Real-Time Reporting in Business, Essay Sample for You

Introduction

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Before the introduction of real-time reporting, organizations used to analyze and update their financial reports and data on fixed periods such as monthly, quarterly, semi and annually basis. Additionally, the emergence of real-time reporting was initiated by the demands from stakeholders to access the current proceedings of an organization (FSN, 2009). Schneider (2012), states that "stakeholders' requests resulted in the need for institutions to post their financial operations at a faster rate and ensuring that stakeholders such as the investors can access such data at a speedy and on a regular basis." ACCA (2013) states that investors associate real-time reporting with the provision of better conceptualization of excellent management, governance, and the business performance. Moreover, Gatner (2018) states that as the competitive levels in the business environment increase, enterprises demand more reliable and up-to-date data to enhance faster decision-making. The statement outlines the importance of real-time reporting, and how managers can utilize the recent data in the decision-making process. Therefore, the essay identifies the advantages and limitations of real-time reporting, and the solutions for the challenges, and current developments in real-time reporting.

Advantages of Real-Time Reporting

Firstly, the adequate and reliable access to up-to-date financial information by the management has increased the competitive levels of an organization. This has necessitated corporations' managers to be quick and nimble in the thinking and decision-making process (Schneider, 2012). This enables such institutions to adopt the latest developments and discoveries in the market and thus enhancing its relevance to their stakeholders. For instance, rapid changes in consumers taste, necessitates product managers to access regularly, where he/she can tailor products or services to meet the consumer's specifications (Gatner, 2018). Such a move will ensure that the firm remains relevant and competitive in the market.

Secondly, the adoption of Real-time data analytics saves on finances and time in the long run. Such development may seem expensive in the initial periods, especially on the acquisition of the real-time analytic and generating tools. KPMG (2014) states that, in the long run, the established systems will eliminate or reduce the need for resources, which were previously utilized in providing the periodical reports. Additionally, the real-time adoption reduces the periods of time used in waiting for the development and publication of the final reports for the management to engage in the productive decision-making process.

Thirdly, external stakeholders such as investors value the speed at which enterprises release their final reports. According to the report released by ACCA (2013), more than 73% of external stakeholders such as investors believe that organizations that have adopted the real-time reporting system exhibit more efficient and robust management. Therefore, this implies that enterprises that have efficiently adopted the real-time reporting tend to have a more reliable and organized management team, which in turn attracts more investors on board. Hence, the faster a corporation is in releasing their reports, the more efficient the investors perceive it.

Fourthly, advances in technology have significantly facilitated the actualization of up-to-date reporting. For instance, the introduction and adoption of cloud computing in the reporting process have increased the efficiency and accessibility of an enterprise's data, provided that the users have access to an internet connection (Trigo, Belfo, and Estebanez, 2014). Additionally, according to a survey conducted by Brand (2014), it indicated that more than 52% of the interviewed investors associated real-time reporting with efficiency and effectiveness during the decision-making process. Thus, enterprises practicing it instills confidence in its stakeholders.

Finally, the provision of real-time financial reports and the undertaking of the business enables the investors to weigh on the available investment opportunities quickly actively. ACCA (2013), states that more than 85% of the respondents believe that the provision of real-time corporate reports will hasten the reaction of the investors in both the short run and the long run periods. However, as the technology improved, such investors can now access the information on the real-time basis, thus enabling them to make sound and updated investment decisions (Rennekamp, 2012). For instance, more than 60% of organizations have reduced the period of publicizing their financial reports. Such speed has been associated with the investors need to access the performance of various businesses, thus enabling them to make sound and quick decisions.

Challenges/Limitations of Real-Time Reporting

The first challenge states that the system is faced with imprecise computation, which results in erroneous data. The process uses algorithms, which are arithmetical, and are proceeded by sequential approximation. Fuller, Collier, and Seager (2008) explain that the data collected from real-time reports are utilized in making critical decisions by either an organization's management or external stakeholders such as investors. According to accounting principles, financial statements of an organization ought to be useful, where it provides accurate figures that can be used by various stakeholders in the decision-making process (ACCA, 2013). For instance, a survey conducted by Gatner (2018), showed that 75% of the firms studied were subjects of bad financial decisions, which were arrived at due to the utilization of incorrect data. Such revelations indicate the challenge the organizations face in ensuring that their final reports are accurate.

The second challenge is highlighted by Trigo, Belfo, and Estebanez (2014) where they state that data loss and inefficient recovery system have caused severe and adverse effects on various enterprises across the globe. Thus, "data loss goes against the going concern accounting principle, which aims at ensuring that operations of enterprises remain intact for the foreseeable future" (ACCA, 2018). For instance, HMRC corporation data loss scandal in 2007 led to loss of reputation and significant Britons data. According to the CEO, the case could have been easier if it had a more secure backup plan, thus eliminating the unprecedented scenario (Pritchard, 2018).

The third point suggests that the periodical reporting sequence had been incorporated in several organizations, which has become a challenge to adopt the utilization of the real-time reporting approach. Abusaid and Ahmad (2012), reports that, implementation of real-time reporting has faced a slump in its application due to the comprehensive traditional periodical reporting culture. The introduction of regular data update came as a surprise and a challenge to the managers and investors. Investors and managers raised issues such as information fatigue, where the stakeholders had massive loads of information, to process, which at times led to the generation of contradicting conclusions (Trigo, Belfo, and Estebanez, 2014). According to SFG financial investment advisory firm, right decisions in an organization is determined by the correctness and the selection of the information utilized. Thus, the manipulation of large sums of data has emerged as a significant challenge in the actualization of the up-to-date reporting program.

The fourth challenge outlines that the real-time reporting practice lacks sufficient control and audit, which reduces the efficiency and reliability of the final reports released. According to Fuller, Collier, and Seager (2008), the accuracy of the statements generated is compromised due to such a weak control process, since various corporations have not established a reliable governance framework that can be used in evaluating the accuracy of the data released to the stakeholders (Abusaid and Ahmad, 2012). This will enable such institutions to ensure that the figures released are in line with the actual data collected in the firm.

The fifth challenge mentions that the process of sustaining real-time reporting necessitates additional costs in term of finances and time used by organizations. Apart from automated data generation and transmission, an enterprise needs to invest in additional staff, who are dedicated to feeding the necessary data into the database for manipulation. Moreover, the available workers are forced to work extra hard to increase their turnover, which limits demands an increased overall payment. Additionally, Buchheit (2003), explains that "enterprises can increase in expenditure especially hiring overtime employees to actualize the real-time reporting task."

Finally, the frequent provision of financial data into the market may lead to an increased volatility rate in the financial market. Brand (2014) mentions that access to up-to-date by the investors may result in the emergence of short-termism by the investors, which would, in turn, lead to a higher liquidity rate in financial markets. Additionally, ACCA (2013), mentions the importance of accurate data in the decision-making process, which is perceived as more important than the increased access rate of the same data. Hence, enterprises ought to focus on providing accurate data, which leads to the adoption of sound decisions.

Solutions to challenges and Current Developments in Real-time Reporting

Real-time reporting is actualized through the utilization of modern technologies such as Business Process Management Suites. This program is enhanced by the utilization of Business Activity Monitoring module, which ensures that all business activities are updated, and the stakeholders can access the final business operations and records. According to Seele (2016), such programs have been facilitated by the development of technology and ensures that individuals have access to an accurate breakdown of the activities undertaken by enterprises. The advances in technology have made sure that all the stakeholders have access to up to date information and proceedings, thus enabling continuous assessment of the company's operations.

Additionally, cloud computing is identified as one of the significant innovations that facilitate the actualization of real-time reporting. For instance, the cloud computing has provided a safe and dedicated back up the option for institutions to store and protect their daily and long-term data (Gartner, 2018). Enterprises are now secure since their backups in the cloud account cannot be altered. This has assured such organizations security and assists them to uphold the going-on concern according to the accounting principles. Additionally, the system has enabled corporations to access an extended number of users, thus making it easier for them to reach its significant stakeholders who also use it. For instance, the Dropbox CEO Drew Houston suggested that the firm has secured data for large corporations and has enabled them to share them efficiently amongst their stakeholders.

Moreover, the advancement in technology has created diverse channels, which an organization may use to relay its real-time information. For instance, organizations have used their dedicated websites to display their day to day transactions, which are coupled with relevant analysis (Rennekamp, 2012). According to research conducted by SanthoshBaboo and Prabhu (2013), enterprises use direct mails, where the real-time reports are sent to the appropriate stakeholders. Such approaches have enabled these enterprises to increase the access of information to their audience, especially the new crop of online-based investors. Therefore, this also assists such companies to m...