Make this a central part of the transformation of corporate finance
We continue to be bombarded daily by new offerings from technology vendors, both hardware and software products, particularly SaaS (Software as a Service) solutions. There seems to be no end to these innovations.
In spite of all that, I think there is always room for new technology as long as it fills a legitimate need and the benefits clearly outweigh the cost, complexity and on-going maintenance and user education on the new product or service.
However, I strongly believe that pure technological innovations are not enough, unless they are combined with an ever changing mindset on how to apply innovative technology to a particular need, in our case, corporate finance needs. As is the case with all technology solution implementations, the process is just as important as the technology itself.
The next few years will continue to bring about technology innovations. Recently there has been mention of terms like “Real Time Data” and “Real-Time Analytics” and certain technologies that promise to deliver that.
What is Real-Time Data?
According to Technopedia, that touts itself as “The IT Education Site”, “Real-time Data refers to data that is presented as it is acquired”.
What this means is immediate availability of data from business operational and financial activities (transactions). This data can then be included in presentations to interested parties, usually corporate, financial and operations managers in a business enterprise.
Just how current the data is depends on the systems’ ability (and willingness of management) to cause operational and financial transactions to be recorded in the various systems as they occur. For example, on an operational level, receipts of inventory items can either post to the inventory intermediate ledgers as they occur or accumulate in batches that must manually be posted on a periodic basis (e.g., daily, weekly). These same transactions can post to the General Ledger (GL) as they occur, or the intermediate sub-ledger batches can be posted to the GL periodically by system users.
How often these events occur is a function of the system’s capabilities combined with users’ preferences with regard to their workflow, usually directed by management.
What is Real-Time Analytics?
According to TechTarget, a major marketing on-line resource, “Real-time Analytics is the use of, or the capacity to use, data and related resources as soon as the data enters the system.”
Here, availability of data enables the system to capture relevant data sets and transform them into meaningful reports and presentations as required by users. For example, financial management, as well as senior management can receive a monthly set of consolidated financial statements with variances from budgets, representing the entire organization or broken down by legal entity, division or any operating units defined in the system and for which there is a need to acquire and present these data.
Business unit managers can receive specific operational reports, formatted exactly to their needs with emphasis on elements of these data that are specifically relevant to their business units.
Combining Real-Time Data with Real-Time Analytics
Using Real-time Data, analytics can take place immediately as relevant data is available. For example, operational analytics like sales reports can be performed daily, or even multiple times daily; financial statements and comparisons with approved budgets and forecasts can occur right after a period-end close (e.g., monthly).
The benefits of using Real-time Analytics to companies and their managements can be tremendous if the right technology is wisely combined with a well-designed workflow, since the technology alone can never deliver its potential benefits without thoughtful and proper setup and execution.
The most obvious benefit is providing management with the exact information they need in the format most suitable to reviewing and understanding the data. This, combined with the Real-time Data availability makes the decision making process not just more accurate but a lot sooner and always in alignment with the most current operational and financial data and existing budgets and plans.
What is becoming increasingly evident is that these new technological advancements are no longer exclusive to the Fortune 500 and other large enterprises but also available to the average SMB. With the proper mindset and focus on the process as much as on the technology itself, even smaller organizations, regardless of the type of business, or product or service offerings, can gain access to Real-time Data and its natural companion Real-time Analytics.
Alan Hart, MBA, is Principal Consultant at Pacific Shine Group in Portland, Oregon, with responsibility for client business development and hands-on client project implementations. Prior to starting Pacific Shine Group, he worked in various executive accounting and finance positions with technology and growth companies. Notable is his 18 years in the hi-tech manufacturing industry where he served as Controller, Vice President of Finance and CFO of several privately as well as publicly held companies in the Hi-Tech industry, such as Hybrid Arts, Inc., Hamilton Bay Associates and Syncronys Software. In his role in management consulting, Alan has worked in diverse industries and with a variety of clients, including fortune 1000 companies such as Boeing, Delta Airlines, Intel, Wyndham Worldwide and others, as well as many mid-market organizations such as Guitar Center, Ducommun AeroStructures, Cypress Semiconductor, TriQuint Semiconductor and others.
Combining his skills and experience in engineering with deep understanding of technical accounting, he is able to assist small and medium-size manufacturing companies establish GAAP compliant accounting and reporting systems.
