Management & Board
iFACTS on – Management & Board
Often there is a significant difference between financial and operational governance. Financial governance includes proven data and information, rich KPI’s and mechanisms such as tax authorities, VAT procedures and standard protocols. All elements are designed so stakeholders may understand and rely on the financial reporting.
Operational governance lacks these elements, making it very difficult for management, and especially the Board, to understand what is going on in the organization in terms of objectives, nonconformities, and risk.
Management and the Board have an important responsibility to establish Governance. Its implementation is typically divided into three activities:
- Setting rules*
- Facilitating compliance*
This Governance approach increases the challenge for management & the Board. It is not enough to decide upon a rule, it must be accompanied with resources, methods, time, acceptance and training. A common vocabulary must be defined to make comparisons between different operations possible. Finally, management and the Board should follow-up on the rules, asking questions such as; Do they achieve objectives? Are the requirements fulfilled?
A major task for the Board is to demand systematic and rich operational reporting with the same quality as the financial reporting. Control & audit is a key player to make this happen.
Operational KPI’s include:
- Projects above €1000 million status red
- Monitor top 100 KPIs
- Critical regulatory compliance index
- Dependencies status red with business impact above €25 million
- IT risk status red
If your organization is not working in a systematic manner today — it’s likely that some of the following applies:
- Business activities are handled in silos causing sub-optimization and expensive administration.
- Business continuity can’t be demonstrated because no connection to objectives and risk management exists.
- Several different incident reporting systems are in place doing basically the same thing (IT incidents, crisis, HSE incidents, etc.).
- Numerous IT systems are uncontrolled. Some systems are not used but still maintained, others are duplicates. Vital business functions are frequently documented only locally on Excel spread sheets, sometimes known only to a single person.
- You have potential business impact of millions of Euro that no one is taking formal responsibility for. The primary reason: organizational silos with no coordination.
The iFACTS method crosses organizational borders and takes a holistic view. It introduces shared protocols and one universal information model, allowing transparent and reliable reporting. Making your operational governance on par with your financial governance.
*Source: Joachim Brandt, TeliaSonera