Managing financial reporting in times of uncertainty
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Managing Financial Reporting in an Uncertain Environment 6th Controlling, Performance & Reporting Forum Amsterdam, 20 Mar 2015
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Transcript of Managing financial reporting in times of uncertainty
Managing Financial Reporting
in an Uncertain Environment
6th Controlling, Performance & Reporting Forum
Amsterdam, 20 Mar 2015
Your speaker today
Partner, finance services
Equity partner & mentor
Visiting professor
I have also had
mainstream jobs
SCIEX (Life Sciences)
FP&A EMEA 2007-2013
UppTalk (mobile messaging)
CFO 2013-2015
Outline
• 10:00 to 10:45 20 Mar 2015
• From internally produced to externally observed: business metrics in a digital environment
• Dealing with the pressure to perform with less resources and limited budgets. Low cost, low maintenance reporting systems
• Cross-functional leadership - expanding the reach and influence of the finance team
• The era of ever-growing expectations in a weak economy: how finance can help deal with human conflict
The Framework
The role of forward-looking assessments in dealing with complexity and uncertainty (Source adapted
from Zurek and Henrichs, 2007)
The Framework (2). McKinsey management under
uncertainty model
Hugh Courtney “20/20 Foresight: Crafting Strategy in an Uncertain World”
• Rare situations that tend to
migrate to other levels over
time
• Qualitative analysis mostly
• Still – don’t throw your hands
in the air, stay systematic
even if it is only to gain
perspective or identify
variables
• Eg: 2008 financial meltdown
in a capital equipment
industry
Paradigm 1
• Organizations increasingly recognize the
ability of analytics to give them a
competitive cutting edge, in a world where
all products and services become
commoditized
BI/Reporting projects,
a historical overviewCloud based
and external
Client server
&
Propietary
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
20
11
2012
2013
2014
2015
“I want to move from business
intelligence to business analytics”
0
10
20
30
40
50
60
70
80
90
100
business intelligence business analytics
Source: Google trends
Side by side
Biz Intelligence Biz Analytics
Runs the business, focuses on operational
efficiency
Changes the business, seeks to
understand the information that can drive
biz change
Understanding the past Anticipating the future (predictive analytics)
Reporting Self-Service analytics
Refers to the data platform as a whole A subset
A noun – umbrella term for the overall
scope of the activity
A verb – the act of discovering insights. Not
so much limited by the infrastructure
“Intelligence without analysis is a waste of
time”
“Analysis without intelligence can’t be
done”
Business Intelligence vs. Business Analytics: What’s The Difference?. BI Software
insight
“And the winner is…”
( Where are
salesforce.com
and Wave? )
The question remains…
• How do we become a data-driven
organization?
• (We will respond later on in the
presentation)
Paradigm 2
• From internally produced, internally
defined business metrics…
• … To industry standardized, externally
observed ones…
• … (bonus track – often public!)
New company, old metrics
• In its IPO filing, Twitter claimed that “through the eyes of management” the company had made a profit of $21MM in the semester
• Even though the accounting loss had been $69MM
• The difference is an unorthodox “adjusted EBITDA” which excluded non-cash compensation and other items
• Another example would be Groupon
New company, new metrics
• In mobile apps, Localytics sets the standard about usage… both how you define usage and how many users you have
• There is no tolerance whatsoever for deviations from this standard, and companies have little capacity to influence the metric or to define an internal one
• And the info is semi-public
… Yet another example
This is not gibberish! This drives company valuations!
Paradigm 3
• “Process is everything”
• Choose the right metrics
• Communicate and disseminate
• Follow them consistently
• Do variance analysis
• Reiterate into model
• Finance is the key stakeholder that should own the operational cadence
“We are what we repeatedly do. Excellence, then, is not an act,
but a habit” (Aristotle)
Common sense rigorously applied
W1 W2 W3 W4
L1 Metric: Units
ordered new
product “XY78”
EMEA
Owner:
Roger
Penrose
AC 70 80 15
FC 71 76 56
LY 55 63 46
L2 Metric: Units
ordered new
product “XY78”
Italy
Owner:
Ruggiero la
Rosa
AC 11 16 1
FC 13 15 15
LY 12 11 8
• Consistent strategy deployment over different organization levels
• Visual management tools
• Robust process
• Focus on problem solving: Pareto analysis, etc. (This is a science, not an art!)
Corollary
• Finance is uniquely positioned to partner with
the general management
• And influence other parts of the organization
through cross functional leadership
• Avoiding human conflict by staying factual
• And being a true business driver
From reporting to
self service analytics
(also as a company
philosophy)
Become data centric,
improve the
organization and
make it cohesive
through process
The democratization
of information: your
metrics are not your
metrics, and you
don’t own them
anymore
( thank you! )
