Systems

Recent Developments

Active business management means setting targets and defining the right strategies for reaching these targets. Such targets can include boosting turnover by 10 percent over last year’s figures, higher productivity levels and, consequently, higher performance targets for each member of staff or the optimization of the entire cost structure to increase operating profits.

Controlling systems are engineered to monitor such targets and strategies as well as their commercial impact in terms of a regular target-performance analysis to identify any potential shortfalls and their causes. This allows companies to recognize negative developments at the root and to initiate suitable countermeasures accordingly. Economically uncertain times in particular call on managers to always be aware of the current financial health, above all the liquidity, of their business.

Active controlling stops companies from merely going with the flow of the markets, and instead gets them to actively find new opportunities. Many companies do not have sufficient time for the analyses this requires in the pressures of their everyday work. In this situation, our consultants can come to the assistance of their managers. Our adherence to defined intervals also ensures the regularity required by effective controlling.

Typical problems at work in corporate controlling:

• The company has not established a long-term plan for controlling, i.e. a controlling master plan is missing.
• Budgeting and planning processes are complex and frequently not coordinated with each other. Strategic and operational targets are not aligned effectively enough.
• The approach to prioritizing or clearing projects or managing investments follows a spur-of-the-moment, unsystematic system.

Our Consultancy Services/Interests

Our approach to consulting services for controlling purposes centres around the following three core issues:

Consultancy Focus 1 – Designing a Controlling Master Plan

Companies regularly adjust their product range, their manufacturing or their distribution processes to changing circumstances. At the same time, one aspect is often passed by: their internal controlling systems. Many companies show the following weak points:

• Oftentimes, controlling is subjected to a gamut of new initiatives (the introduction of new indicators like EVA, new methods for analysing procedural costs, the development of support systems like a data warehouse).
• Lacking transparency in controlling (the fit of the initiatives is not obvious; unclear priorities; uncertainty about the availability of results).

The consequences of these pitfalls are dissatisfied and, effectively, demotivated staff, insufficient management of the expectations at the “receiving” end and a lack of awareness for priorities and fundamental work across the organization.

Consultancy Focus 2 – Simplifying the Planning and Budgeting Process

Budgeting and planning processes are frequently characterized by their extreme complexity, a result of the multitude of indicators, differing survey cycles etc. As a consequence, processes are handled incorrectly or not at all, and operational controlling targets are not grounded systematically in the wider targets of the company. The reasons for this can include:

• A lack of a link between planning and budgeting processes.
• Complex and expensive processes requiring a considerable investment of time on the part of managers.
• Massive inaccuracies or only seeming accuracy in the data despite considerable planning and controlling efforts; insufficient transparency.

It is not surprising that the following problems can arise when it comes to controlling:

• Companies being virtually paralyzed for months as a result of the budgeting process.
• Focus on “political” budgeting instead of adherence to the actual purpose.
• No basis for accepted, active top-down costs management (e.g. no ceiling for budgets).
• Changes occurring over the course of the year cannot be reflected in budget controlling.
• Budgeting constraints reduce the room to manoeuvre in strategic planning or forward-looking controlling.

Our consultancy approach therefore concentrates on:

• A stronger intrinsic focus in the budgeting process and a better link between planning and budgeting.
• More pragmatic processes.
• High-quality planning, which allows for the definition of a ceiling for budgets.

Consultancy Focus 3 – Establishing Stringent Project Clearance Procedures

Projects are cleared on the spur of the moment (using circumstantial criteria); allocation of individual projects following no systematic project portfolio; investments are cleared without an eye on their actual effectiveness.

Typical weak points in the area of controlling:

• No clear, accepted criteria for assessing projects – frequently “political” or ad-hoc decisions.
• No clear, structured process for clearing projects on the basis of defined data; no established procedures or deciding bodies; cleared projects are not monitored perseveringly.
• Projects are assessed only on the level of the individual projects and not in the context of an overall project portfolio.
• No definition of projects on the basis of the planning process.

Problems that can arise for controlling:

• Definition of a wrong focus, frequently for the benefit of regulatory projects or projects supported by strong internal lobbies.
• Frequent cancellations of projects or budget over-runs as a result of a lack of a preparatory “validity check”.
• No inclusion of the projects in the wider context of the organization – neither in terms of a portfolio nor in their link with the corporate strategy.
• A structured clearance procedure is the precondition for the effectively structured tracking of current projects.

Our approach:

• Transparent and accepted processes: we involve the relevant departments at an early date, use the input of the management board for the definition of the criteria; we use iterative cycles for selecting projects; competent and regular communication, in particular between IT and the relevant departments; permanent reviews.
• Accepted criteria: profitability, break-even / payback, regulations / constraints, external – regulatory, internal – revision, strategic impact, corporate strategy, IT strategy, project risk.
• An active role for controlling: provision of tools, facilitation of the selection process; such selection processes grounded in predefined criteria, their coordination with the affected departments, involvement in the planning and budgeting process.
  

We are always ready for a first, general exchange of ideas with you. Please contact us.