Creating a successful ERP reporting strategy

The world around us is shifting

The world around international and non-profit organisations is changing faster than ever before. Fuelled by technology and increasing digitalisation organisations are flooded with data. At the same time, rising complexity and external uncertainties have prompted organisations to re-think their operating models and prioritise activities that achieve the highest impact. The war in Ukraine, geopolitical pressures in the Middle East and climate events taking place around the world are just a few examples that clearly show the impact of such events on the planet, the people and aid distribution.

Finance professionals in NGOs face rising expectations to address these challenges – both from an operational and strategic point of view. Reliable and transparent reporting plays a key role in responding efficiently and effectively to these new needs and is especially relevant for international and non-profit organisations to maintain their donors’ trust (e.g., where funding comes from and what it is used for). Furthermore, finance is increasingly expected to look beyond ‘business as usual’ and provide relevant insights and capabilities for improved decision making.

Building a future-ready ERP reporting strategy

There are numerous digital technologies available today that are being used to automate responses and improve processes through advanced analytics. The key technologies are listed here and outlined more in detail in Deloitte’s Reporting in a digital world article.

Technologies are often implemented without yielding the results envisioned and become overly complex to maintain as new needs are built into an inflexible architecture. Why? Simply put, it is the lack of an overall ERP reporting strategy to integrate, synchronise, govern, and flexibly match structure to objectives. What is more, while organisations are inundated with data, much of that data is in disparate, non-integrated systems. The data in existing ERPs is not captured or attributed in a common, standardised model, which then requires data mapping, reconciliation, and harmonisation. In many cases, some data simply is not captured at all.

Let us explore some of the common challenges and how a reporting strategy can help. Experience shows many reporting issues are driven by:

• Poor data quality
• Lack of a single source of truth
• Misaligned chart of accounts
• Ineffective reporting governance
• Lack of consideration of external data

Organisations that do not address the issues above may not have the information needed to run the organisation. Worse yet, information may be interpreted differently across the organisation, resulting in confusion, mistrust, and missed opportunities. Let us start by defining what it means to have a successful enterprise reporting strategy, one that:

• Delivers accurate information
• Moves beyond financial analysis and into organisation analysis
• Provides a single source of truth
• Enables self-service reporting and analytics
• Includes reporting/analytics governance that ties the data model to analytics and KPIs

To build a successful ERP reporting strategy, organisations must start by accounting for different stakeholders across the organisation. And each has unique information needs.

The 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:

1. Data design and KPIs

It starts with the enterprise information management (EIM), sometimes referred to as the common information model. An EIM is a framework for organising the critical information required to run the organisation and drive insights. The EIM provides the foundation on which an organisation’s processes and reporting will be built. An EIM can be made up of many domains (e.g., Finance, Grants Management and Operations), based on the structure of the organisation. Each domain has its data models, but the key data elements that are required to run the organisation should be common across all domains. At a 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? The answer to these questions will influence where the data is captured and how to align it.

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

2. Systems and tools

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, tools) and identifying ways to maximise those tools based on clear data definitions and process discipline. Afterwards, Finance can identify the gaps based on desired capabilities (near-real-time data availability, financial modelling, analytics, 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.

3. People and organisation

Enabling new reporting capabilities means less time is spent reconciling data. 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 functions are being challenged to reskill their teams and to help them shift from transactional and operational reporting activities to strategic insight generation and scenario modelling that informs key organisational decisions.

As new reporting capabilities are adopted, there will be a need to shift to a scalable reporting capability to evolve with the organisation. 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 organisational strategy and reflect its current view.

4. Reporting governance

No matter how well your EIM is defined, or how advanced your reporting 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 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 organisation.

Reporting governance also means the organisation defines standard reports for key organisation 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 that increases efficiency and aligns reviews with KPIs linked to your overarching strategy.

Getting started – Guiding principles for designing a reporting strategy

As organisations define their reporting strategy, certain guiding principles should be considered:

• Single version of truth: Integrate data from multiple sources into a single data platform to enable true performance measurement across a common set of data elements. A 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: Use 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 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.
• Global architecture: The reporting platform and related tools should be enabled by an architecture that will support diverse (global) users within the finance functions with unique reporting requirements. This will allow for the creation of global and organisation-wide reporting and technology standards across multiple divisions , countries, and locations (especially for finance data and reporting) to avoid conflicting interpretations.

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Thanks to Sebastian Peichl for his contribution to this article.