Ruchi Karmalkar
By: Ruchi Karmalkar
Published on: August 18, 2016

The role of today’s CFO extends way beyond the mandate of traditional financial management into more strategic areas of business. The new responsibilities make it crucial for CFOs to have meaningful data at their fingertips to support and develop strategic business initiatives.

However, the problem is with getting the right data, in the right format and at the right time. Traditional MIS systems especially those used for revenue and expense reporting, are saddled with inaccuracy, inconsistency, and unmanageable complexity.

The way the data is collected, stored, compiled and presented to CFOs makes it unfit for analysis and decision making.

For department heads and finance teams, data management is an arduous and time-consuming process.
Why is this the case?

1. The data extracted from the traditional MIS systems is aggregate data.

In any organisation, department or product heads are given budgets at the start of every month or quarter and their performance is gauged against this budget. To view their individual performance against budgets, department heads resort to the canned reports from the General Ledger (GL) generated by the finance teams. They view the report data, look for variances, and take corrective measures to eliminate cost overruns and maximise budget efficiency.

Seems pretty straightforward till this point, doesn’t it? Well, it’s not, especially when there are deviations in data.

Aggregate data is not enough to understand the root cause of budget deviations.

The GL reports show aggregate data for spends vs. budget. This data output has none of the rich transactional details that are necessary for investigating the root causes that trigger a budget deviation or an unexpected increase in a particular expense category.
In this case, the departmental managers go back to the finance teams for the underlying details behind the GL data — the individual transactions that caused them to exceed their budget. This triggers a spurt of activity within the finance department causing workload to shoot up immediately during the month or quarter end.
The finance departments run additional reports to find out the required information for managers. The process doesn’t stop there. The departmental heads often have questions on the new reports generated. Once they receive the answers, they have follow-up questions and the cycle continues. It sometimes takes weeks for the issue to get resolved satisfactorily from both ends.

2. The data is stored in multiple systems managed by different teams.

The GL summary report contains transactional data that is extracted from different systems like HRM & Payroll,  Accounts Payable and Inventory Management  – each of them managed by different teams.

People other than finance also gets tasked with requests for data extracts.

This makes the entire process even more complex and time-consuming. No wonder it takes weeks on end to solve one issue.

3. The data does not facilitate easy comparison of different departments or cost centres.

The reports generated by the finance department for comparison are income statements and balance sheets. They show profits,/losses and performance vs. budget for an individual manager, department or product and are definitely useful.

But imagine a Director who has 15 Managers reporting to him – he must view 15 individual reports. And to compare the performance of all managers together, he and his team have to do a fair amount of spreadsheet work.

Teams have to manually copy, paste and transpose rows into columns to compile the data together.

Ideally, the GL should be able to generate these reports without putting the directors through this manual and error-prone process.

So what is the way out for CFOs and finance teams?

Alternative #1:  Replace their legacy GL system

One way is to replace their current GL system with the latest ERP or accounting softwares. However, this might involve substantial cost and resource commitment.

Alternative #2:  Adopt a self-service, expense management system

A smarter way out is to adopt self-service, expense management systems that give CFOs the analytics they need while leaving their existing GL in place.

In this regard, our intelligent expense management solution ‘Happay‘ is the perfect choice for you.

Happay‘s new age expense management gives you access to the right data, in the format you prefer with just a tap of a button.

  1. No need to extract data from multiple systems: Happay brings all your expenses and payables on one platform and give you access to it from one place.
  2. No need to depend on different people to get data: Everyone from the management team has centralised access to data via their online dashboards.
  3. Generate reports in the format your need: Happay’s rich data filters enable management to analyse data across categories, managers, products, departments, cost centres, etc. without any manual work. You can generate comparison reports with a click of a button.
  4. Identify and control budget deviations without follow-ups: Happay automatically identifies budget deviations and helps management and finance teams to drill down to its root cause with ease. The second an expense overshoots the budget, managers are sent a notification of the underlying transaction that triggered it. Happay also helps prevent budget deviations through hard and soft spend limits.

If your organisation is facing the above challenges and needs a better MIS in place for business expenses, we could love to help you out.

Sign up for a one on one conversation and a demo with our data experts here.

Ruchi Karmalkar

One response to “3 Challenges Of Legacy MIS And Ways To Overcome Them”

  1. Very Informative. Good to know more about MIS.

Leave a Reply

Your email address will not be published. Required fields are marked *