Developing insightful

management reporting
Opportunities and
challenges for CFOs
Definitions
For the purposed of this publication business partnering is defined as the role that finance undertakes to support the strategic and tactical
priorities of the business by delivering guidance in support of future performance.

Methodology
Deloitte asked senior finance executives to complete an online survey on the subject of management reporting and analysis. The
information, which was collected between March and October 2015, has been analysed in aggregate and forms the basis of this
publication. In some figures, because of rounding, percentages may not add up to 100.
Foreword

Welcome to our new report examining the opportunities and challenges CFOs face when
developing insightful management reporting and analysis.

Having worked with numerous global organisations over many years it is clear that many senior
finance executives and their counterparts in the business are dissatisfied with the presentation,
detail and effort required to create management reports.

Finance leaders often struggle to pinpoint the exact cause of their dissatisfaction and to
determine what is required to fix the underlying problems. Poor data quality, ineffective
technology and talent shortages are regularly cited as issues. They are fundamentally interlinked
and prioritising them can be challenging.

In an effort to understand these challenges better Deloitte carried out an in-depth survey of over
600 senior finance professionals from around the world and from all industries.

Survey responses suggest that data governance remains a challenge for many organisations.
This can undermine the quality and accuracy of finance outputs and results in time-consuming
duplication and manual manipulation.

Many technologies can be implemented to aid reporting and analysis. There is increased
availability of data discovery and visualisation tools that enable finance staff to turn information
into insights and to quickly communicate them to stakeholders. However, survey findings
indicate that in over a third of organisations technology does not support effective performance
management.

Challenges remain around the skills available to finance and the behaviours that are encouraged
among finance professionals. Many CFOs tell Deloitte of their growing struggles to find the right
candidates for financial planning and analysis, and business partnering roles. Survey respondents
overwhelmingly recognise this skills gap.

We would like to thank the 614 senior finance executives who participated in our survey.
We hope you find our insights thought-provoking and useful, and welcome your feedback.

Rolf Epstein
Partner, Lead Finance Consulting Germany

Developing insightful management reporting | 1

Good data quality is the foundation for insightful management reporting
of respondents feel data
53% quality is a problem in
their organisation
This increases to 80% when
80% executive sponsorship is
not available

Having technology that supports performance management means

Finance Business Partners can focus on higher value activities…

When technology
Over a third of supports effective

35% respondents do not

believe their finance
technology supports
management reporting
and analysis, Finance
Business Partners are
effective management twice as likely to spend
reporting and analysis their time interacting and
communicating with
the business

In organisations where skills are unavailable, Finance Business Partners

are more likely to spend their time on lower value activities…

Where skills are Where skills are

unavailable... available...

Mind
the gap
52%
...of Finance Business Partners
76%
...of Finance Business Partners
spend the majority of their time spend the majority of their time
creating and updating reports interacting with the business
2|
Monitor the right KPIs to understand
business performance
Organisations that identify a direct link between Key Performance Indicators (KPIs) and their
strategy typically have a better record of execution. However, it is not just the link that makes this
effective. It is the tracking and monitoring of underlying measures that make up the KPI that truly
determines success. Ideally a number of measures are tracked and monitored at a granular level,
which are combined to have a direct impact on the strategy level KPI.

Figure 1. Link between KPIs and business strategy, percentage of respondents

1% 1%
KPIs and stategy linked

9% KPIs and stategy often linked

KPIs and stategy often not linked

30%
KPIs and stategy not linked

Unsure

58%

Source: Deloitte analysis n = 614

Survey respondents overwhelmingly affirm that there is a clear link between KPIs they measure
and the business strategy. However, where there is no link between KPIs and the business
strategy, key management questions are more likely to remain unanswered.

Figure 2. KPIs monitor and link to strategy, Figure 3. KPIs answer key management questions
percentage of respondents and link to strategy, percentage of respondents

97% 96%

57%
48% 52% 43%

3% 4%
KPIs are in place to KPIs are not in place to KPIs answer key KPIs are not in place to
measure and monitor measure and monitor management questions measure and monitor

KPIs and business strategy linked KPIs and business strategy linked
KPIs and business strategy not linked KPIs and business strategy not linked
Source: Deloitte analysis n = 600 Source: Deloitte analysis n = 596

Deloitte’s view – Organisations should continuously review their KPIs against their business
strategy and ensure that when a change in the strategy takes place, a KPI review also occurs.
This allows finance to maintain a strong understanding of business strategy and to intervene
as required.

Developing insightful management reporting | 3

 Standardise management reporting to support
strategy execution
Deloitte’s survey found that most respondents provide core management reports that are
standardised across business units and management teams. However, 30 per cent of finance
functions do not provide standardised reports. Management reports are a combination of
detail, commentary and exception reporting. They should clearly articulate the areas that teams
should focus on by showing where the exceptions exist. The report should then allow sufficient
‘drill-down’ to help the business leaders understand the cause of the exception and enable the
creation of a plan to address the issue. Standardisation allows for there to be one accepted
‘version of the truth’. However, in many cases management teams do not receive standardised
management reports because ‘that is the way it is always done’ or because finance has not fully
articulated the benefits of standardisation.

Figure 4. Data quality assessment, percentage of respondents

1%
Standardised
6% Largely standardised
18%
Largely not standardised
Not standardised
24%
Unsure

51%

Source: Deloitte analysis n = 614

In organisations where core management reports are standardised it is significantly more likely that
these reports will be used to drive focused and insightful conversations in leadership meetings.
Seventy-three per cent of respondents indicate that the management reports provided by finance
are standardised and do drive insightful conversations. However, 54 per cent of respondents
indicated that reports are not standardised and that they do not support insightful conversations.
There are still instances where standardisation does not drive focussed discussions in leadership
meetings. This is often because finance is seen as the source of trusted financial information but
not a provider of judgement-based insights that challenges the assumptions of leadership.

Figure 5. Standardisation and the use of management reports to drive insightful leadership conversations, percentage of respondents

73%
46% 54%
26%
1% 0%
Management reporting drives insightful Management reporting does not drive insightful
conversations conversations

Reports are standardised Reports are not standardised Unsure

Source: Deloitte analysis n = 599

4|
Improve data quality to build the foundations
of insightful management reporting
Fifty-three per cent of survey respondents indicated that data quality is recognised as a problem
in their organisations. In 78 per cent of those organisations the issue is also recognised by senior
leadership. High performing finance functions recognise when data quality is a problem within
their organisation, and have the appropriate executive sponsorship to put in place the necessary
processes and governance structures that help identify and resolve the issues.

Figure 6. Data quality assessment, percentage of respondents

1%
Data quality is an issue

Data quality is not an issue

Don’t know

46%
53%

Source: Deloitte analysis n = 614

Survey respondents indicated that where executive sponsorship is not available it is much
more likely that poor data quality impacts management reporting and analysis as well as other
finance activities. Even where executive sponsorship is available data quality remains a significant
problem that often requires a multi-functional and multi-dimensional solution that changes staff
culture, technology toolsets and processes.

Figure 7. Data quality assessment by availability of executive sponsorship, percentage of respondents

71%
80%
46% 53% 49% 49%
28% 20%
1% 2% 1%
Executive sponsorship Executive sponsorship Executive sponsorship Executive sponsorship
available somewhat available somewhat not available not available
Data quality is an issue Data quality is not an issue Don’t know
Source: Deloitte analysis n = 586

Deloitte’s view – If an organisation has an issue with data quality, this should be made
visible at the highest level. With the amount of data available for analysis growing, it is
important that executives ensure that data quality is continuously monitored and assessed.

Developing insightful management reporting | 5

 Utilise technology to build the foundations of
insightful management reporting
Technology is often used as a key enabler to improve the effectiveness and efficiency of the
finance function. Collecting, aggregating and analysing data via the ubiquitous spreadsheet
continues to constrain the management reporting activities of many organisations. However,
data visualisation tools and other analytical software offer an opportunity to communicate
insights more effectively and improve decision-making in the business.

Performance management tools can be integrated to allow for powerful and effective reporting
and analysis. Many tools are flexible enough to adapt to business changes quickly. Sixty-two per
cent of respondents believe that the finance technology in their organisations supports efficient
and effective performance management.

Figure 8. Technology support for efficient and effective performance management, percentage
of respondents
3%
Supports performance management
6% Often supports performance management
14%
Often does not support performance
management
Does not support performance
management
29%
Unsure

47%

Source: Deloitte analysis n = 614

The ability to exploit technology is closely linked with the issue of data quality. The effective
use of technology and high standards of data quality are the basis for impactful management
reporting. They are inextricably linked. It is difficult to get the most out of technology without
good data and it is often difficult to achieve high standards of data quality without help from
technology.

Where an organisation’s technology is not perceived to be agile it is more likely that data quality
is also a recognised issue. Similarly, in organisations where data quality is not an issue technology
is much more likely to support effective performance management.

Figure 9. Data quality and agility of technology to adapt to organisational changes, percentage of respondents

78% 71%
65% 85%
33% 28%
22% 15%
0% 2% 8% 1%
Technology is agile Technology is largely agile Technology is largely not agile Technology is not agile
Data quality is an issue Data quality is not an issue Don’t know
Source: Deloitte analysis n = 599

6|
Figure 10. Data quality and technology support for efficient and effective performance management, percentage of respondents

77%
49% 50%
20%
1% 2% 5% 3%
Data quality is an issue Data quality is not an issue
Technology supports performance management Technology does not support performance management Unsure

Source: Deloitte analysis n = 605

In organisations where Finance Business Partners spend the majority of their time interacting
with business stakeholders it is much more likely that the technology suite available to finance
supports performance management. Technology, especially analytical and visualisation
technologies, can remove the need to manipulate data manually. This frees Finance Business
Partners to spend more time articulating their findings rather than repurposing data analysis
using spreadsheets.

Figure 11. Technology support for efficient and effective performance management by time spent, percentage of respondents

66%
40% 37%
24% 23%
10%
Creating and updating reports Analysing and interpreting information Interacting and communicating with the business

Technology supports performance management Technology does not support performance management

Source: Deloitte analysis n = 604

Deloitte’s view – Finance’s ability to provide insights to the business is dependent on its
ability to ‘do the basics’. Inadequate technology and poor data can inhibit this. The issue is
that it is not always clear what the root cause is – is it the technology or the quality of the
underlying data? In our experience, poor data quality and ineffective data management are
often the key contributing factors in these situations. Many organisations are using reporting
tools and data visualisation dashboards. However, if the issues with the underlying data
are not resolved there is a risk that the inadequacies previously found in spreadsheets are
replicated in the newly implemented technology. As such, data quality should be a priority
during technology investment conversations.

Developing insightful management reporting | 7

 Future investment in technology to support
management reporting
Organisations tend to review their toolset regularly and are aware of the latest developments in
the marketplace. Many finance functions have invested or are planning to invest in integrated
reporting tools that allow for multi-dimensional analytical views and ‘drill-down’ functionalities
that enable the lowest level of detail to be assessed. In addition, new data discovery and
visualisation capabilities allow end-users (not just finance professionals) to explore, analyse and
visualise information. A majority of all organisations are looking to invest in new analytical and
visualisation technologies. Those organisations where their Finance Business Partners spend the
majority of their time creating and updating reports are more likely to invest.

Figure 12. Future technology investment and where Finance Business Partners currently spend the majority of their time, percentage
of respondents

69%
52% 52%
40% 40%
25%
5% 8% 8%
Creating and updating reports Analysing and interpreting Interacting and communicating
information with the business
Looking to invest Not looking to invest Don’t know
Source: Deloitte analysis n = 604

Similarly, respondents indicated that they are more likely to invest in new analytical and
visualisation technologies when data quality is a recognised issue. However, technology should
not be viewed as a panacea. Data quality issues will remain if underlying cultural, organisational
and process issues are not addressed.

Figure 13. Future technology investment and data quality, percentage of respondents

68%
52%
40%
26%
13%
8% 6%
Data quality is not an issue Data quality is an issue

Looking to invest Not looking to invest Don’t know

Source: Deloitte analysis n = 605

8|
Build the right management reporting
capabilities
Effective Finance Business Partners spend time interacting and communicating with the business,
providing insight and successfully contributing to organisational performance. This can include
activities such as strategy formulation, commercial decision-making and negotiation, and leading
on in-depth business analysis.

In almost half of organisations, Finance Business Partners spend the majority of their time
creating and updating reports. Less than 20 per cent of respondents indicate that their Finance
Business Partners currently spend the majority of their time interacting with stakeholders in the
business. However, finance leaders would prefer for this time distribution to be reversed with
Finance Business Partners spending considerably less time creating reports and significantly more
time on business-facing activities.

Figure 14. Current and future time spent of Finance Business Partners, percentage of respondents

69%
48%
32% 27%
13% 18%
3% 3% 4% 4%
Creating and updating reports Analysing and interpreting information Interacting and communicating with
the business
Majority of time spent
Current time spent Preferred time spent

Source: Deloitte analysis n = 613

Figure 15. Availability of analytical skills and where Finance Business Partners spend the majority of their time, percentage of respondents

67% 76%
46% 52%
30%
13% 21%
2% 3% 4% 4%
Creating and updating reports Analysing and interpreting Interacting and communicating
information with the business
Skills available Skills unavailable Unsure

Source: Deloitte analysis n = 604

Developing insightful management reporting | 9

 Figure 16. Availability of analytical skills and finance’s ability to produce insights, percentage of respondents

64% 69%

33% 29%
13% 3% 2%
3% 2%
Insight supports commercial decisions Insight does not support commercial decisions

Skills available Skills unavailable Unsure

Source: Deloitte analysis n = 594

Deloitte’s survey found that Finance Business Partners experience greater job satisfaction when
they interact with the business. They are much more likely to find their role unrewarding if they
spend the majority of their time focused on the ‘basics’ such as creating and updating reports.

Figure 17. Finance staff satisfaction and where Finance Business Partners spend the majority of their time, percentage of respondents

77% 80%
60%
31%
13% 10% 14% 9% 14%
5%
Creating and updating reports Analysing and interpreting Interacting and communicating
information with the business
Role is rewarding Role is not rewarding Unsure

Source: Deloitte analysis n = 604

Deloitte’s view – Organisations often struggle to find the right talent. Developing a
rewarding and structured career path for your most effective Finance Business Partners
should be a top priority.

10 |
Find the right operating model to meet
reporting needs
Currently 60 per cent of survey respondents indicated that their finance functions deliver
management reporting and analysis through a mixture of Centres of Excellence (CoEs) and
decentralised in the business units. A quarter of respondents indicated that management
reporting and analysis is fully decentralised while 13 per cent deliver these capabilities solely
through a CoE. Forty-nine per cent of organisations plan to change their operating model in the
next 18 months. Deloitte’s analysis suggests a small trend towards centralisation of delivery.

Figure 18. Operating models for delivering management reporting and analysis, percentage of respondents

60% 58%

21% 25% 18%

13%
Centre of Excellence (CoE) A mixture of both Delivered in the business

Current operating model Desired operating model

Source: Deloitte analysis n = 614

Developing insightful management reporting | 11

 Figure 19. Proposed changes in operating model, percentage of respondents

Current operating model

Delivered in
25%
the business

A mixture
60%
of both

Centre of
13%
Excellence

Other 2%

Source: Deloitte analysis

12 |
 Desired operating model

Delivered in
18%
the business

A mixture
58%
of both

Centre of
21% Excellence

2% Other

n = 614

Developing insightful management reporting | 13

 There is little variance in data quality issues across the different operating models typically
used to deliver management reporting and analysis. Where management reporting is delivered
through a mixture of CoE and in the business data quality is marginally more of an issue.

Figure 20. Data quality and delivery models, percentage of respondents

52% 48% 56% 53%

42% 47%

0% 2% 1%
Centre of Excellence (CoE) A mixture of both Delivered in the business

Data quality is an issue Data quality is not an issue Don’t know

Source: Deloitte analysis n = 604

Where a CoE is used to deliver management reporting and analysis, 81 per cent of respondents
indicated that the finance professionals in their organisations find their roles rewarding. This is
a higher proportion than for those organisations using decentralised delivery models. Where
management reporting is delivered entirely in business units 25 per cent of respondents believed
that staff do not find their roles rewarding.

Figure 21. Finance staff satisfaction and current operating model, percentage of respondents

81%
68% 68%

23% 25%
14% 10% 7%
5%
Centre of Excellence (CoE) A mixture of both Delivered in the business

Role is rewarding Role is not rewarding Unsure

Source: Deloitte analysis n = 604

Deloitte’s view – CoEs are important in driving efficiency gains through more effective
reporting. They free up Finance Business Partners’ time so they can focus on more value-
adding activities. However, by employing a full CoE model organisations risk losing the
insight into local markets, products and services that can only be gained by being close to
the business. It can become difficult to provide variance analysis, insight and commentary.
When designing an operating model for management reporting, it is important to consider
the advantages and disadvantages of each relevant option and further the role of the
Finance Business Partner.

14 |
Survey demographics

Figure 22. Participants by location, percentage of respondents

4% 1%
1% 3%
2% 17%4%
3% 4% 1%
2%
20% 4% 1%
1% 2%

1% 1%
1%
2%
1%
2% 6%

3% 1%

3%
7%
1%

Source: Deloitte analysis n = 614

Figure 23. Participants by role, percentage of Figure 24. Participants by revenue, percentage of
respondents respondents

10% 7%
18%

7%
30% 22%

18%

8%
29%
14% 6%
19%

Chief Financial Officer Up to £250 million Up to £10 billion

Controller Up to £1 billion More than £10 billion
Finance Director Up to £3 billion Prefer not to say/
Unsure
Finance Manager Up to £5 billion
Head of Financial planning & Analysis

Source: Deloitte analysis Source: Deloitte analysis n = 614

Developing insightful management reporting | 15

 Contacts

Rolf Epstein
Partner
Lead Finance Consulting Germany
Tel: +49 (0)69 97137 409
[email protected]

Thomas Klingspor
Partner
Lead Business Finance Germany
Tel: +49 (0)89 29036 7947
[email protected]

Marc Meschede
Senior Manager
Business Finance Germany
Tel: +49 (0)211 8772 3258
[email protected]

16 |
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