Beyond the Tangled Mess: Unlocking Clarity in Segment Reporting with Automation

As a kid, summer vacations were a riot.

All my cousins would land up at home, and the experience we had could be summed up in three words: stories, delicious food, and games galore.

One of the games that I played remains etched in my mind. It was called “Pick the Sticks.”

The game is pretty simple. One gets a bundle of sticks (maybe around 25 or 30 of them) of different colors. You sit on the ground, cup the sticks with both your hands, and let them drop on the ground. And then the fun starts. You are to now carefully pick up each stick, one by one, without moving the other sticks.

It seems simple, but is a solid test of skill and patience, requiring steady hands and keen observation. I have to admit I was not really great at this game.

The typical challenges I faced were:

1.?Unintended Movement: Trying to pick up one stick inevitably disrupted the pile, causing a cascade of movement that sent other sticks scattering and frustrating my carefully laid plans.

2.?Limited Visibility: The tangled mess of sticks made it hard to see which stick I wanted to grab next, especially for sticks buried deep within the pile. There were so many instances when I just poked around and ended up disrupting the entire pile.

3.?Time Pressure: Picking up a single stick required a steady hand, precise movements, and doing this over and over again needed the patience of a saint. All of these ended up being scarce resources, especially when I was under pressure to complete the game.

When I look back now at the travails I faced, it dawned on me that “Segment Reporting,” for the office of the CFO in any organization, is quite like the game of “Pick the Sticks,” and CFOs contend with similar challenges as one does in the game.

1. Defining what constitutes a segment can be subjective and can vary from time to time, depending on company strategy. Inconsistency in how segments are defined across companies or over time makes comparisons difficult. Added to this is the challenge around isolating data for a specific segment because it's often intertwined with diverse accounting systems and solutions.

2. Financial data might be categorized at a high level, making it hard to drill down and understand the performance of specific segments. Accurately calculating profitability and other metrics for each segment also involves complex formulas that are very resource-dependent.

3.?With multiple internal stakeholders wanting quick and incisive insights into numbers, segment reporting often has strict deadlines, but the complexity of gathering and analysing data can make it difficult to meet those deadlines consistently. CFOs are constantly under pressure to deliver reports quickly while maintaining accuracy.

So how do CFOs make their segment reporting process real, relevant, and relatable?

Automation, naturally, is a way out, yielding the following benefits:

1.?Agility in Response to Change: Business needs and market conditions can shift quickly. Automated segment reporting allows CFOs to easily adapt their reports by modifying segmentation criteria or adding new data points in real time. This agility ensures reports stay relevant and reflect the current business landscape.

2.?Enhanced Accuracy: Automation reduces the risk of human error in data entry, overhead cost allocations, calculations, and formatting. This ensures the reports are reliable and reflect the true performance of each segment.

3.?Improved Efficiency: Automated processes eliminate manual tasks like data gathering, manipulation, and report generation, freeing up valuable time for CFOs to focus on strategic analysis and decision-making.

4.?Streamlined Deadlines: Automation speeds up the entire segment reporting process, allowing CFOs to meet deadlines consistently and avoid last-minute scrambling.

5.?Greater Transparency: Automated reports can be configured to provide detailed breakdowns and visualizations of segment data. This transparency allows for deeper insights into segment performance and facilitates better communication with stakeholders.

6.?Consistent Reporting: Automation ensures the consistent application of segment definitions and calculations across reporting periods. This historical consistency makes it easier to track trends and identify areas for improvement.

7.?Reduced Costs: By eliminating manual effort and minimizing errors, automation can significantly reduce the overall cost of segment reporting, allowing CFOs to allocate resources more effectively towards other priorities.

Summary

Challenges around a game of “Pick the Sticks” make for an exciting experience and exhilarating memories, but managing challenges around segment reporting is something CFOs can do without. Segment reporting is no simple game. It is like a financial x-ray of an organization. It helps break down performance by individual business units, revealing strengths, weaknesses, and hidden opportunities. This granular view is crucial for CFOs to make informed decisions. But gathering and analysing this data manually is a time-consuming nightmare. Automation is the hero here. It streamlines the process, eliminates errors, and frees up the CFO’s time for strategic analysis, helping them stay ahead of the curve, ensuring segment reporting remains a powerful tool for driving growth.

And yes, before I sign off, I have to admit that I have placed an order online for a pack of the “Pick the Sticks” game. I hope to do better than how I played it as a kid, with no automation to help me.

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I am Karthik Ganeshan, Co-Founder of BeyondSquare Solutions.

Our product FinAlyzer, is amongst the emerging global leaders in the Enterprise Performance Management space.

FinAlyzer comfortably embraces the entire spectrum of Financial Close, Consolidation, Reporting and Analytics and has found favour with more than 2,000 entities in 45 plus countries.?

It is today, the automation platform that CFOs love.

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