Ufuk Süleyman Oflaz

11Management information architecture

Management Reporting & KPI System

A reporting system that brings financial and operational indicators together in a simple, comparable structure management can act on.

Built by:

The problem

Management reports often contain too much information, or are prepared differently every month. Management looks at the numbers but cannot compare periods or units, and an important signal gets lost among unimportant detail.

Why it matters

Reports prepared differently each month make comparison impossible. An important signal gets lost among unimportant detail.

Approach

  1. Start from the decisions management makes, then define the indicators those decisions need.
  2. Tie indicators to a single set of definitions and produce them with the same logic every period.
  3. Present financial performance, cash, working capital, profitability and operational indicators together with their relationships.
  4. Keep the report lean: few indicators, clear trends, clear comparisons.

What it examines

  • Financial performance indicators
  • Cash and working capital indicators
  • Profitability analysis
  • Customer concentration
  • Operational KPIs
  • Comparison across periods and units

Example output

Indicators for profitability, cash conversion cycle, days sales outstanding, customer concentration and working capital, with trend lines and a unit comparison.

Limitations

  • Indicators only mean something if their definitions are applied consistently.
  • Indicators should be chosen around the company’s decisions; a few right indicators are more useful than many.

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