Robert Kugel's Analyst Perspectives

Workiva Chains Liberates FP&A

Posted by Robert Kugel on Jul 4, 2020 7:30:00 AM

Workiva recently introduced Chains, a visual workflow tool for the Workiva platform. Individuals use Chains to create and manage linear sequences of tasks that they otherwise would have to execute manually, for example, automatically updating a report with the most current dataset. Chains is like old-style Excel macros in its simplicity; users configure sequences with a drag-and-drop visual interface. There’s nothing to code and it’s easy to follow the sequence and the logic that drives the process. Organizations can take a modular approach to building chains, enabling users to string together a sequence of them. Such an approach makes it possible to standardize process execution and maintaining shorter chains is usually simpler than longer ones.

I recently commented on the importance of finance departments upping their game when it comes to reporting, using up-to-date tools to improve visibility, transparency and perspective. Workiva’s platform, especially the addition of Chains, supports this kind of more effective reporting for internal and external purposes. Improved reporting processes can significantly enhance insights into an organization’s performance and condition. Although our recent Office of Finance benchmark research finds improvement in the accessibility of performance analytics, it’s still the case that only 59% of senior finance executives and 46% of senior corporate executives have full access to the analytics they need.Ventana_Research_Benchmark_Research_Office_of_Finance_19_28_Access_to_Analytics_Has_Improved_190906

Chains increases the usefulness of the Workiva platform and the power of Wdata. Ventana Research awarded our Digital Innovation Award in 2018 to Wdata, which facilitates the availability of a broad set of data from disparate data sources for more comprehensive analysis and reporting. Using Wdata, the financial planning and analysis group and business analysts can readily utilize a consistent and timely set of relevant data from multiple sources. Rather than being confined to financial information, analysts can work with a broad spectrum of data — especially operating and external data — for analysis and reporting.

The software industry has spent decades making it increasingly easier to report the “numbers” — in this case, accounting and financial data. While financial data is of critical importance, it’s insufficient to fully inform executives and managers about their and their organization’s performance. Because Wdata can incorporate data from multiple internal systems — including data from CRM, human resources, scheduling and manufacturing systems as well as third-party data such as industry statistics — it can substantially enrich the scope and richness of analyses. Combining all this data with financial information provides a deeper and more nuanced understanding of the efficiency of a process or business unit.

Combining operational and financial data enables more useful performance measures with which to evaluate efficiency, such as input-output measures, sales-per-employee in a retail outlet or units processed per employee hour. Capturing external data is useful for understanding and forecasting the impact of economic or industry-specific measures on company or product performance. Moreover, it’s increasingly possible to monitor industry or product pricing on a regular basis. This information can be used by the pricing or sales operations group in a company and by financial planning and analysis (FP&A) for performance reviews or planning and budgeting.

Having all the data available is one issue. Streamlining the process of communicating information about that data is another. By reducing workloads, Chains can facilitate the creation of a broader range of ad-hoc or periodic composite reports that combine data, narratives, charts and other graphic elements for external and internal reporting purposes. Through time-saving automation, Chains expands the ability of FP&A and business analyst groups to expand the scope of their analysis and reporting.

Having the ability to bring together multiple data sources and report it efficiently is important. FP&A organizations and business analysts need to focus on expanding the palette of information available to executives and managers. Our research shows that few companies perform analyses that meaningfully contribute to their effectiveness. Our Office of Finance research finds that while a large majority (71%) of departments perform financial analyses, only 34% assess customer profitability and 30% measure product profitability. Wdata creates the central source of accurate, timely and consistent data that finance organizations need for analysis and reporting. Because everyone accesses the same set of authoritative information, “the numbers” are always consistent. Chains takes the Workiva platform to the next step by automating rote processes for collecting and updating data.Ventana_Research_Benchmark_Research_Office_of_Finance_19_36_Limited_Adoption_of_Advanced_Analytics_191007

Organizations can execute Chains on a schedule, such as running a task that takes data from spreadsheets and data tables on the Workiva platform, updates reports that use that data and then alerts recipients of a report’s availability or circulates the report.

A Chain also can be triggered by an event, such as when a value or set of values exceed thresholds. For instance, if a balance sheet ratio is above or below an acceptable band, the system can automatically prepare a report that drills down into the data and presents a set of tables and charts that highlight the underlying data. While most ERP and financial management systems offer dashboards and other reporting devices, these are often limited in the scope of the data they can present, especially if the data needed to drill into underlying causes is collected in other systems. A Chain also can be triggered by the completion of another chain or when some logical condition exists in executing a chain. This capability is handy when a standard process is performed under some but not all circumstances. For example, if the answer to “Does the wording of the footnote(s) containing this data need to be examined or revised?” is yes, the system kicks off a chain that handles the editing, reviewing and approval of a document such as a regulatory filing.

I recommend that FP&A and business analysts investigate the use of Workiva’s platform for business reporting and for virtualizing the close. Wdata in particular, enables organizations to work from a much broader set of reliably accurate, consistent and timely data to make reporting a more effective business communications tool.

Rob Kugel

Topics: Office of Finance, Financial Performance Management, ERP and Continuous Accounting, Reporting, XBRL, iXBRL, document management

Robert Kugel

Written by Robert Kugel

Rob heads up the CFO and business research focusing on the intersection of information technology with the finance organization and business. The financial performance management (FPM) research agenda includes the application of IT to financial process optimization and collaborative systems; control systems and analytics; and advanced budgeting and planning. Prior to joining Ventana Research he was an equity research analyst at several firms including First Albany Corporation, Morgan Stanley, and Drexel Burnham, and a consultant with McKinsey and Company. Rob was an Institutional Investor All-American Team member and on the Wall Street Journal All-Star list. Rob has experience in aerospace and defense, banking, manufacturing and retail and consumer services. Rob earned his BA in Economics/Finance at Hampshire College, an MBA in Finance/Accounting at Columbia University, and is a CFA charter holder.