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The thief of time: The hidden costs of reporting processes in modern organizations

Worldwide Partner Channel Manager, Performance Management, IBM

Time is money. And today, almost every organization—whether private, public or nonprofit—is unknowingly wasting time at almost unbelievable levels.

Reporting is widely acknowledged as a time-consuming, but necessary, part of the business lifecycle. That said, in my career as a financial professional—working with organizations in all sectors, and for the past 15 years with IBM Financial and Operational Performance Management solutions—I have found a common flaw undermining reporting in almost every organization: the gross underestimation of actual time spent on reporting processes.

What we refer to as “narrative reports” have become routine in many companies. These documents feature not only tables, charts and graphs, but also narrative text. They tend to be filled with long, descriptive paragraphs, including numbers that must link to the values in the tables, charts and graphs as well as to notes with related values. These paragraphs are comprised of eyes-glaze-over sentences such as the following: “Average inventory levels increased by 343,209 units, which is a 6.35% increase over the prior year and 1.23% above the targeted projection (see note #5).” Examples of narrative reports include annual and quarterly financial reports, such as Form 10-K and 10-Q reports for publicly traded companies, Comprehensive Annual Financial Reports (CAFRs) for the public sector and Corporate Sustainability Reporting using Global Reporting Initiative (GRI) standards.

Beyond these examples, companies can have dozens, even hundreds of other external and internal narrative reports spanning areas such as operations, sales, facilities, human resources and R&D. I have seen these narrative reporting processes in place in organizations ranging from relatively small midmarket firms to Fortune 100 companies. While narrative reporting processes may be very different in content and purpose, they all share several common features:

  • Input from multiple sources
  • Numerous levels of approvals and reviews
  • Extensive copying, pasting, rekeying, formatting and manual validation

The combination of these factors results in organizations grossly underestimating amount of time actually spent on reporting.

The devil in the details: How 16 hours of reporting time can balloon to 130 hours

The key to understanding how modern organizations, with their complex planning and time allotment systems, still unknowingly and vastly underestimate actual time spent on reports lies in the details of reporting processes. I have chosen the following real-world example to illustrate this phenomenon—changing names, and a few industry-specific particulars, to protect the firm in question.

In my engagement with the firm, I learned of a particular report that took between 12 and 16 staff hours to prepare. Initially I thought nothing of this, as this estimate seemed reasonable given the complexity and importance of the report. One manager, “Nancy,” was responsible for this report. Nancy, as well as everyone else in her department, would record their task work hours in a time reporting system with project or task codes. That is how the organization arrived at the estimate of 12–16 hours to complete this report.

http://www.ibmbigdatahub.com/sites/default/files/thiefoftime_blog.jpgWhile this seemed transparent and logical, upon interviewing Nancy it became apparent that the organization’s systems were not capturing the full details—and time expended—in drafting reports. For example, we discovered Nancy sent emails to eight different departments requesting data and narrative updates. Each department frequently would respond with a brief question, or a submission requiring a minor edit, and then email a reply. These interactions were usually so short that Nancy never entered them into the 15-minute blocks in the time reporting system. But they were numerous enough that upon analysis, we determined she spent a total of about 30 minutes a day on them. Aggregated over 20 workdays in a month, these little interactions added up. So the 12–16 hours spent per month on this report was now closer to 22–26 hours.

Then we interviewed the people on the other end of this process: the eight departments submitting the data and narrative text to Nancy. We found that each department spent, on average, 10 minutes a day emailing information and questions. So the time spent on this report was now up to 48–52 staff hours.

Of course, these eight departments also had to prepare their submissions for Nancy. This involved downloading or exporting data from a variety of commercial or in-house systems into Excel spreadsheets. This data had to be edited and formatted. Then the values that must be referenced in Narrative were typed into Word documents. We learned that, on average, each department spent over 10 hours a month preparing its parts of the report. So the report, which was originally estimated by the organization to have required 12–16 staff hours, was actually consuming around 130 staff hours a month.

Upon sharing this astonishing finding with senior management, we uncovered an even more startling fact: this company had over 150 similar reports and reporting processes in place across the organization.

This real-world example illustrates the hidden costs of reporting processes in a modern organization. When you consider that the staff members doing these reports were highly educated and well-paid professionals—whose work time was being spent copying, pasting, formatting and typing reports rather than focusing on their business objective—it's clear how reporting in many organizations has become the thief of time.

Learn more about how advanced reporting, budgeting and planning technologies can drive more efficient, cost-effective reporting in your organization.