Management reports remains in limelight due to the transparency factor and because of current market situation. Due to recent failure in the corporate and requirement of transparency in information sharing, management reporting is an important need of hour due to following factors:

1. Precision to meet market authorities and regulators
2. Competence for organisation staff to meet the demands of the market and customers.

To meet shareholder claim for better speed and transparency, businesses need to execute more effective ways of communication. This is particularly crucial for financial information reporting where and figures have to be evidently presented and explanations universally shared to constrain out guesswork. This will result in reliable and transparent information. There are significant number of ways to create an efficient management reports which will be more effective in terms of transparency and meeting current market demands and requirement.

In this blog we will discuss few methods of efficient management reportings, but before discussing the methods we should always know the presumptions for a tried, tested and efficient reporting process

1. The recent collapse in corporate world has enlightened the need for precision and call for change in the way companies report to investors and financial markets. Market regulators and local authorities also require more timely information, more inclusive information.

2. In the recent time businesses are moving at an ever more faster pace a fact which is not lost upon the financial markets, which are stridently demanding business reporting to stand up to the mark. Corporates face regular challenges in broadcasting of financial information both internally and externally, investors, local authorities and stock exchanges. It is clear that swiftness is of fundamental nature and loss of precision is an increasing evident risk.

Electronic information serves as a fast, efficient and cheap method to reach audiences globally, when dealing with business reporting data, searching the Internet for information particularly for time receptive corporate disclosures which has become a natural prospect.

To do this top management of the company will have to find new improved tools to attain the related objectives of providing both trusted and efficient reporting to their audience.

There are two primary aspects essential to these calls for more revelation first, the critical data needed by investors, analysts and regulators is substantially the same as that used by managers to make both strategic and operating decisions; and second, the technology used to generate in depth information channels within companies is the same one used to generate corporate communications to the public via the Internet. Financial market participants are already clamouring for companies to provide a broader spectrum of information.

Value Addition

The structured reporting system do add value to the overall system in different manner

1. By Meeting the needs of the user it ensures that by providing support for the requirements of business users of the project solution.
2. To generate effortless use of reporting that are simple to use, easy to learn and contain standard tool for performing in depth ad hoc analysis and it can segregate accountability and Insight reporting
3. Liability reporting is primary planned to help management better measure performance against target, whereas, insight reporting is focused on providing information to help management better understand the business and react tactically and strategically.

The extent of reporting varies from client to client depending on needs, which can include preparation of high level management reports on a spreadsheet which entirely focus on evaluating implementation of corporate strategy to large scale implementation of specialized reporting applications.

Following can be, three typical examples of management reporting projects:

1. Strategic Reporting
2. Fast close project
3. Management Information System (MIS)

Strategic Reporting provides an insight about the development of corporate strategy implementation on a regular basis. The project phases are analysis of current corporate strategy, preparation of documentation containing strategic goals and drivers, identification and definition of key performance indicators, measuring strategic goals and drivers, design of reporting process ensuring regular information preparation and preparation of pilot reports for management.

Fast close project reporting is to shorten the closing and reporting cycle. Typical project phases are analysis of current closing and reporting process, identification of blockages and automation opportunities, support during regular monthly closure process and implementation of relevant tools like estimates and adjustments.

Management Information System augments efficiency of management report preparation and sharing. Projects in MIS implementation consist of identification of management information needs, definition of MIS data model, selection of MIS platform, preparation of Business blueprint describing in detail calculation of key performance indicators from source data, implementation of MIS database and extract, transform and load routines and rolling out of management reports or building a comprehensive management portal.

Key Benefits:

1. Augmented effectiveness of the reporting preparation and distribution process.
2. Acceptable, definite and informative key performance indicators and reports.
3. Condense delivery time for management reporting and reduction in cost.
4. Enhanced decision support system with faster and more relevant management information.
5. Improved logical capabilities and performance management support.

(Written by Ashwani Chandra, Class of 2008, IBS Hyderabad) Ashwani also shares his expertise on Finacology.com)

6 Businessmen, 6 limited points of view, 6 hunches/hypotheses

In reality the successful (money-making) hunch is “Its an Elephant”

Individually none of them knows or understands an Elephant

Through constructive discussion they might realise that the whole is more than a sum of its parts

by Dr. Siva V. Gabbita

Five things you did not hear the Finance Minister Pranab Mukherjee say in the budget speech.

By

Vivek Kaul[1] and Nupur Pavan Bang[2]

“Statistics are like a bikini. What they reveal is suggestive, but what they conceal is vital,” said Aaron Levenstein, an American professor of business management.  And not Navjot Singh Sidhu as we Indians tend to believe. The annual budget of the government of India is also like a bikini. A lot it is revealed about it through the budget speech made by the Finance Minister, but the vital aspects lay hidden in the budget document. Here are five things you did not hear the finance minister Pranab Mukherjee say in the budget speech he made a few weeks back.

1. The government of India in the financial year 2011-2012 (i.e. the period between April 1, 2011 and March 31, 2012) spent 65% more than what it earned:

That the government spends more than it earns, we all know. This difference, known as the fiscal deficit, is expressed as percentage of the gross domestic product (GDP). For the financial year 2011-2012, the fiscal deficit of the government of India stood at 5.9 per cent of GDP.  But this number somehow does not convey the grimness of the scenario that the government of India is in.

The expenditure for the year 2011-2012 has been estimated to be at Rs 1,318,720 crore (Rs 13,187.2 billion). In comparison the government’s income for the year is at Rs 7,96,740 crore (Rs 7,967.4 billion). This works out to a difference or fiscal deficit of Rs 5,21,980 crore (Rs 5,219.8 billion). Hence in simple English the government spends 65.5 per cent more than what it earns.

When we compare the situation in this way we come to realize that the government is spending much more than what it earns. If you or me were to do that we would be in trouble pretty soon. The government as we shall see has a longer lifeline.

2. The fiscal deficit of the government of India has gone up by more than 300% in the last five years:

For the financial year 2007-2008 (i.e. the period between April 1,2007 and March 31, 2008) the fiscal deficit stood at Rs 1,26,912 crore (Rs 1269.12 billion), against Rs 5,21,980 crore (Rs 5,219.80 billion) for the financial year 2011-2012. Now what does that tell you? In a time frame of five years the fiscal deficit has shot up by nearly 312 per cent.

During the same period the income earned by the government has gone up by only 36 per cent to Rs 7,96,740 crore (Rs 7,967.4 billion).

When expenditure is expanding nearly 9 times as fast as your income, it can’t be a good thing. No wonder, the finance minister gave that piece of information a miss.

3. The fiscal deficit target for the financial year 2012-2013 (i.e. the period between April 1, 2012 and March 31,2013) is likely to be missed:

When the finance Pranab Mukherjee gave his budget speech in February last year, he had set the fiscal deficit target for the financial year 2011-2012, at 4.6 per cent of GDP. He missed his target by a huge margin when the real number came in at 5.9 per cent of GDP. The major reason for this was the fact that Mukherjee had underestimated the level of subsidies that the government would have to bear.

He had estimated the subsidies at Rs 1,43,750 crore (Rs 1,437.5 billion) but they ended up costing the government 50.5 per cent more at Rs 2,16,297 crore (Rs 2,162.97 billion). The finance minister had underestimating the subsidy level of the three main categories of food, fertilizer as well as oil.

This has been the case in the past as well. In 2010-2011 (i.e. the period between April 1, 2010 and March 31, 2011) he had estimated the oil subsidies to be at Rs 3,108 crore (Rs 31.8 billion). They finally came in 20 times higher at Rs 62,301 crore (Rs 623.01 billion). Same was the case in the year 2009-2010 (i.e. the period between April 1, 2009 and March 31, 2010). The estimate was Rs 3,109 crore (Rs 31.09 billion). The real bill came in nearly eight times higher at Rs 25,257 crore (Rs 252.57 billion) (direct subsidies + oil bonds issued to the oil companies).

Similar underestimates have been made for the financial year 2012-2013, to project a fiscal deficit of 5.1 per cent of GDP. The total subsidies bill has been estimated to be at Rs 1,90,015 crore (Rs 1,900.15 billion) a good 12 per cent lower than the subsidy bill for the year 2011-2012.

The government has constantly underestimated the cost of subsidies and there is no reason to believe that it would not be the same for this year as well. Oil prices are unlikely to go down, and inflation is also not seen slowing down. Hence it is most likely that the government will miss its fiscal deficit target for this year as well. The only way to cut this bill is to cut the level of subsidies, and that is unlikely to happen. As a known stock bull said on TV the other day, even Saudi Arabia doesn’t sell kerosene at the price at which we do. And that is why a lot of kerosene gets smuggled into neighboring countries and is used to adulterate diesel and petrol.

4.  The government is in a huge debt trap:

The fiscal deficit target for the financial year 2012-2013 has been set at Rs 5,13,590 crore (Rs 5,135.9 billion). The government raises this money from the financial system by issuing bonds which pay interest and mature at various points of time. Of this amount that the government will raise, it will spend Rs 3,19,759 crore (Rs 3,197.59 billion) to pay interest on the debt that it already has. Rs 1,24,302 crore (Rs 1,243.02 billion) will be spent to payback the debt that was raised in the previous years and matures during the course of the year 2012-2013.

Hence a total of Rs 4,44,061 crore (Rs 4,440.61 billion) or a whopping 86.5 per cent of the fiscal deficit will be spent in paying interest on and paying off previously issued debt. What this means is that new debt is being issued to pay off old debt and pay interest on it.

The situation is similar to that of an individual who takes new loans to pay off older loans or rotates credit card debt across his various credit cards. The government can keep doing this for a long period of time because in the worst possible scenario it can print money and repay the debts that have accumulated and in the process reduce the value of the domestic currency. This is what many governments in the developed world are doing right now. You and I can’t do this and ultimately will fall prey to debt collectors or will end up behind bars!

5. Interest rates will continue to be high:

As explained above the government finances its fiscal deficit by issuing bonds on which it pays interest.  Who buys these bonds? These bonds are primarily bought by banks which by law need to invest 24 per cent of their deposits in such bonds. At the same time the government is also competing with private companies and you and I for this money. The banks have the option of lending their deposits to companies and also give it out to individuals in the form of car loans, home loans, credit cards, personal loans etc. Hence the government has to offer a higher rate of interest on its bonds.  Given this, the rate of interest charged by banks on all other forms of loans goes up because they are more risky than lending to the government. Hence if the government is offering a rate of interest of 8 per cent on its bonds, then the banks are likely to charge more on all other forms of loans that they make. So the next time the finance minister talks about the interest rates going down, be skeptical. The interest rates cannot go down as long as the fiscal deficit doesn’t go down and that doesn’t seem to be happening any time soon.

The article was originally published in www.rediff.com on April 10th, 2012

Laxmiamma has been putting away the Rs500 that she saves every month, under her mattress. This has been going on since 2002. She likes the smell of money whenever she picks up the mattress. She likes to keep counting them. She likes their fading color; it indicates that she has been saving since really long and speaks volumes about her discipline!

Somewhere in her heart, Laxmiamma has the desire to buy back the gold bangle that she had to sell off when her husband took seriously ill some 25 years back and the family needed the money for his treatment. The bangles were a wedding gift from her grandmother and had 25 gms of gold. They were her pride. She felt like a queen when she wore them.

Alas, there is still a long way to go. She only has Rs61,500 (500*12*10yrs3months)under the mattress. Two years back when she had gone to the Jeweller, he told her that it would cost her Rs40,000. When she went with Rs40,000 to him, he said that the price of gold has gone up and it will cost 60,000. Three months back when she went with Rs60,000 to him, he said that now the bangle will cost Rs70,000. “If this is the way the price keeps going up, I’ll never be able to buy those bangles”, thought Laxmiamma with tears welling in her eyes.

This is the story of a lot of us. While prices keep going up, our income and savings do not go up in the same proportion. And this is where Prof. Nicky enters the scene.

Prof. Nicky does not promise to solve all your financial problems or make money grow on trees. Prof. Nicky gives simple tips on money and investment, which might help ease your situation.

Enter Laxmiamma and Prof. Nicky.

Prof. Nicky: Laxmiamma, why do you keep your money under the mattress? Does it grow there? And what if there is a thief in the house one day? Why do you take the risk of keeping it at home? Why don’t you invest it? In this way, the money is not only safe, it grows too! Yes, money can grow if invested well.

Laxmiamma: “You mean keep it in the bank?”

Prof. Nicky: That is the easiest way to invest. You could at least start by putting your money in the bank. In fact, you would have been able to buy your gold bangles by now if you had invested your money in a recurring deposit with a bank every month. By now you would have Rs84,682/- (using 6% p.a. interest and the Future Value of Annuity Formula) in your account instead of Rs61,500/- under the mattress.

With popping eyes, Laxmiamma asks, “Really?”

Prof. Nicky: Really. You might actually have earned even more, if you had invested in other assets like Equities, Mutual Funds, Bonds, and Derivatives. In the past ten years, the Equity indices have given over 400% returns in India. Of course with return comes risk, but one must balance the two and invest in asset classes where they are comfortable with the risk.

Laxmiamma: I understand that I should invest. And I am going to start by putting my money in the bank from now on, rather than under the mattress. But pray do tell me more about risk and return and these other asset classes that you have mentioned.

Prof. Nicky: I will tell you that in this column some other time. Till then, why don’t you think about risk and return in our day to day affairs?

This article was first published in Postnoon on April 6th, 2012
http://postnoon.com/2012/04/06/let-your-money-grow/41858

This post is written by Kishor Kumar Dash, alumnus of IBS Hyderabad (Class of 2004). It is in continuation of our earlier post on Multitasking vs Single-minded Focus.

Let me add one more perspective to multitasking vs. single-minded focus. I think Single minded Focus is an integral part of multitasking and greatly compliments to achieve success in multitasking. To me multitasking can NOT be effective without single minded Focus. Am I sounding confusing?  In fact I am NOT. Let me explain…

Multitasking is NOT necessarily meant doing several tasks at one point of time. Rather the most important aspect of multitasking is how quickly you can switch your tasks and give your 100% attention and concentration on the switched activity as well. For example when you are preparing an important presentation, suddenly your team wanted your immediate attention and support to resolve a critical issue raised by a client. Then you need to put the presentation work on hold and then jump to the issue raised by the client and involve yourself 100% in understanding the issue and providing the solution to your team. Then once the issue is resolved you again switch to the presentation as you need to complete that task as well. The deciding factor of effective multitasking out here in the example is

1. How quickly you can switch your focus/attention/concentration from the presentation to the client issue and again back to the presentation and

2. How effectively you are switching your focus/attention/concentration and giving your 100% on the activity (the presentation and the client issue each at one time)

I believe, now I am little clearer on how single minded focus is an important part of Multitasking. In fact you can not do justice to any activity if you are not having single minded focus on the task/activity. Then obviously we can not complete the multitasking if we are not focused on whatever we are doing at any point.

Let me add one more interesting fact to the argument, Scientists have proved by research that human mind is capable of thinking in multiple (correlated and uncorrelated) topics and directions at any point of time. In fact we all experience the same in our day to day activities. Let me put an example, though I am now thinking and writing about multitasking but my mind is simultaneously planning about when I can get my books for FRM Exam and also I am answering some interrupted questions asked by my mother on some quite unrelated topics. However I am still focused and committed on my writing. Though I still understand had I NOT been interrupted by my mind and by my mother, probably I could have completed this task bit quicker. But to me this is NOT multitasking. Rather this is just a reflection of capability of human mind and brain to juggle around intermittently on different areas but not losing focus on your core task. We all normally experience the same on our daily life for example, talking when driving, Eating when watching TV, planning for a special/surprised gift for your girlfriend when sweating out in Gym etc. Is it really not strange?

Going back to the earlier example, at the time of preparing the presentation your mind still might be thinking of how exciting the IPL match was last night and so many other thing, but you would still be committed and focused on your presentation. When you switch to look into the critical client issue you still might be sharing some light jokes with your Team to make the Team bit relaxed from the tension given to them by the client query. But this intermittent activity (sharing joke) is certainly not to be considered as Multitasking.

Hope I am now making sense on Multitasking and and how single-minded focus is NOT completely isolated from multitasking.

Let’s take the discussion a step further on how multitasking plays a big role in the career growth of professionals.

Throughout our education starting from Schooling till MBA Schools, from primary teachers to the B School professors we keep on hearing about Multitasking. Even if in our professional life our line managers keep on insisting on multitasking, which for most of the Managers is one of important factor of our performance as compared to our peers. I have experienced this in my little professional journey on how Multitasking with single-minded focus required to be used effectively to survive and grow in professional environment. The example given earlier will suffice my argument.

Let me put one more school of thought arguing against multitasking that, it dilutes your concentration and focus effectively putting you in a miserable situation having poor quality on all the tasks you are doing. I do agree with this line of thought; though selectively. I will explain why Multitasking does not necessarily provide you a winning proposition always.

Coming to our first example, let’s assume that the presentation you are working on is a sales presentation to the client to be presented this afternoon which could make or break the deal for you/Company. On the other hand if the critical client issue is NOT addressed immediately the client would be extremely unhappy and might escalate the issue to the senior management. Hence you are certainly in a catch 22 situation out here. If you continue working with the presentation work you would make your existing client very unhappy and also leading to a serious escalation. On the other hand If you work on the critical client issue, you might not do justice to the client presentation which might end up with losing a perspective client. Whatever you do there is an impact on your performance as well as hitting your company’s reputation and top line. In this situation normally professionals who are good at multitasking take the risk of working on both the tasks and invariably they end up not justifying any one activity and losing the both. I hope this example would substantiate the argument to an extent that multitasking does NOT necessarily put you on a win win situation always. Hence we need to probably choose one to the other depending on what is our highest priority.

However this is certainly NOT the only solution to the above situation. As a Manager you will find yourself in a similar kind of situation at various point of time in your professional career. Hence can you afford to always compromise one activity/task every time by not choosing multitasking or would you try something different? Then the question comes what is something different? As a Manager/Leader, I think we need to address this situation with “Multitasking with Proper Delegation”. This is probably the mantra of success for professionals when they find themselves at the center of centrifugal force feeling the heat from different stake holders simultaneously.

Keep watching this space on continued discussion on the very interesting topic on Effective Delegation….

Sachin Tendulkar, also known as God of cricket, wrote an article “the little steps matter” for Hindustan Times that summarised his journey till then in very simple words. Much to the surprise of many, there weren’t any success mantras, only few perspectives on keeping life simple and working with a single minded focus.

Single minded focus, what does that imply? With the kind of speed the world is operating at, is it really possible to think of single minded focus, let alone live your life with the concept! Is multi tasking not the order of the day?

So what works really? You may be facing this question if you are in job already or searching fr employment. The answer is that there is no fixed answer for anything! You can create success for yourself using both or any of the two concepts. You can choose to work with a single minded focus on a single task, assignment, project, number, vision, goal etc or you can choose to juggle between multiple things and switch from one to another without losing sight of the end result. What really makes a difference is you!

Multi tasking or single minded focus

Multi tasking means the ability to handle varied or interrelated tasks simultaneously. But if we dwell deeper we find that people who are good at achieving results with multi tasking actually work with a single minded focus. Does that mean there is some problem with our definition of multitasking? May be there is! Consider this then ‘multitasking is the ability to perform various tasks in a quick succession.’

Did you get some answers? All of us multitask, we talk while driving, we listen to music while cooking and we never complain about it. It doesn’t drain our energy, it doesn’t distract because perhaps they require an attention of lower order. Where is the problem then; when we have tasks that require a higher degree of attention?

Take the example of a sport like cricket. How effective would a player be who scores a run and gets ready to bowl the next ball or rushes to field at some place in the ground and then comes back to face the next ball. In fact we have many examples of people from cricket who decided at one point of time in their life that they would like to focus to more on one aspect than be a ‘jack of all trades’.

The choice is yours really. You are your best judge; you need to find out what works for you the most. This will take some time to test a concept and decide that works or doesn’t work for you. All the best for your quest!

Most of the people who are applying for admissions to MBA feel that getting into a good b-school is the most difficult and those who are in feel that getting out is more difficult! Strange as it may sound, but getting out of a b-school is no easy. Reason, during you MBA you have to make some tough decisions and deciding on the specialization is one of them.

One of the first things to understand is that specialization is not something that one should worry about at or from the time of joining. Most of the students remain perturbed about their specialization from day one! If you have carefully chosen an MBA for your post graduate studies then understanding the course and industry expectations in semester one is more important than worrying about anything else. Remember, there are many in the campus who (mis)guide you on this.

Most of the institutions require you to choose a specialization in semester three, which means you have a year at your disposal to understand the specialization well before you zero into something. In fact most of the course curriculum in semester one and two touches upon some aspects of all the specializations. So you know well what each specialization entails and depending upon your interest you can make the right decision for yourself.

Traditionally, the specializations were limited to marketing, human resources, finance, IT/systems and operations management. Now there are more options available like entrepreneurship, rural development, hospitality, tourism, brand management etc. I understand more options might translate into more worries for some, but if you have understood the discipline and researched well, it shouldn’t mean much.

Before you decide: Now before you decide, you may like to consider the following for better decision making

• Understand the Subject well: Understanding does not mean whether you like the subject book or not. It means getting to know what kind of job opportunities are available for the particular discipline and whether or not want to you see yourself holding any of these positions. You may well be interested in numbers, but what roles are available in the field of finance is what is more important to know.

• Know your priorities well: Industries / organizations vary in how they reward people / employees. Some believe in fast internal promotions and lesser remuneration comparatively while others are good pay masters with lesser internal promotions. You choose one depending on what suits you more. Similarly the work hours / schedule may also be a consideration for you. Research is the key word. I would advise dedicating a good one hour towards the end of semester two.

• Use the elimination technique: An elimination method is often a good way to arrive at what fits you best. You begin by dropping out what you don’t like the most and whatever is left is the best option for you.

The focus of business education should be to develop practical skills in people which they can then use at work. In fact the b-school campus should simulate the corporate working environment; this way the students get to experience the reality rather than just the curriculum which doesn’t help much!

One of the practical skills is team work. In organizations you work with people from diverse backgrounds. They may be your colleagues, subordinates, bosses, vendors or clients. You may find working with some easier and some might be a challenge. Despite all this you have to ensure that whatever you are assigned with happens smoothly and within a given time frame.

Team work in college

This is testing for many fresh MBA’s when they start working but it has a solution while you are still doing your MBA. The college campus is also an organization of people and has challenges in equal measure as with some mid or large sized organization, the challenge is from people. In fact the concept of team work in campus has picked up abroad, where cohort structures are put in place to get home the nuances of team work among the students.

A cohort structure is deliberate attempt to bring together students from different backgrounds. This remains so for the first few months or for the entire first year. The team members in a cohort are expected to learn work as members of a team, solve problems, resolve conflicts, become responsible and ensure high level of commitment over whatever task you are assigned. The aim is to transform you from independent to interdependent, as is in a corporate setting.

One of the methods employed in the team building process is to allow students question the curriculum in a manner that they start looking beyond what is instructed. They cannot raise their voice but looking beyond is an instruction they comply with. This is one way to plant the seeds of cooperation among teammates.

At many other campuses, like the MIT’s Sloan school of management, students are put into ‘core teams’ from day one. The campus infrastructure and facilities are designed such that it requires team work to make an activity / assignment happen. The classrooms have been reconfigured there such that students face each other rather than the front of class.

Such models of team building can be (should be) replicated in our country in b-schools and the whole of education system. In fact we need it more considering the amount of diversity in our country.

The companies, the organizations, the movies, the people who are most successful and therefore those we most admire are those who have great HUNCHES. The best HYPOTHESES. If it works it is called STRATEGY.
Once they are successful – others keep testing these hypotheses – while the companies, organizations, movies, people move on to the next great hunch

Dr. Siva V. Gabbita