Do you need to be better at business driver analytics?

Business driver analytics matter more than ever, with directors and shareholders demanding up-to-date, relevant information on a regular basis. This needs to be easy to digest, well presented, and in some cases, shareholders need to be able to manipulate it in limited ways through their own personal dashboards.

Business drivers are a broad set of metrics; anything that affects the financial and operational results of the company. These could include:

• number of stores or locations,
• number of products sold (volume),
• prices of products/services sold,
• number of salespeople,
• effectiveness of salespeople,
• production rate for manufacturing,
• energy and electricity costs,
• salaries and wages per employee,
• foreign exchange rates, and
• commodity prices

We asked members how they’re developing their business driver analytics to better reflect the needs of their businesses in 2021.

We’re pushing our current tools to do more

Stephanie Mehra FMAAT, finance director, Cheevers Poole

When it comes to business driver analytics, what you get out is only as good as what you put in. During to the pandemic, we realised that we need to do more with our data. We have Sage, and Sage Construct, which will do so much. A lot of these systems are playing catch up, and over the last 12 months, I think those technology suppliers realise that they need to do more when it comes to presenting information, rather than having a standard system where any analysis of the data would require some work in Excel. We knew we needed something new; something that connects all departments in the business. 

Our shareholders expect dashboards and three-to-four pages of data analysis that they can look at very quickly, and if they need more information or analysis, you catch up with them in a meeting. We wanted to create a system where we could create dashboards easily, and that shareholders could log in any time to view their dashboards and dig into the data and our findings.

We approached it a little bit backwards in the sense that we looked for systems that would be a good fit for the main contracting part of the business. We then looked to see if the system had a good financial package. Software companies often don’t think about the overall culture of the business when they pitch systems, but that’s very important. It helps you to understand what we want to collect and analyse. We decided to stick with Procore, a specialist construction industry software, and look at what data and dashboards we can get out of it.

It’s definitely becoming cheaper to get customised systems, and our staff are more technologically savvy than we thought they were. We’re working with our providers – Sage, Sage Construct and Procore – to customise our standard systems in a way that’s not too expensive.

We’re concentrating on deepening our data lines

Ali Jaw FMAAT, finance and operations manager, M B Technical Services

We need to prove our value as professionals to our organisations by evolving our reporting away from historical data to real-time and predictive analytics, allowing us to make robust decisions that matter, in the moment.

My organisation is a fire and security specialist operating in the City of London. The metrics I commonly look at are the turnover of each site, the number of contracts we have, etcetera. This is mostly done using advanced Excel formulae, drilling down into detail on the performance of each site. Now I’m focussing on expanding the data that we have, so that we can more accurately measure the profitability of each contract, even for each engineer.

The benefits of this kind of analytical work is that we can identify more clearly the critical business drivers for us. Once you identify it, you can focus on that driver, monitor the results, look at how to improve performance and hopefully present that to management so they can make business decisions to ensure improvements in the future.

For example, say we look in detail at the profitability of each of our contracts, and some aren’t where they should be. We could look at the pricing and make sure we’re costing jobs effectively, or we could look at the time taken on each job and work out whether we need to allocate more resource to ensure they are completed more efficiently. All of these are my focus for improvements this year.

We don’t want to rely too much on tools – it’s the skills that matter

Clare Elliott FMAAT, CFO, ILUX

When it comes to business driver analytics, qualifications, experience and expertise in what you do matter more than the tools you use. The key is to really understand the finances in your organisation. Once you know your business, you absolutely know what the results should be. Then you can explain the intricacies and understand what has happened. We have a piece of bespoke software that does all of our workflows for our technical team. That does generate statistics and reports. So we use that to set targets and monitor our metrics.

Doing your analysis two different ways, using different tools is always really beneficial, because then you absolutely know that what you’re seeing is accurate. It’s very easy for business owners to fall into the trap of thinking that a really clever piece of software, like Xero, will do everything for them. And Xero is amazing, but it’s very easy to look at it in isolation. If you haven’t got all of that skill in the background work – the journal adjustment, deferred income, accruals, prepayments – without all of that background expertise, you won’t get real results from that software.

If you’re waiting for your accountant to do your year-end accounts, you’re months out of where you need to be thinking in terms of planning for your future and your business growth. I think that’s probably why we can’t quite give up spreadsheets. We know what we know, so we should use our expertise, instead of just simply relying on a piece of software.

Mark Rowland is a journalist and former editor of Accounting Technician and 20 magazine.