I have been searching for an analogy that would allow me to demonstrate the inefficiencies that come with one of the most common approaches to chart conversion. Chart conversion is a process an organisation undertakes, usually as part of a wider Financial Transformation Program, to review and amend their chart of accounts to better support operational and reporting requirements. An overview of the approach in question, known as trial conversion, is outlined in the diagram below:
In order to demonstrate the inefficiencies and impact this can have on a transformation program, I am going to apply this trial chart conversion approach to painting a house.
When we review these two chart conversion approaches we can see that asking a stakeholder to sign off on a new chart without viewing data is synonymous with asking your partner to sign off on painting a house without seeing the colours to be used.
The trial conversion process is iterative, costly and, as a result, hugely inefficient. There is, however, an alternative. It is possible, using a combination of a multi-dimensional reporting tool and effective master data management, to create an environment in your financial transformation project to allow your stakeholders to see you current key reporting structures and the proposed replacements to allow both reconciliation and reporting. This ensures your key stakeholders gain confidence in the proposed changes whilst simultaneously reducing the costs associated with resource intensive trial conversions. It also de-couples the need for revised reporting from the need to convert your general ledger meaning you can start using your new reporting structure in advance of the final conversion process.
If you would like to learn more about this approach, please reach out to us.