Creating a successful ERP reporting strategy

Four key elements of a successful reporting strategy

Once you understand the needs of your stakeholders, you need to account for the four key elements of a successful ERP reporting strategy:

It starts with the EIM, sometimes referred to as the common information model (CIM). An EIM is a framework for organising the critical information required to run the business and drive insights. The EIM provides the foundation on which an organisation’s business processes and reporting will be built. An EIM can be made up of many domains (e.g., Finance, order management, supply chain, and operations), based on the structure of the business. Each domain has its own data models, but the key data elements that are required to run the business should be common across all domains. At minimum, organisations should have a common definition and an aligned understanding of how it affects reporting and performance metrics.

Defining an EIM is just the first piece of the puzzle. It lays the overall foundation from which to build a reporting strategy, data strategy, and common chart of accounts. It enables an organisation to align on what data and level of granularity is needed by what functions, by each leadership level, and for what purpose.

Once a common language and data needs are understood, the next step is to define a data strategy. What are your data sources, where do you want to report, and what tools do you want to use? Does the information you need have to be in the general ledger, or can it be sourced or reported on elsewhere (e.g., subledgers, a data hub, or a data warehouse)? The answer to these questions will influence where the data is captured and how to design the chart of accounts.

Once there’s alignment between the critical data elements needed (assets, locations, etc.) and the functional data models (supply chain model, finance model, etc.), there can be a clearer understanding of how those elements affected performance measures and the relationship between operational and financial performance.

Once the data design is complete, the next step is to assess the global system and reporting tool architecture. This includes assessing the current technology landscape (e.g., ERPs, sales tools) and identifying ways to maximise those tools based on clear data definitions and process discipline. Afterward, Finance can identify the gaps based on desired capabilities (near-real-time data availability, financial modeling, analytics, data visualisation, data science, etc.). In looking to activate new capabilities, consider the enablers for all the reporting use cases (operational reporting, management reporting, strategic analysis and insights, external and statutory reporting, etc.) needed as part of an ERP-driven finance transformation.

As with all successful transformations, the desired outcome changes the way activities are performed to generate better results. Reporting is no different. Enabling new reporting capabilities means less time is spent reconciling data and performing shadow finance activities. Therefore, it is important to assess the impact on your people and finance organisation.

Finance team members will be asked to generate insights and no longer just keep score based on historical performance. As the role shifts, it often results in new efficiencies and a need for new skills. Finance organisations are being challenged to retool their teams and to help them shift from transactional and operational reporting activities to strategic insight generation and scenario modeling that informs key business decisions.

As the organisation adopts new reporting capabilities, it will need to shift to a continuous improvement mindset. The organisation will also need a scalable reporting capability to evolve with the business. There should be an emphasis on self-service, and Finance should take on an elevated role beyond being a distributor of reporting. Instead, the focus should be on ensuring reporting capabilities are aligned to the business strategy and reflect a current view of the organisation.

No matter how well your EIM is defined, or how advanced your reporting and visualisation tools are, they will only be effective and sustainable if the proper governance and controls are in place. Effective governance includes clearly defined roles and responsibilities, strict adherence to data and hierarchy governance, and a scalable security model to manage user access to reports and data. The governance model includes finance data in ERP systems, as well as upstream reporting systems across the enterprise.

Reporting governance also means the organisation defines standard reports for key business reviews and eliminates both legacy reports and oversized reporting packages that have grown over the years. Standard reporting packages are essential to the successful implementation of a reporting strategy, as they typically help drive standardisation across the enterprise that increases efficiency and aligns business reviews with KPIs linked to the overall business strategy.

Guiding principles for designing a reporting strategy

As companies define their reporting strategy, there are a few guiding principles to consider:

• One version of the truth: Integrate data from multiple sources into a single data platform to enable true performance measurement across a common set of data elements. Common data platform enables multiple roll-ups (alternate hierarchies) of the same data for analysis to provide factual understanding and confidence in all downstream reporting applications.
• Dynamic reporting: Reporting tools should have the flexibility to perform dynamic queries and generate reports to address the majority of operational, management, and analytical information needs. This will avoid manual creation and consolidation of global management reports and improve timeliness of information, freeing up more time for analysis.
• Information consistency and governance: Leverage data and reporting governance processes, standards, and policies to establish a consistent baseline and ongoing measurement of data quality and reporting packages. Avoid complicated metric-accumulation procedures in order to create more timely and reliable performance metrics.
• Rationalised toolsets: Limited toolsets reduce up-front training effort, promote transferability, and improve the ability to maintain and reduce support costs.
• Common data architecture and defined access: Access to common data elements should be restricted by security roles to ensure users have the appropriate view of enterprise information. Access to ad hoc querying tools should be limited to those with a business need. Additionally, the ability to publish reports should be controlled and governed by a central group.
• Global architecture: The reporting platform and related tools should be enabled by an architecture that will support diverse (global) users within the finance organisation with unique reporting requirements. This will allow for the creation of global and enterprisewide reporting and technology standards across multiple business units, countries, and locations (especially for finance data and reporting) in order to avoid conflicting interpretations.

As mentioned, thinking through chart of accounts (CoA) design is a key part of reporting and ERP strategy. Read more about the guiding principles for building a comprehensive CoA in our report on optimising ERP through your chart of accounts design.