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Eighty-two percent of large organizations admit to not having complete visibility into profits leading to impaired financial performance

Research released from Oracle, and conducted by Dynamic Markets, reveals senior business and IT managers across Europe, U.S., Middle East and South Africa’s large organizations struggle with a lack of visibility into profits that is impairing financial performance, morale and business success. The research, entitled “Performance Management: An Incomplete Picture,” also highlights the significant issues with the data-gathering processes that is central in creating a dangerous ‘four-month’ data lag. The research, conducted by Dynamic Markets, surveyed 1,499 managers in large organizations in 13 countries across the world.

Research Highlights

  • Profit Myopia: Eighty-two percent of businesses admit to not having complete visibility into profits by line of business. Furthermore, 46 percent believe this creates potentially erroneous business decisions, 40 percent feel this can impair financial performance and 38 percent believe it results in flawed business planning that will hamper business success.
  • Spreadsheet Spaghetti: Managers typically spend over a third (36 percent) of their week number crunching in spreadsheets. In fact, 82 percent of those involved in scenario planning use spreadsheets to manipulate and investigate data during this task. Vintage Data: Handling data this way means it becomes outdated quickly — on average, data used to make decisions is more than four months old, worse still is that 28 percent of managers do not even know the age of the data they use.
  • Outdated Planning: Scenario planning fares little better, with data being typically six months old, with almost a third (30 percent) again not knowing the age of critical data, it is no surprise that 95 percent of respondents involved in this process encounter problems.
  • Poor Agility Creates Consequences: It can take nearly a year-and-a-half to identify and amend a failing business process or initiative and 83 percent of companies admit to suffering consequences because of this. One third (33 percent) see plans become obsolete, 55 percent incur unnecessary costs and 43 percent witness a negative impact on employee morale.
  • Silo-Mentality: Eighty-seven percent of businesses managers criticize their inter-departmental data sharing and communication, with 71 percent describing the links between strategic goals, operational plans and budgets as “fragmented.”

John O’Rourke, Vice President EPM Product Marketing at Oracle, said: “Management is clearly struggling to cope with the vast volumes of data being generated by their businesses, which is manifesting itself in a serious lack of visibility into profitability across the entire company. Without enterprise business planning systems to give organizations an end-to-end planning process that links strategic, financial, and operational planning to profitability and cost management, they are going to continue to struggle with fragmentation and have no option but to continue ‘making decisions in the dark.’”

“According to the research, most businesses appear to have a fragmented approach to performance management often underpinned by spreadsheets. This piecemeal approach to planning rather than opting for a holistic view can lead to dangerous inaccuracies, human error, and serious time lags. To combat this, leading edge companies are implementing common enterprise performance management systems that take the time and complexity out of ensuring all relevant information is delivered in a timely fashion, supporting more agile planning and decision-making,” said O’Rourke.

Professor Andy Neely, Deputy Director, AIM Research, said: “Organizations today face significant challenges in extracting accurate information on profit and performance. As the volume of available data increases, so does the complexity of organization structures. The shift to shared services, accompanied by the tendency to outsource and partner, makes it more difficult than ever before to allocate costs and apportion overheads. As this research shows, the consequence for executives is a partial picture of performance.”

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