The highlights of this article - what distinguishes integrated management reporting?
- Ongoing control and professional support
- Reliable data basis
- Flexible reporting software
- consolidation functionality
- SAP BW4/HANA is a data pool
- Applications BCS4/HANA and BPC 11.0 ensure a homogeneous data structure
Corporate controlling requires a reliable data basis. This applies to both operational (e.g. result management) and strategic (e.g. carve outs, M&A transactions) issues and processes. Management reporting always works when it provides the addressees with timely, decision-relevant information in the necessary granularity. Sounds simple, but this sentence also describes the enormous challenges of providing financial statements in corporations.
Ongoing control and professional support for individual reporting are important
Of central importance is a decision-supporting (management) reporting that takes into account industry and company-specific characteristics and comparative standards and at the same time is based on a uniform and comparable database. In particular, the high level of dynamism in operational issues harbors the risk that superficially identical positions do not have the same content on closer analysis. The same applies to the definition of financial ratios. This makes it all the more important to have ongoing control and professional support for the company-specific reporting in order to obtain a well-founded basis for decision-making. The granularity set up for management reporting depends on the reporting obligations and control options of controlling.
Integrated management reporting only works with flexible reporting software.
Well-established, flexible reporting is reflected in the various phases in which a company finds itself. For example, in phases of growth (on foreign markets), the structure of the reporting with regard to the organizational units to be reported may have to be completely revised. In this scenario, new country-specific factors for management become more important. Companies that are in a concentration phase, e.g. because they are streamlining their product portfolio, also need reporting that supports this change and, if necessary, adjusts it to include previous other business areas.
The more flexibly the software works, the better these content-related requirements can be implemented. The software used should be able to map the described changes in reporting as simply and transparently as possible for the department.
How well this succeeds depends on the one hand on the software solution and on the other hand on its design as part of the IT conception. This means that, for example, changes in the management hierarchy (structuring of business areas, profit centers, etc.) should be made without adjustments to the actual financial statement data.
The software needs to be able to handle adjustments in multiple categories of data, for example when structural changes affect plan and actual reporting. A central correction of the same type ultimately facilitates the evaluation.
In addition, the software should be able to map any changes at a specific point in time, ie the current reporting window must be limited in terms of time, and structural changes in group reporting may only take effect within this reporting window. This refers both to the respective reporting date and to the retrospective presentation of the final figures.
Reporting software requires a consolidation functionality.
The software should also offer a consolidation functionality with which more complex consolidation tasks such as the elimination of interim results or facts of the capital consolidation can be processed accordingly. In addition to the actual figures, this also applies to the plan values, depending on the planning approach. As part of a middle-up approach, planning is already carried out at the level of the control units relevant to the Group in a consolidated form.
If, on the other hand, the figures are provided from the ERP systems via a button-up approach, internal eliminations must be carried out for comparability. Effects such as intra- and inter-company sales, interest expenses and income, interim results, receivables and liabilities, internal group provisions, processes in the area of capital consolidation should then be dealt with.
Integrated management reporting is based on a holistic data model.
Ideally, reporting uses a homogeneous database in which all values for actual reporting, planning, budgeting and forecasting are stored "equally". The management reporting should be integrated into the preparation of the financial statements of the legal reporting, so that the figures can be selected from a central data pool. The definition of such a central database is a core element in the conception phase. A holistic data model enables actual and planned figures to be evaluated homogeneously and efficiently.
The following diagram serves as an example of integrated management reporting based on a SAP BW/4HANA platform:
The basis for consolidated actual reporting and group planning is formed by the operative data from financial accounting and the operative planning of the individual companies. The financial accounting and controlling applications of the individual group companies are traditionally organized in a heterogeneous and decentralized manner on ERP system landscapes. In order for group-wide, homogeneous group and management reporting to be successful, a central platform is required on which the heterogeneous data sources are brought together and transformed into a uniform, homogeneous database.
SAP BW/4HANA serves as a data pool and is the basis for a homogeneous data structure
The strategic data warehouse platform BW/4HANA from SAP plays a central role in this. On the one hand, it serves as a data collection point for the operational upstream systems and, on the other hand, it offers two high-performance applications for consolidated actual reporting (SAP BCS/4HANA) and corporate planning (SAP BPC 11) on the same platform. This enables the creation of a homogeneous data structure for actual and plan data.
In addition, both applications can communicate with each other, ie planning data recorded via the BPC can be consolidated with the help of BCS/4HANA. Another advantage is the possibility of joint reporting on actual and plan data.
The following diagram shows how corporate and management reporting grow together on a uniform platform and which content components interlock.
For uniform group and management reporting, it is necessary to develop a comprehensive data model. In order for this to succeed, not only must the technical system landscapes and structures grow together, but technical issues between Group Accounting and Corporate Controlling must also be standardized.
These technical definitions affect, for example, the position charts used, as well as other organizational units relevant to control, such as companies, segments, profit centers, functional areas, business lines and the KPIs used.
The standardization of the technical objects and structures as well as a large number of advantages are derived from the homogenization of the technical definitions.
Advantages of homogenization are:
- Master data is maintained centrally and is used for all reporting views
- The uniform data structures and flows enable precise traceability of the value flows
- Uniform key figure definitions and evaluations reduce the coordination effort between the areas
- A central interface from the ERP
- The reporting depth in accounting and controlling is directly comparable on one platform
- The integration of the planning components is much more efficient
- Change and maintenance processes are more transparent and less complex
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