Why report the business?
20th century management lays reporting structures over the business
Since the business is not organized or managed the actual business cannot be reported. Management reporting is against the myriad of organization, management, administrative, and other structures laid over the business. Each structure employs its own terminology and information systems to produce reports on the structure. This produces a myriad of unrelated management reports for plans, business processing, resource planning and utilization, manufacturing, supply chains, customer relationships, accounting, quality control, financial management, human resource management, information technology management and on and on. The reporting possibilities create information complexity with no specific framework to relate all the reporting. Despite all the reports and complexity, there is no direct reporting on the actual business.
We try to bring together information from the diverse structures by adding special 20th century reporting structures, such as:
- Performance management: Control panels, dashboards, scorecards and various other structures to capture and report information
- Strategic enterprise management: Structures to consolidate defined information from specific information systems
- Data reconciliation: Structures to gather and redefine inconsistent data from diverse systems
- Decision support and drill down: Structures to allow management to search and find information in diverse systems
- Categorization: Structures laid over information to reconcile and restructure information and to manage records, documents, reports, content, and other information sub-sets
These various reporting structures and supporting information systems constitute a large overhead and contribute to rather than solving information and business complexity problems. Management information produced is inconsistent, inaccurate, and incomplete in terms of what is actually happening in the business.
Business management reporting must be against the current and planned business
In order to report the business the actual business must be organized, planned, directed, and controlled as explained in previous articles. Actual business reporting is provided by Result-performance Management (R-pM) by reporting the three components of the business:
- Results: The economic outputs of value and quality produced across the business
- Capital: The investments in capital as specific solutions that must be acquired and developed to provide the capability to produce future results and that must be utilized in business performance to produce actual results
- Performance: The deployment and utilization of a specific capital solution to incur costs and provide effectiveness in producing a specific result in a performance domain
The business can be reported only by organizing the actual business as current results produced, invested capital available to the business, and performance in the utilization of the capital to produce results. Result responsibility is reported against the business organization solution and human personnel solution deployed to manage and produce the result. Capital responsibility lies with the capital result unit manager responsible for developing and supporting the solution. Performance responsibility lies with the performance manager assigned to deploy and ensure cost-effective utilization of the solution.
Business operation reports capital deployed to a performance domain with rules and exceptions for cost and effectiveness measurement in producing a specific result, the economic output results of total cost and value-added produced by business performance, and the proper utilization of capital in business performance. Business development reports capital developed as specific solutions to be utilized by the business to produce results to determine solution worth and development costs to be amortized, and to measure and achieve the return on the investment in the planned added result value-added.
A strategic business structure must be developed to plan and report strategic results, the capital development required to provide the solutions needed, the result goals by period to move from the current business structure to the strategic business structure, and performance expectations for the utilization of variable solutions in performance. Budgets are set up as financial, such as performance costs and value-added, and non-financial, such as volume, in result goals by time period or performance expectations by capital solution. The business is reported against the current business, goals and plans by future period, and updated estimates for the strategic business.
All business information must be managed and related to the business in one Business Information Base
The business consists of a limited number of data entities such as results, invested capital as solutions, performance in solutions deployed to produce results, enterprises, time periods, and business descriptors that describe the attributes of business entities. All information capital in the business be it data, knowledge, records, or intelligence must reference one or more business entities to be integrated and controlled in the Business Information Base. This includes all email and other correspondence, Internet content and downloads, files transmitted in or out of the business, and business documentation, related to the historic and planned business, business initiatives, business activity, and business follow-up.
The actual business must be reported for accurate business management information
The actual business produces one set of information on economic output results produced by the business and capital utilized in business performance. All other “business information” is inaccurate and superfluous. The information on the actual business is reported against the current and strategic business and period by period goals and estimates. One set of consistent, accurate, and complete management information is reported.
Management receives actual management information solutions on result value, quality, volumes, risk, value-added, goals, and symptoms; performance costs, effectiveness, capacity, uncertainty, utilization, expectations, and problems. Management can view information by solutions responsible for specific results such as business result organization unit, and human personnel deployed as the responsible manager. Management can view information by result and performance solution attributes reported as business descriptors such as result group, capital category and class, capital solution type, market, product group, customer segment, and many other breakouts. Information is reported on capital worth, investment planning, development projects, and investment returns. Information is reported on enterprises related to the business, such as projects, corporate divisions, suppliers, customers, business partners. Information is reported against the strategic business and plans to reach the strategic business.
Additional management information is reported as performance solutions to produce management results
Management must also produce results to understand the business environment, future opportunities and threats, and make strategic and current business decisions. Management results are supported by information capital solutions in business data, facility records, human knowledge, and management intelligence. Business data and facility records solutions report status and support current business decisions. Management knowledge solutions needed is created for products, and other business results and solutions utilized in the business. Knowledge solutions may be provided by various management subjects or topics of interest. Management intelligence analyzes business data and facility records to summarize, interpret, and forecast to produce management information solutions. Management intelligence conducts research to provide information solutions on the business, industry, customers, competitors, new developments, and other information to support strategic decisions.
Information reported against overlaid structures is discontinued
Facility records should be used to account for the actual business. Additional information may be maintained in account structures for required financial statements to provide compliance reporting. All other information related to overlaid structures is replaced by direct business information and can be seen to be inaccurate and is no longer reported. Information reported for performance management, etc is replaced by the information on the actual business. The various information systems and hardware used are discontinued. Information complexity problems are removed. Management is supported by Result-performance Management with one set of consistent, complete, and accurate information solutions to manage the actual business.
This is the article twelve under the forum “Why Manage your Business”
The Business Change Forum is now running series of articles under the forum “Why Manage your Business?” to explain R-pM fundamentals for actual business organization and 21st Century Management. This is article twelve in the forum. A new article is posted to the forum every Friday. Visit result-performance-management.com to learn about the breakthrough advantages of R-pM and how you can use R-pM to report your business for 21st Century Management.
