How To Transform Traditional Reports into Performance Playbooks

At their recent Global BI Summit, market research firm Gartner presented their vision of “Analytics and the Office of Finance” and introduced the concept of Performance Reporting. In this article I will zoom into the three key areas of Performance Reporting, but lets first have a look what performance reporting is and why companies need it.

Performance reporting: Takes management reporting to a new level of inclusion and ease of use with additional collaboration capabilities that transform traditional management accounting reports into new performance playbooks that provide a more inclusive approach to results explanation. 

Magic Quadrant for Strategic Corporate Performance Management Solutions, by Gartner, May 2016

Performance reporting is a key component of Strategic Corporate Performance Management (CPM). It offers a collaborative environment where Finance works together with functional business groups to understand and present the story behind the results. It contains meaningful visualizations and analytic drill-down. In order to tell the story of performance, reports include operational detail and narratives that explain what happened.

Let's take a deeper look into the three key areas of Performance Reporting using some practical examples of CXO-Cockpit customers.

Telling the Story of Performance

“Storytelling” is a lot more than distributing your monthly financial statements with some footnotes. It is supposed to be interactive and should contain input from different operational departments. A story of performance compares business performance with the long or short term strategy using visualizations that emphasize outliers.

Practically you can approach storytelling with the following three steps:

1. Choose the right reports to tell the story, enrich them with operational detail and meaningful narratives containing background information and explanations
2. Put the reports in the right order so a logical story of performance is created
3. Share the story with the company stakeholders in a simple and intuitive way

A practical example of storytelling is the Q3 Cash Flow Improvement Plan as shown in the image below. This Storyboard first zooms into sales details for the two operating regions, then presents a dashboard that analyzes the Days Sales Outstanding (DSO) and Days Payable Outstanding (DPO) per region to understand cash conversion. Finally, it concludes with a report showing a full cash flow overview together with an improvement plan in the commentary field.

Instead of just being aware of the fact that the company is facing a problematic cash flow position, stakeholders now understand the background and can read the plan for improvement.

The stakeholder could receive the story in an app on his tablet and reads through the story as if it was a Wall Street Journal article, while still having all analytic capabilities like drill-down and slice-and-dice.

Collaborative Reporting

Reporting is a process that should involve more than just the Finance department. Performance Reporting gives insight to enterprise performance by including details from operations and narratives from the business.

The example below shows the current month corporate P&L compared to last year. To give more insight into sales performance it includes a detailed product breakdown from the company’s CRM system. Users can drill down to the individual products per operating entity and the system shows a small reconciliation difference to keep the report accurate from an accounting point of view.

In the commentary field the individual Finance and product managers have entered their explanations. CXO-Cockpit enables roll-up of the regional business explanations to report a consolidated story of performance. 

Using Relevant Visualizations

The use of charts can be a great way to tell an effective story of performance, if done properly. With CXO-Cockpit we strive to use the most relevant visualizations that promote understanding of results by following these rules:

Focus on variances: Compare the actual results to strategic targets, and use consistent colors for positive and negative variances.

Emphasize outliers: The benefit of showing hundreds of products that have achieved expected results is minimal, but highlighting exceptions and outliers will draw attention to problems and opportunities.

Visualize what contributes to the story: The example chart series below shows sales variances by region, as part of a story about how the unexpected Brexit decision negatively impacted Europe’s total results.

The first chart shows how the Europe region under-performed as a whole. 

Meanwhile the second chart removes the effect of foreign exchange impact to show that in fact Europe has out-performed. 

In the third chart we see the results by country, and it becomes clear that the drop in the GB Pound vs. the US Dollar was the major reason for the region’s results to turn negative. 

Performance Reporting combines collaboration, meaningful drillable visualizations, and narration to tell a clear story about the reasons behind business performance. CXO-Cockpit is a tool that provides these features, enabling you to achieve the next level of performance reporting and drive business transformation.