Real-Time Reporting

Computerworld - It wasn't too long ago that corporate accountants could take their time assembling, analyzing and packaging financial data for executives. It took a while to massage the numbers, and that wasn't a problem because the competition was moving at the same sluggish pace.

But in the past few years, as e-commerce has sent business time lines into warp speed, annual budget cycles and monthly financial reports have proved to be inadequate tools for managing the rapid pace of change at many companies. To keep up, many have adopted real-time reporting.

Spending on real-time reporting reached $1.05 billion 1998, according to International Data Corp. By 2003, the total is expected to exceed $4.1 billion, says IDC analyst Henry Miller, explaining that this figure includes worldwide spending on end-user query and reporting software.

A major part of the increase is due to the fact that e-commerce makes it possible to gather more data significantly faster than before.

At the same time, production cycles are shorter and the pace of innovation has accelerated. But traditional financial managing and reporting systems weren't created to deal with such a fast pace.

"Budgets tend to be retrospective," says Randall Russell, director of research at the Balanced Scorecard Collaborative Inc. in Lincoln, Mass. "They give you a view of what happened last time but don't tell you what the drivers are for next year."

A senior manager should be focused on strategy rather than the annual budget, Russell added. "An annual budget cycle is woefully inadequate for today's competitive environment," he says. "If you look at the market - look at competitive dynamics - it's a recipe for disaster."

A New Economy Company

In September 1995, The Dow Chemical Co. in Midland, Mich., started planning its real-time reporting system. It went live in January 1997 and received national recognition for its innovative and effective methods.

Today, all the information the company tracks is done by an automated, paperless system, according to Mike Costa, Dow's director of finance.

"We opted to create a global data warehouse and a series of data marts," he explains. "Then we deployed some enterprise software - specifically Business Objects and Power Play. So we went from a batch mode with paper reports to pretty close to real time."

Real-time reporting allowed Dow to retire about 1,300 legacy logistics and manufacturing systems and made it possible to get reports to management instantly, says Costa.

At Dow, 30 data marts - or mini-data-warehouses (Technology QuickStudy, Dec. 12) - cover areas such as maintenance, logistics, inventory management, sales management, production, expense reporting, capital spending, fixed-asset monitoring and personnel data.