What metrics do we need to manage the institution effectively?

What potential reporting and analytics should we consider that we aren't currently producing?

What data does our institution already produce to support the above?

Where can we get any ancillary data that we don't currently access?

What data do we produce that we do not necessarily need?

The responses will vary by institution, as each credit union has its own unique data and reporting needs based on the institution's primary business objectives. But these questions should not just be answered by the credit union's finance department. Finance should take a 360-degree approach and solicit input from its entire management team – from the CEO to the line of business managers – to determine the level of information they actually need. It is critical to ensure that the data and reporting the credit union generates is useful and insightful to stakeholders, as opposed to providing information just because it is available. Otherwise, credit unions run the risk of underutilizing the EPM system and replicating useless data and reporting that the credit union is already generating.

Prior to and during implementation, the credit union's finance department should work closely with its data warehouse or data analyst departments and communicate the data requirements so everyone on the team is aware and fully understands the desired results. By including data analysts as part of the team and discussing the requirements, instead of just handing them a requirement list, credit unions can save significantly on implementation resources.

To help make the implementation process go as smooth as possible, alleviate delays and rework and make the most out of an EPM system, credit unions should formulate a long-term strategy that implements the various processes – i.e. budgeting, profitability, incentive compensation – in stages.

A Case and Point: Westerra Credit Union

The Denver-based, $1.3 billion Westerra Credit Union sought an EPM system that would help improve its planning and management reporting processes, as well as its monthly closing process. Additionally, the credit union's long-term strategy encompassed implementing segment, product and member profitability measurement and reporting.

The credit union decided to initially focus its EPM system implementation on improving the monthly management and financial reporting and their close processes. After completing this first stage, Westerra eliminated multiple manual steps in the closing process which increased its efficiency.

During the next phase, the credit union focused on replacing its Excel-based budgeting and planning system with a solution that embraces Excel to provide users with a familiar interface, while eliminating Excel's shortcomings (such as the need to upload, download, reconcile, cut, paste and email one-off spreadsheets). This stage of implementation was completed in three months due to the sound foundation the credit union built during the reporting phase. Once the budget phase was completed, the team began to design and build its profitability solution for segment and member profitability.

Westerra included a data analyst with an IT background in all phases of the process to ensure the analyst would not only understand what was needed, but also how it was used. This eliminated the re-work that often occurs due to miscommunication about data elements and resulting reports. When implemented correctly and thoughtfully, a robust reporting solution has the power to transform an institution's data into insightful information. To truly achieve this, credit unions must find a way to overcome the patchwork of disparate data sources and cumbersome spreadsheets that are making it difficult for them to access, consolidate and manipulate the numbers.

From Implementation to Digestible Results

Once implemented, credit unions must find an effective way to present the results generated by their EPM systems. One proven method is the use of dashboards, which have the ability to condense critical information that managers need to see in a single view.

Credit unions should ensure their EPM systems can present, at a quick glance, how their institutions are performing using charts, graphs, gauges, etc. Using data visualization, credit unions gain the organizational insight that would otherwise be impossible to achieve with just a grid of numbers. Often times an institution has the performance data it needs, but it does not present the right data to decision makers. Dashboards enable users to quickly drill into the institution's data, providing deeper analytics and the ability to perform “what if” scenarios.

Because dashboards require a sound foundation of data and results, they should be implemented after the completion of a phase. But to have a sound foundation of data, credit unions must have a vision of the information they need to present, and how they wish to present it, prior to implementation. To maximize their systems' dashboards, credit unions should create story boards that illustrate the design of the dashboards and the interactivity of each data element prior to the implementation of an EPM system.

As market conditions continue to evolve, credit unions must navigate a dynamic landscape laden with pressures on margins and loan credit quality, restrictions on capital and directives to reduce expenses. Putting extra, up front effort into EPM system implementation will result in a tool that has the power to become an institution's most trusted advisor.

Paul Panther is a senior consultant for Axiom EPM. He can be reached at 815-986-6980 or [email protected].