Research shows innovation in financial reporting is a top CFO concern. Now it's just a matter of thinking through how content consumption patterns are changing.
Ten years ago, if you asked the average person to draw a phone, they would probably have sketched something with a base, a handset and a cord running towards a wall. Today, they'd probably draw an iPhone.
What about "annual report?" Probably many of us would draw a thick binder or something that looked even more refined, like a coffee table book. Unfortunately, most people can't imagine what the iPhone equivalent of an annual report looks like yet.
An executive from Deloitte wrote a piece for FEI Day that did a fantastic job of pointing out some of the ways annual reports could be reconceived by finance departments. Some of the ideas included basic things like hyperlinks, but also tags to let other members of the organizations toggle through specific topics and access to extra files that add context to the report. It comes to a word that sounds ugly but is essential: Usability:
Many users don't read a financial report like a book, from cover to cover in linear fashion; instead, they bounce from topic to topic looking for related information. Moreover, users don't just read information - they use information - so they want easy access to advanced features such as search and extraction. They also want the ability to lay pieces of different reports side by side to make comparisons and identify trends. Therefore, users increasingly favor electronic documents over paper reports.
It's not as though finance departments don't realize the need to innovate in how they manage financial reporting and producing annual reports. In fact, consulting firm Kaufman Hall just published the results of its 2016 Performance Management Survey, which touched on this area. Among the stats you need to know:
- More than 70% of over 380 finance executives polled say supporting decision-making is their number-one goal for 2017
- Over 90% say they need to do more with the financial and operations data at hand to help top management make critical decisions.
- Less than 23% of respondents are very confident in their company's ability to maneuver past unforeseen business obstacles, due in part to outdated financial planning and analysis (FP&A) tools and processes.
- Thirty-eight percent of respondents say their company now uses rolling forecasts, up from 33%
The commitment to giving annual reports an extreme makeover is there. The ideas on how to reimagine it are starting to percolate. The tools to make it happen are already available. Now we just need a few pioneering finance departments to show the world the newer, better, big picture.
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