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Last updateMon, 02 Mar 2015 10am

 

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Why should you track benefits?

"FDs could easily end up making decisions based on inaccurate financial data with no clear audit trail."

"FDs could easily end up making decisions based on inaccurate financial data with no clear audit trail."

 

Experience suggests that two of the biggest changes any business will ever go through are a major cost-cutting programme or a merger/acquisition – with the former particularly relevant in the current climate. 

In both cases, companies have to take a long, hard look at everything from staffing levels to operational expenditure in order to derive every last penny of value.

Most companies are pretty good at identifying what has to be done to cut costs and where the benefits need to come from; what they often lack is a robust process which will accurately and consistently track the savings generated over the entire period of the programme. 

Inconsistent financial data


Furthermore, these programmes often involve a range of stakeholders.  They typically have different systems and use their own ways of reporting data and their own approach – which hardly lends itself to producing reliable and consistent data for reporting purposes.

It comes as little surprise then that FDs can end up making decisions based on underlying numbers with, at best, varying degrees of accuracy.  If financial data is not captured or reported on in a consistent manner, whether as part of the cost-cutting initiative or across the newly expanded enterprise, decision makers will struggle to know whether targets are being achieved or what is the best course of action.

Currently, in many businesses, benefits tracking data is reported and analysed in a series of standalone spreadsheets with no proper workflow and no real consistency.  The costs being saved in Project One are reported in a different format to those in Project Two, while Project Three has eight separate contributors, all of whom keep their own copy of the spreadsheet that they update without any input from the rest of the team.

Potentially disastrous


It’s not just time-consuming and painful; it can be a disaster waiting to happen.  FDs could easily end up making decisions based on inaccurate financial data with no clear audit trail.

And these cost-cutting or restructuring programmes often run for years, with participants coming and going, so there’s no consistency.  Not to mention that constantly having to change results opens a can of worms with regard to corporate governance and compliance. 

Avoid ‘spreadsheet slavery’


Fortunately, there are solutions.  Today’s technology solves these problems by removing the ‘spreadsheet slavery’ that has characterised many change programmes up until now.  Instead, FDs can employ a single benefits-tracking tool, such as qantif, to establish a consistent process across multiple cost-cutting programmes. 

This allows teams to spend more time delivering benefits and less time on data validation, chasing updates and reworking reports. In fact, research has found that effective benefits-tracking technology can cut 20-40% off the time used to manage the process.

Why bother?


Why does this matter?  Research has revealed that roughly half of all mergers and acquisitions fail to deliver the business value they set out to achieve.  Similarly, a disturbingly high proportion of internal cost-cutting initiatives do not hit the targets that were put in place at the outset.  In a thriving market this is bad enough; with the economy in recession it could be critical to the performance of the overall business.

Leveraging collaborative technology to support the benefits tracking process will not on its own guarantee the success of any of these programmes but it does play an essential part.  FDs can establish a robust and lasting benefits tracking process, which will instil a greater degree of confidence in the data being reported whilst minimising the number of FTEs required to support the process.  

So if a company is looking to save £100m, every last penny can be tracked: it won’t get to £75m and then hit a brick wall because their understanding of the remaining projects is either inconsistent or the tracking of those projects has ‘got lost’ or been overshadowed by other business initiatives.

 

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