Let’s give two examples, one for the dimension “product”, another for the dimension “time”.

So a private customer can purchase an insurance product which is a single product from a sales perspective, but comprises a combination of products or rates from an internal perspective, such as an accident insurance policy in combination with pension benefits for survivors. The modelling of  such complex circumstances requires a clear definition of the term “product” as the basis of a correct definition of the dimension “product”, reflecting the complex  product structure with product building blocks, products, and further components. This is a challenge, but it is also a critical success factor for meaningful reports.   

A typical example for differing time-based delimitations within the dimension “time” are the monthly reports which must be prepared at the end of the sales month and at the end of the calendar month. Or, as another example, in the insurance business the differentiation according to the closing  date and the effective date of an insurance policy.

Diversity in performance indicators and reporting views is inevitable due to structural complexity

But it often becomes a problem when the designation does not adequately reflect the content of the performance indicator and performance indicators with differing content in the reporting layer are given the same name. In the insurance business, for example, a breakdown of premiums according to “class of business” in a report quickly leads to the kind of situation described at the beginning of this article. The boundaries of the concept of “class of business” vary slightly , depending on whether it is being used in the business departments, in sales, in planning, or when measuring the degree of target achievement.

This complexity often causes difficulties for the individual departments trying to give an exact description for a desired analysis. If a description is selected which, although understandable at the moment for the party requesting the report, fails to express the fine points of its distinctiveness, the transparency of the report content and the reproducibility of the report will quickly be lost.   

Let us summarize again: the decentralized and individual-driven creation and maintenance of performance indicators and reporting dimensions, designations and meanings specific to the departments, the lack of an exact description or the failure to communicate one, all of this complicated further by the ambiguity of natural language, result in perfect performance indicator chaos! The entire situation is exacerbated further by data quality problems caused by incompleteness of the data, incorrect or incomplete values.

A study carried out by Detecon (Switzerland) in cooperation with the Institute for Accounting, Controlling, and Auditing of the University of St. Gallen on the topic of management reporting[1] also calls attention to this problem. Companies evaluated their management reporting on the basis of excellence criteria defined in the study. About 60% of the respondents in the survey rated the excellence criteria transparency and understandability as well as consistency and data quality as “very important” or “important”, whereby the dissatisfaction quota for these criteria is between 12% and 16%. At the same time, an equally high level of dissatisfaction with the economic efficiency of the reporting solutions was reported.   
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