Controller. Caught Between Big Data and Advanced Planning

Transcription

1 whitepaper Controllers as Business Partners Caught Between Big Data and Advanced Planning AUTHOR Prof. Dr. Uwe M. Seidel OTH Regensburg In their basic position paper, the International Controller Association ICV and the International Group of Controlling IGC postulate that controlling is a management task. In this document, both organizations explain their views on the most important aspects of controlling. According to Dr. Dr. h.c. Albrecht Deyhle, the founder of Controller Akademie, the core principles of controlling in companies, NPOs and public institutions are as follows Controlling must be carried out in a target-oriented way. It is a combination of analytical and soft factors. Managers and controllers should carry out controlling tasks as a team. Based on their role as Masters of Numbers, controllers should strive to develop into Navigators and, as a final step, into Business Partners, who pursue complex and linked management tasks together with the management to promote a more result-oriented management approach. This aspect is also highlighted by the mission statement of IGC. To be able to optimally fulfill their role as operational advisors, controllers have to reorganize their work schedule. The effort needed for the mere collection and technical processing of information should be reduced and instead, they should spend more time with the content-related preparation and professional evaluation of data gained from Business Intelligence systems. This is illustrated by the chart below, which was developed by Deyhle and is still valid today. 1 Operational advisor for the manager % % Manager Result-oriented management Controller Provider of methods and sytem services % % Ultimate responsibility, motivation Promoting complex and linked management tasks Responsibility for data and methods, third look Information provider for accounting % Up to now % Target Fig. 1.: Interrelation between managers and controllers (source: Schäffer/Weber, 2015) Fig. 2.: Distribution of working time for controllers (source: Weißenberger et al., Controller als Business Partner/, ZfCM, issue 5/2012, p. 331) 1/5

2 In practice, this is easier said than done. In many cases, controlling tools and structures lack a future-oriented approach. Due to increased uncertainty and high volatility, it is necessary to adapt the used tools to focus even more on the requirements of volatile times: early warning indicators, forecast calculations, rolling forecasts, risk management, scenario planning, stochastic analyses keep the structures as lean as possible: reduced degree of detail in planning and budgeting, close connection between key performance indicators and company strategy In addition to backward-looking controlling tools, handling large amounts of data without the necessary and means is another challenge for controllers. To systematically raise awareness for the challenges of big data in companies, the ICV developed a dream car report that highlights the effects big data has on controlling and on the role of the controller. Big data is generated along the entire value chain. Therefore, the controller s position supplying the management with decisive information makes it necessary for him to think outside the box and look beyond the horizon of accounting. increase the flexibility of the underlying business models: more flexible structure costs, continuous cost management (not only in emergency situations) Development Production Logistics Sales Aftersales Digital description of new products and product innovations Integrating the results of big data analyses into product development Applying sensor technologies and machine-tomachine solutions in production Intelligent production systems and decentralized management through digital networking Demand-oriented logistics management through digital networking Fast and felxible reaction to changes in production orders Analysis of usage behavior Individual prices and rates set at the point of sale Analysis of usage behavior Individual and proactive aftersales management Fig. 3.: Big data generation across the value chain (source: ICV, Big Data Potenzial für Controller/ Big Data Potential for Controllers, 2014, p. 11) 2/5

3 When carrying out their core task of supplying decision makers with information, controllers should use analytical data analysis techniques. Usually, companies can assess quite well in which development stage they currently are regarding the use of big data to support decision making: To make sure the issue of big data gets the necessary attention, the ICV dream car report contains numerous action fields including checklists for the use of big data for controllers based on the controlling process model of the IGC (see examples below). Development Description Content Controlling task Analysis questions Big data support Stage 1 Aspirational Confirming decisions that have already been made via analytical methods Documenting previous actions (e.g. post calculation) Analyzing why decisions were wrong Stage 2 Experienced Exploiting the potentials of big data Evaluating different alternatives to solve a problem e.g.: in-house production or external procurement of parts Stage 3 Transformed Identifying cause-effect correlations Generating alternative decisions e.g.: What are the critical success drivers of my products? Technical preperation Do we already have on Business Intelligence and big data? Are we consistently and sytematically promoting our own continous further Development? Know-how on applications, analysis methods, mobile solutions, databases & technologies, purchasing cloud-based solutions Opening up for a 360 view of all relevant relationship levels (stakeholders) in the company Acquiring knowledge on suitable evaluation and measuring criteria as well as adequate measuring methods Fig. 4.: Big data in the main controlling process Operational consulting and management (source: ICV, Big Data Potenzial für Controller/ Big Data Potential for Controllers, 2014, p. 27) Fig. 6.: Development stages for the use of big data (source: ICV, Big Data Potenzial für Controller/ Big Data Potential for Controllers, 2014, p. 20) 3/5

4 Controlling task Analysis questions Big data support Carrying out strategic analyses, e.g. for Markets Products Portfolio Competition Innovation Technology Core competences Resources Can the assumptions from strategic planning be confirmed? Is there a reason for assumptions to be changed immediately? Are the signals for change increasing? Making the dyamics and complexity of demand and procurement markets more transparent, e.g. through Long-term forecasts Segmentation and classification of demand degments Sales forecasting Social media analyses Automatic monitoring of predefined topics Recognizing customer requirements, sentiments and trends Price comparisons Recommendations Experiences, criticism Online sales Fig. 5.: Big data in the main controlling process Strategic planning (source: ICV, Big Data Potenzial für Controller/ Big Data Potential for Controllers, 2014, p. 25) The controller s role in the new environment of big data and business intelligence (BI) is strongly influenced by his own self-conception, i.e. how he wants to (and can) position himself: As a Master of Numbers, he can either develop into a conceptually oriented business analyst or into a more technically oriented implementer ( data scientist ). Both roles are based on the assumption that it is necessary for the controller to develop beyond the finance division and extend his tasks to other departments of the company. In this case, there is a risk of falling into a competitive relationship with the members of the IT department, who also see themselves supporting the management in terms of big data In addition to working with business intelligence tools, which in times of big data have become integral for both roles, the requirements for controllers are increasing with their new role as Business Partners. According to ICV and IGC, there are six core competences that require controllers to have a wide range of qualifications. As most of those competences were not as important in the past, there is a risk of them being perceived as excessive demands, which might lead to rejection. The Navigator, who is on his way to being a Business Partner, uses big data for his own purposes, e.g. to improve business planning. However, he cannot restrict his focus to the finance division either and has to look for further fields of action in the company, for example in the personnel or logistics department. 4/5

5 Good-natured urging and mediator position Providing services together with others, e.g. accountants Resolution ( backbone ) Tool Analysis skills ( logic ) Manager gut instinct BUSINESS PARTNER Good judge of character ( psycho logics ) Communication skills Business Analytical skills alone are not enough Fig. 7.: Controllers core competences (source: ICV and IGC, Grundsatzposition ( Position of Principle ), 2012, p.7) Getting the message across In the end, controllers of the future will only be able to successfully position themselves within their company if their tools and systems are adapted to the changed requirements in terms of flexibility, speed and reliability. Moreover, they have to be willing to change their role in order to become real business partners for the management. In terms of social competence, cooperation instead of competition will be the key to success. Sources: ICV, Big Data Potenzial für Controller, 2014 ICV und IGC, Grundsatzposition, 2012 Weißenberger et al., Controller als Business Partner, ZfCM, Heft 5/2012 To make controlling more future-proof in times of big data, there are a few essential requirements: Developing a roadmap Controlling Fit for Big Data Predictive (forecasts) instead of retrospective (reporting) approach Basing forecasts on big data, as this makes them much more valuable and speeds up the decision-making process Implementing powerful (planning) models with differentiated cause-effect correlations Using value driver trees instead of isolated measures for controlling Integrated EBIT and cashflow management Replacing backward-looking reporting methods with forecasts (monthly, rolling) About us prevero, a Unit4 company, is one of the leading providers of planning, analysis and reporting software. The solutions provided by prevero enable companies to sustainably improve their business management and decision processes. info@prevero.com Germany Austria Benelux France Italy Switzerland UK APAC USA 5/5