How data dashboards are changing accounting
If you wanted to present a defining image for the cloud accounting revolution, it would probably be the online data dashboard. With new applications such as Geckoboard and Neatly joining the rapidly expanding list of existing suppliers, AccountingWEB set out to document how these tools are evolving in 2015.
According to legend, sixteenth century English polymath Francis Bacon claimed that “knowledge is power”; fast forward to the 21st century, however, and the vast array of data-gathering tools has brought us to the brink of overload. As American historian Daniel J Boorstin put it: “The fog of information can drive out knowledge.”
Organisations that are not careful can end up drowning in statistics. Even when data is collated and well analysed, using and communicating this information in a quick, efficient and motivating way remains a challenge.
Throughout most of its history, accounting has been a batch-oriented process in which the figures are collated at the end of each period, verified and put into summary reports. In a phrase that will be familiar to many accountants, technology has opened the door to “real time” accounting ledgers, where a transaction is reflected in summary totals the instant it is recorded.
Data dashboards that draw on that data in real time are designed to cut through the informational fog and give managers instant, immediately recognisable snapshots of what’s happening in their business. “You should be able to glean what’s happening at a glance from 10m away,” commented Geckoboard founder Paul Joyce.
Dashboards earn their keep by making it possible to summarise key performance indicators (KPIs) and present them in simple, easily understood formats. Where a certain level of competence with Excel is needed to tease out insights from accounts data, dashboards do all the preparation and formatting in the background and give users what they want most - simple, intelligible graphics.
For finance managers and practising accountants, dashboards turn the traditional reporting pack into something more interactive that can stimulate tactical and strategic conversations with colleagues, owners or managers.
And because they exist separately from the nominal ledger systems, but rely on validated, current figures, users can compile and interact with dashboard reports without compromising the accuracy or integrity of the accounting records. They can also plug into other ledgers and information sources, potentially allowing managers to view financial results alongside non-financial outcomes.
As Pegasus marketing director Stuart Anderson explained: “Online dashboards are replacing the traditional management pack. They’re built around the specific needs of the user, using real-time data. This means managers can make the best decisions based on current information.”
The concept is contagious. Most people are used to vetting potential products and suppliers from simple ratings on eBay, Tripadvisor and the like and many are used to viewing web statistics in Google Analytics. Thanks mainly to the rapid rise of a new generation of dashboard tools that work with cloud accounting engines like Xero, QuickBooks Online and Sage One, this “self service” reporting philosophy is spreading into the finance mainstream. Even HMRC is getting in on the act with its prototype business tax dashboard, now renamed Your Tax Account and evolving into a dashboard-style interface for all taxpayers.
Impact on profession
To quote yet another maxim, “The medium is the message”. The changing mode of management information delivery is also altering the role that accountants play. Instead of producing semi-redundant reports on what has happened in the past, accountants can use dashboards to shift their perspective to what’s happening in the business right now.
They can spend more time looking at the performance indicators themselves and helping business owners and managers to understand what the numbers are saying. The accountant or adviser can use the figures to highlight an issue that needs addressing, or project the figures forward in sales, cash flow and other forecasts that point to where the business is going.
Dashboard selection criteria
If these capabilities and opportunities appeal to you, the next set of questions will help you identify which of the many tools available are best for you:
- What accounting system will it connect to? This is always a good starting point, as dashboards are increasingly being built into core accounts packages, or are offered as companion programs from third-party developers. Always start by asking your software provider for recommendations, or if you are a cloud software user, visit the relevant app marketplace (see links below).
- What other data sources does it need to link to? Are you looking just for a finance dashboard, or will you be seeking to compile non-financial KPIs alongside? Sales pipelines, production volumes, web traffic, HR surveys and headcounts and all manner of other data sources could be up for grabs - but might limit your choices when it comes to connecting to the all-important application programming interfaces (APIs).
- Who are the dashboards being designed for, and how will they be consumed? Remember the first rule of management information, that all users have a much bigger appetite for data than they can digest. Before embarking on any dashboard project, talk to the likely users about their operational requirements and knowledge levels. A good dashboard will give them the key measures they want, and little else.
- How easy is the tool to configure and manipulate; and who will be in charge of this task? Will you need to pay a team of consultants to come in and set up your dashboard, or will it be something you can “plug and play” yourself? Again, this will relate to the ultimate purpose of the dashboard and the sophistication of its users.
- How accurate and immediate do the charts and graphs need to be? More flexible systems tend to sacrifice a degree of accuracy to achieve user-friendliness, but a dashboard designed as an internal control mechanism would need to be spot-on at all times.
- Will it be a performance-monitoring tool only, or are you looking for forecasting, budgeting and scenario planning tools? This article concentrates on basic reporting dashboards, many of which will cope with basic P&L and cash flow forecasts. But there are also more specialised programs to handle sophisticated forecasting needs.
- How much will it cost, and how can you calculate the returns you get from it? Like any piece of modern software, your dashboarding system needs to pay its way. Don’t just invest in a system because it looks cool. Work out what it can do for your organisation and where you might get the paybacks first. Online dashboards may be a long-term rebellion against the Excel empire, but experimenting with measures and charts in Excel is a good way to test the feasibility and acceptability of your dashboard concept - and to communicate your requirements to potential suppliers.
Management reporting and KPI dashboards
There are numerous built-in and third-party dashboard tools for desktop accounting and ERP systems, but the main focus of this article is on the new wave of tools that hook into cloud accounting systems. Most of the leading providers in the UK now come with some kind of companion dashboard, as follows:
- Sage View - One of the components in the Sage Impact suite of practice applications, this is a KPI/dashboard tool that can take financial data from Sage 50 Accounts and Sage One and turn it into graphical ratios and dashboards. It is designed to help Sage Impact practitioners create dashboards for their business clients.
- Xero Performance Dashboard - Like many cloud accounting applications, Xero’s launch page presents a basic overview of current revenues and other key financial figures. Clicking the business performance option within the reporting menu will offer all manner of KPI ration charts and measures that you can display on the home page dashboard. Like Sage View, it’s mainly for practising accountants.
- Free Agent - FreeAgent was one of the earliest adopters of the KPI interface model with its revenue and tax liability timeline, but because of its focus on microbusiness users, FreeAgent hasn’t attracted the same level of reporting support as other cloud accounting engines.
- KashFlow - Now comes with a basic PDF management pack as standard, but can integrate with the GearShift reporting tool, which is available for users who want on-screen dashboard views.
Specialist cloud dashboard tools
This is just a small selection of what’s available. If you have more particular needs, check the app marketplaces - but remember that there are likely to be other potential tools available out there. If you know of any others, make sure to let us know by commenting below and we’ll add them to our listing.
- Blink Reports - Live reporting engine that integrates with Google Sheets and Xero among others.
- CrunchBoards - Interactive real-time dashboard designed to help small businesses identify and achieve key performance targets. CrunchBoards present the user with a toolkit of reporting boards and cards that they can shuffle and populate in any way they want. The boards link back the user’s chart of accounts in Xero to give up-to-date summaries of the underlying data. The flexibility of the interface encourages users to explore different possibilities and scenarios, but the developer explains that the tool is intended to stimulate talking points between business managers and their advisers.
- Fathom - Interactive dashboard tool designed to give business managers the ability to explore their KPIs. It offers more levels of detailed analysis than built-in cloud dashboards, and comes with good recommendations for the look and feel. As well as connecting to Xero and QuickBooks Online, it can also incorporate non-financial data.
- Financial Driver - Business performance reporting tool, now adapted to work with Xero.
- Finagraph - Snapshot and interpretive graphical reports tool developed originally in the US to handle QBO data, but also now compatible with Xero.
- GearShift - Works with KashFlow and Xero.
- Geckoboard - A new entrant to the UK market. This KPI dashboard offering has an API that makes it possible for developers to integrate data from any other system in to a Geckoboard dashboard using the same visualisations as cloud integrations.
- Neatly - General-purpose online dashboard aimed at small businesses. While not conceived as an accounting tool, it has been adapted to work with Xero and QuickBooks APIs to display accounts information alongside non-financial measures from sources such as Google Analytics and social media for applications such as customer profiling.
- Panalitix - Client dashboard designed for practitioners who want to monitor KPIs for a portfolio of clients in a similar fashion to Sage View. Includes trend analysis, three-way forecasting and a target-setting tools. Works with Xero and MYOB.
- Qvinci - US reporting application that is now listed in the UK section of the QuickBooks Online app market.
- Spotlight Reporting - Spotlight imports financial data from cloud accounting systems including Xero, QBO and Sage One. One of the pioneering cloud dashboards, Spotlight produces single screen summaries to stimulate discussion. Spotlight can handle both traditional reporting and forecasting measures, with the latter useful for cash flow and scenario analyses.
Other cloud reporting tools that may be able to incorporate data from Sage 50 Accounts and other desktop systems include:
- AdaptiveInsights.com (full planning and forecasting BI suite)
- Management packs: New tools and techniques
- Management information: The new frontier
- Third party apps add up to more than the sum
- AccountingWEB apps directory v2.0 - Business intelligence tools
If you’re a developer with a product in this space or if you have any news you would like to share, email us at [email protected].