- Harvey Mackay
Expectations towards financial management have increased rapidly in the last two decades. A company cannot be successful in the ever increasing competition and diminishing margins if major business decisions are based on inadequate financial information. The focus of the financial functions has therefore shifted from external accounting and reporting to supporting business management.
Decision-making requires transparency in terms of the productivity of products, clients, areas and units as well as the factors affecting profitability. Lasting results are achieved through developing management reporting and improving the ability to analyze results and by linking financial information with appropriate stages in the management process.
Management reporting development for a process industry company
A recent change in the client’s organization structure raised a need for developing management reporting to support decision making according to the new organizational responsibilities. Simultaneously, a lately completed ERP system implementation provided vast amounts of previously unavailable data for establishing a multidimensional reporting.
In the first phase of the project, August supported the client in defining a high level vision for the reporting concept. The reporting concept included the definition of Group management’s reporting content for performance management and operative decision making, process development to enable high-quality source data, definition of reporting organization and processes, mapping of enabling IT systems and creation of a competence development plan for both management and controllers.
In the second phase, August supported the launch of implementation program. The program created tailored reporting content for each user group, defined a uniform source data behind all users and processes to ensure data quality. IT tool implementation was started as well as building capabilities for users and controllers. Project management office ensured the project coordination and also managed the interfaces to other development efforts within the company.
Multidimensional reporting dashboard was launched to serve both Group and business management. The dashboard includes both financials and operative KPIs. August’s support both in the definitions and implementation phase helped the client organization to get a rapid and successful start for the new management reporting system.
Deployment of a value chain profitability model for an international metal industry company
The challenge of our client was to grasp the profitability and costs of a complex production network. The profitability figures of the value chain were required to support the strategic choices made by the company. We designed a model that enabled the management to monitor the accumulation of costs and assets in the supply chain. Following the planning stage, August supported the introduction of the model in several areas, such as the creation of rolling productivity reporting and development of best utilization practices. The implementation aimed at making use of the results at as early a stage as possible, for example, already during strategic planning. To enable this, we trained the company’s financial experts on a global level to use the new productivity information and we supported them in the practical implementation work. This type of change management and the competence development measures were critical to establishing the new practices. Once the system was in place in its entirety, the information produced by the value chain productivity model enabled the adoption of a sophisticated financial management model and the setting of productivity and other targets for the integrated organization.
Development of a financial management model for a metal industry group
The financial management system of our client company had flaws that impeded the efficient operative management of the company’s units, complicated the accounting process, reflecting negatively on the quality of investor communications. We charted alternative structures for a new financial management model and modeled the impact of the selected alternatives on the net sales and result of the divisions and business units. As a result of the project, our client had a platform they could use to deicide on the development of a financial management model.
Defining management practices and financial responsibilities in the processing industry
Our client organization was about to implement an extensive ERP and reporting system. At the same time, the company also wished to update its productivity reporting and clarify financial responsibilities to better support growth and results management.
The project was launched with management team interviews, which helped define the current understanding of the financial responsibilities and financial reporting needs. From the perspective of business operations, supporting the cross-selling of products and a more comprehensive management of the production network capacity were identified as the key development areas. A proposal on clarified financial responsibilities was drafted in workshops held together with the company’s financial management.
The recommendations of the project led to changes in the organization of the company and more business-oriented definitions regarding the ERP and reporting system under development.