How Responsibility Accounting simplifies Managing complex Organizations

1. “RESPONSIBILITY” – ENABLER FOR BUSINESS AGILITY
OBJECTIVE:
This shares one of the key barriers in embracing business model changes and reorganization of business units
across any large organization from management systems perspective. This also further introduces
“responsibility” concept that not only addresses the barrier but also unleashes an array of possibilities across
the management systems to meet the evolving business model with agility.
BACKGROUND:
Management systems are designed to reflect the business structure and often times they correlate to senior
management’s responsibility, compensation and rewards. Businesses are restructured for deploying new
strategies, business expansion into adjacencies and evolving business models to gain competitive advantage,
all requiring management system changes to reflect the business structure changes in near real-time.
Management systems are constrained to reflect the business results including all the historical information
which can only be achieved through extensive effort of reorganizing the underlying data while consuming
significant business and IT resources. This becomes a key barrier for new business models to evolve in
reasonable timing (less than 3 months) or for management to restructure business or organization when
warranted to achieve higher performance.
What needs to be true to enable business restructuring in near real-time in management systems?
• Business reorganizations should be achieved through the reference data changes vs. reorganizing the base
data. This in essence will require on the fly aggregation based on the reference data definition.
• Business relationships and accountability within matrix organization are often defined with complex
combinations across various elements such as Geography, Product, Customer, Channel, etc.
• Business accountability in large organizations is often not necessarily traditional parent-child relationship.
In many cases, the parent responsibility is not sum of the children responsibility and this relationship needs to
be definable. This leads to the need of specialized roll-ups vs. traditional hierarchical summation.
• Business relationship visibility in hierarchal format is critical and should be extendable for new reference
data elements such as customer, channel & others as the business model evolves.
Why “Responsibility” concept is important for large organizations?
Standardized systems are often designed for scale and end-to-end integration for seamless information
exchange across transactional systems but this paradigm shifts for management reporting demanding greater
flexibility in producing business results for the new business models. Integrating “Responsibility” concept into
the base reporting product will enable to take advantage of the flexibility in management systems and further
drive the total cost of ownership significantly to support business organizations.
The need for real time data for management to draw insights and make key business decision is at the highest
level than it has ever been but without the capability to trigger actions to measure performance results,
rewards and supporting management systems being agile diminishes the competitive advantage for both the
organization and the IT division enabling the business.
This capability can now be leveraged to analyze and simulate futuristic organization views in the “what if”
context and enable management systems to transition to new structure seamlessly.
How is P&G meeting this need?
P&G is leaping forward in building the “responsibility” as custom functionality to address the immediate needs
as the reporting platform refresh occurs. The need for expanding “responsibility” usage across the company is
unprecedented with both the impact and benefit being very visible.
Contacts: Manoj Agarwal(agarwal.m.1@pg.com) Financial Reporting Solution Leader 1
Nandha Kumar (kumar.nt@pg.com) Financial Reporting Business Owner