Finance Transformation: Know Your Information Needs

May 12, 2014 Casey Wiedeman

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Previously, we discussed how “Finance Transformation Begins with a Vision”, establishing governance to “Stay on Course and Enable Quick Decisions”, and how to “Transform Your Processes”.

The next step is to create a thorough definition of financial, operational, and analytical reporting requirements that will drive the layout of the general ledger, budget, and overall financial system data model.  The definition of the general ledger is the foundation for all other financial functions within a financial management system.  If the general ledger is not defined appropriately, then the transaction processing will not properly classify the data for effective financial, operational, and analytical reporting.  Financial information must be properly defined and structured to enable Finance to be a strategic business partner and provide meaningful and actionable financial information.

Define Key Performance Measures

Before defining reporting requirements, it is important to first define the performance measures that drive the business and enable the organization to control its competitiveness and profitability.  These measures are the foundation and anchors for the future-state reporting & analytics.  It is important to gain alignment throughout the organization to ensure that these measures have a clear and consistent definition.  Start with the key performance measurements already in use, and then identify problems and opportunities through executive and business leader interviews.  The discovery results should provide the information necessary to produce a list of key measurements that will need to be reviewed and refined with key stakeholders.

Understand The Reporting and Planning Requirements

When capturing reporting requirements, a focus needs to be placed on the reports that will provide insight to the business and how the business needs to plan and forecast.  Financial statements and accounting operational reports are also important, but they won’t provide a lot insight to the business. If Finance organizations want to be a strategic business partner, then they must understand what financial information drives decisions for each business area and then ensure that information is captured in the financial system and built into the planning and forecasting process.  This can be accomplished by gathering and analyzing existing reports and discussing what information and planning gaps exist with each business area.

Define The Financial Data Model Framework

Once the performance measures and reporting requirements are clear, a framework for the financial data model can be created.  The leading cloud-based financial systems take a different approach to structuring financial data by utilizing a multi-dimensional structure instead of an accounting code block, which enables more effective and efficient reporting and analytics.  With traditional on-premise financial systems, this multi-dimensional structure would typically need to be created in a data warehouse and the information extracted from the financial system.

Utilizing a multi-dimensional approach allows the chart of accounts to be collapsed because the additional dimensions can further describe the accounting transaction instead of creating more accounts.  Users will then see logical definitions of the data instead of traditional accounting codes.  This results in less accounts to maintain and reconcile, simpler and more intuitive transaction entry and budgeting, and dashboards and reports that make it easier for the business users to interpret and interact with.

Establish Data Governance

The consistency and integrity of the key performance measures, reports, and financial data model must be maintained.  A lack of data governance will result in multiple versions of the truth and financial data elements (e.g. accounts) that are used inconsistently across the organization.  A process must be established to control the setup and maintenance of the financial data elements.  This ensures that each account, cost center, product, etc. are setup with a holistic approach and that downstream impacts are considered.  It is also important to set a process to govern how financial information is published to the organization.  This ensures that the financial information is obtained from the appropriate source and prevents improper interpretation of the financial data and key performance measurements.                                                                                                                                    


A Finance organization cannot transform into a strategic business partner if reliable information is not available to support the business and help drive business decisions. Better tools and processes will reduce the time spent on transaction processing and provide your finance professionals with more time to partner with the business.  Take the time prior to a technology implementation to know the information needs of the business and define the framework for the financial data.  This will ensure that insightful information is available at the time of deployment and will enable your finance professionals to be armed with the information to be more strategic.

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