Financial software can be used to generate the numbers that tell a story—a powerful story—the story of your company, industry, products, and future. It leverages data from your ERP to build powerful stories that help all stakeholders understand key message points.
The Story Arc: Beginnings, Middles, and Ends
All stories follow a simple story arc. From a Shakespearean play to your favorite action-adventure movie, stories have a beginning, middle, and end. They also have a hero, villain, challenge or quest, something that prevents the hero from achieving the goal, and something or someone to help them.
Think about a story most of us know by heart: The Wizard of Oz. Dorothy is the hero or protagonist facing the villain, the mean neighbor intent upon keeping Dorothy’s beloved dog, Toto, from her. When the tornado hits and Dorothy is transported to Oz, the story turns into the traditional quest: finding one’s way home. Aided by three wise (or, in the case of the Scarecrow who needs a brain, not so wise) helpers, Dorothy is able to achieve her goal, defeat the villainous witch, and find her way home.
The Business Story Arc: Numbers Can Tell a Story, Too
You may wonder how Dorothy in Oz compares to your manufacturing company supply chain management struggles, and how in the world you can make unfilled orders due to supply chain disruption into an epic story.
Successfully using financial software to build numbers-based stories relies upon the following strategies:
- Financial literacy: Understanding what the numbers on each of the reports generated from your ERP system are telling you about aspects of your business.
- Using various business storytelling techniques: In addition to crafting a narrative around beginnings, middles, and ends, or the hero’s journey, there are other ways to craft a business story. For example, some storytellers use written narratives (novels) while visual storytellers use film (movies). You’ll need to choose your storytelling vehicle carefully, whether it includes reports, graphs and data visualizations, or narratives.
- Accurate and reliable numbers: You can know what a balance statement means and how to interpret it correctly, choose the right charts and graphs, and build your story, but if you’re using outdated or inaccurate information, you could be telling the wrong story.
Strategy 1: Financial Literacy
Most managers have rudimentary financial literacy and, of course, finance and accounting professionals are well “read” in the field of finances. A financially literate person understands what information can be obtained from each of the major financial reports: the balance sheet, the income statement, sales reports, and inventory and warehouse reports.
Let’s use as an example a personnel manager for a manufacturing operation. A personnel manager may not know all the nuances of manufacturing products, but if they are financially literate and can “read” the data from the financial software, they can see that a dramatic increase in sales across all channels may mean the need for additional personnel. The numbers, in this case, tell the story that sales are increasing (the hero) and, for the company to continue being profitable (the quest), they need to proactively address pending staffing challenges that may arise during the next quarter (the villain). By understanding the story inherent in the data, the personnel manager may read and interpret the financial data and suggest a course of action based upon these findings that can benefit the company.
Strategy 2: Choosing Storytelling Techniques
Next, to tell your story, you need to choose your medium. Writers use words, painters use paint, and filmmakers use videos to tell their stories. You must choose the appropriate business medium to tell your data-based story.
Some suggestions include:
- A written report, such as a memo or one-page summary of findings
- A presentation at a meeting, such as a slide show
- Data visualizations such as charts and graphs
Each has its place in the business environment, but to tell engaging, compelling, and easily understood numbers-based stories, the best way is usually through charts, graphs, and other data visualizations. In fact, many people rely upon these methods as the primary storytelling vehicle. Then, they use them as part of a written report, or a presentation given to others to help make their points intelligible by the average viewer.
To continue our example of the personnel manager at the manufacturing company, perhaps the manager has run the overall balance sheet and sees that sales are up across all channels: retail stores, e-commerce, and distribution partners. He chooses a simple pie chart to show the percent of orders from each channel. Then, he uses a line graph to show year-to-year sales increases. It’s easy to see the steep increase for the current year using a line graph and, in this quick picture, he has just made his point: with sales so brisk, the company is likely to need more staff to handle manufacturing increases and order fulfillment.
Strategy 3: Accurate and Reliable Numbers
Lastly, your financial storytelling adventures rely upon accurate data. That’s where financial software, otherwise known as your enterprise resource planning (ERP) system, comes into the picture.
Cloud-based ERP systems provide real-time data and insights that can lead to powerful strategies. The more recent the data, the better your financial storytelling will be, since it’s a story with immediate impact. Older data, while it can tell historical stories, must be updated to provide accurate information on the current situation.
If the numbers-based story contained in your ERP system doesn’t look right, or your colleagues are saying your story is inaccurate, it’s time to investigate.
- Is the system capturing the correct data? If not, you may need to investigate further to understand why the information is incorrect. Has anything changed in the system that could be throwing off data collection accuracy?
- Is it updating it frequently? Older systems and on-premises systems may not update as frequently as cloud systems. It may be time to consider shifting to cloud-based ERP as real-time data is essential for a competitive advantage for your company.
- Are any parts of the “story” missing? For example, if your ERP captures data from every aspect of the company except the warehouse because the warehouse still uses spreadsheets and manual scratch counts, it may be time to update the inventory management software.
The right business intelligence can make all the difference in how you interpret the financial story. Accuracy is of paramount importance.
Who Needs to Hear It?
All good storytellers consider their audience when they craft their tales. A story written for marketing professionals may tell quite a different tale from a story written for the CEO. Consider who is listening to the story and what they wish to get from it.
- CEOs and other top managers usually want to know the bottom line first. They want storytellers to make their point quickly and to provide them with the big picture, a few insights, and action steps. They usually do not have the time, patience, or need to hear the details, but prefer a high-level overview.
- Middle managers, on the other hand, may prefer the details, since often they rely on details to do their jobs better. A report for middle managers must focus on items of concern to them and on the information they need to act.
Next Steps: Financial Software Makes Numerical Storytelling Easier
As you review this information and consider the many ways financial storytelling can improve your ability to convey important information, also consider the ramifications of financial software on your ability to generate accurate, timely information.
If your financial software isn’t up to date, or if you do not have the right tools for the job, it will make your task of telling a financial tale more difficult. It’s not impossible—after all, people wrote long texts by hand, using ink and quill pens, for centuries before computers made writing faster and easier—but it will impede your ability to convey financial stories with ease.
Now may be a great time to consider updating your ERP, switching from on-premises to cloud, or upgrading other elements of your business software suite. Perhaps you can use your newfound financial storytelling skills to tell your supervisor, “Once upon a spreadsheet …”