Upfront: "Best Practices in Planning and Management Reporting"

When the concepts of benchmarking and best practices first hit the corporate radar, their core goal was to reduce the cost of transactional processes within the finance function. Businesses quickly realized that they could save substantial amounts of money by streamlining accounts payable and receivable, billing, and payroll processes.

Many organizations achieved transactional and operational productivity improvements of 30 percent to 50 percent just by eliminating duplicate controls, consolidating processing activities, automating manual tasks, and standardizing their policies and procedures. Companies were able to do more with less, and finance employees moved on to more strategic activities. Plus, implementing best practices in transactional areas improved both the accessibility and the quality of data.

Today many organizations have wrung as much waste as possible out of their transactional systems, and they are now taking benchmarking and best practices up the finance food chain. These businesses are applying the same techniques that transformed operations to their budgeting, strategic planning, management reporting, and forecasting functions.

David A.J. Axson, corporate planning executive for Bank of America, along with The Hackett Group -- of which Axson was a co-founder -- explore the possibilities in the new book "Best Practices in Planning and Management Reporting: From Data to Decisions" (John Wiley & Sons, 2003). Axson writes, "It is not unreasonable to project that as full adoption of established and emerging best practices increases, the overall average cost of finance could fall a further 50 percent by 2010."

Early on, the book takes readers through the evolution of benchmarking research and offers them a basic framework for putting best practices into action.

Axson contends that a best practice must meet six criteria: It must effect a measurable change in performance. It needs to be applicable to a broad spectrum of organizations. It should be proven in practice. It needs to exploit proven technologies. It must ensure an acceptable level of control and risk management. And it has to match the skills and capabilities of the companies in which it is used.

The second part of the book is where the rubber meets the road for finance functions. Axson outlines what he sees as the principal best practices for each step of the planning and management reporting process. In each area, he discusses the advantages of appropriate technologies and presents the case for elevating his chosen activities to best-practice level.

"The combined effects of changing market boundaries, redefined supply chains, increased M&A activity, better-informed customers, more and more data, changing regulations, and shrinking cycle times are placing tremendous pressure on planners to accommodate complexity and change into what have been largely static planning processes," he writes.

Axson concludes the book by analyzing the critical factors for successfully implementing best practices -- simply put, for moving from data to decisions -- and offers some predictions about the future of planning and management reporting. Among his expectations:

• Global accounting and reporting standards will become a reality.
• Companies' focus will shift from buying technology to using it.
• The annual budget will die.
• Finance executives will need to gain new skills -- or new jobs.

Clearly, Axson's overarching message is that the road to best practices is never-ending (good news for consultants). Companies that pursue best practices will find themselves on a continuous journey. And, he believes, it's the journey that matters.