High Growth and High Performing Company Adopts Multidimensional Analysis: Best Practices

With the growing scale and diversification of businesses managing financial data becomes difficult with traditional practices in place. Inaccurate reporting, lack of clarity, overlapping of functions, difficulty in tracking key metrics and insights, etc. can be frustrating and during annual reports, these challenges hinder from achieving a fair picture.

Multidimensional analysis enables decision-makers to gain a more holistic view of their company’s performance. Financial reports can be made more intelligent and informative by including dimensions such as business unit-wise, profit center-wise, department-wise, location-wise, and product-wise, along with cost center, cost object, client group, and other relevant dimensions. By organizing data and transactions into various dimensions, you can view consolidated financials across multiple entities, giving detailed insights and value-added financial performance analysis.

Let’s look into the nuances of multidimensional reporting and analysis.

What is multidimensional analysis?

Multidimensional analysis allows to you organize and present data across multiple dimensions, enabling users to gain insights and make informed decisions.

By breaking down data into several dimensions, you gain a better understanding of your company and aspects like how well it’s doing, where it’s doing well, where it’s struggling, where you should invest more resources and what kind of resource mix should be used.

Contextual analytics with real-time insights is the need of the hour for CFOs and not just financial data. The answers to questions like How can we reduce supplier costs without compromising product quality? What impact will this new sales channel have on our revenue? How much is this product contributing to customer growth?–lies in making dimension reports.

Business users frequently don’t know what the business question is until they start looking through the data, which often reveals intriguing facts that they may then concentrate on. Multidimensional analysis and reporting give a 360-degree visibility that aids in making strategic decisions with clarity and context, giving you a competitive advantage.

Financial figures are not enough

Data without a purpose is not enough if you don’t know what objective are you aiming to achieve. The users of financial statements rely on them to understand how the business is performing. Management’s approach to assessing business performance should be more transparent, with segment information subjected to greater scrutiny by users of financial statements.

The stakeholders won’t be able to understand which department is performing low or which operations of the inventory department are the most cost absorbers; all these challenges can be effectively met by dimension reports. Data if left unutilized in an efficient manner will fail to provide rich insights to the finance leaders depriving them of the strategic decisions.

Multidimensional analysis gives a well-rounded view

Multidimensional reporting takes into account the various dimensions of the growing organizations. It eliminates the need for complex account codes and uses departments or locations for instance as dimensional values rather than charts of accounts. A dimension can be anything related to operations that is useful in tracking performance like divisions, subsidiaries, revenue generation channels, products, etc.

This when added to transaction reports, creates a rich insightful dataset that allows for detailed tracking of revenue and analysis of the financial statements. It gives business visibility from all angles and in-depth observation of business units or transactions of a particular division. Decisions are fueled by valuable insights and strategies are formulated in the light of multidimensional analysis.  However, multidimensional analysis cannot be carried out by the outdated accounting and ERP software systems that many finance departments still use.

Multidimensional Analysis empowers users to:

• • Drill Down and Roll Up: It allows you to seamlessly navigate through various levels of data, from high-level summaries to the most granular details, providing a deeper understanding of trends and patterns.

• • Slice and Dice: New insights can be uncovered by isolating specific data subsets for targeted analysis and reconfiguring those subsets to view them from different perspectives.

• • Pivot: Multiple angles are always useful to enable flexibility in exploring the data. You can effortlessly swap one dimension for another enhancing decision-making.

Why you should adopt multidimensional analysis and reporting?

• • Get precise consolidated reports: Dimension reports classify data and transactions into dimensions allowing for more granular reporting, consolidated financial statements, and filtered reports based on dimension values. Moreover, transactional data can be reported without the need for complex formulas to extract segments of the General Ledger (G/L) accounts to which they are assigned.Often, the results corresponding to each dimension value are displayed in separate columns, simplifying comparisons and enhancing the overall clarity of the reports. This version maintains your original points while improving readability and coherence.

• • Promotes a data-driven culture: Multidimensional reporting adds value across various roles, enabling data-driven decisions at every level. For instance, a sales manager may be interested in knowing the customer buying patterns to identify trends and adjust strategies for improving sales performance. On the other hand, a production supervisor would want to monitor inventory levels and production timelines, identify bottlenecks, and ensure efficient resource allocation.It also enables improvement in risk management, investment strategies, and overall business profitability. You can identify trends that are otherwise not easily visible with traditional methods.

• • Simplify the chart of accounts: The growing organization size will demand more account codes, and as account codes become more complex, navigating the general ledger can be difficult, leading to confusion and errors. Multidimensional accounting simplifies this by consolidating information into a clear, master view that can be filtered by different dimensions as per your requirements.This approach makes managing your chart of accounts much easier, eliminating the need for manual account selection, reducing reliance on confusing abbreviations, and allowing for quick additions of both accounts and dimensions.

Best practices for adopting multidimensional reporting: A checklist

• • Define clear objectives for dimension reporting.
  • Keep the dimension structure simple and focused.
  • Standardize dimension definitions across the organization.
  • For accurate data processing mapping new dimensions is crucial.
  • Integrate with existing financial and operational systems.
  • Provide training for users to navigate and interpret reports.
  • Ensure flexibility to add or modify dimensions as needed.
  • Regularly review dimensions to keep them relevant.
  • Utilize granular reporting for deeper insights.
  • Continuously refine the reporting strategy to improve value.

Ready to steer ahead in your financial reporting cycle?

Unlock the full potential of your financial data with Resultlane. By generating statements based on dimensions or profit centers, you can effortlessly analyze performance from every angle—whether by department, product line, location, or any other relevant factor. This flexibility transforms your financial insights into actionable strategies, helping you drive growth and optimize operations with precision.