Ad hoc analysis
Traditional financial reports allow business stakeholders like investors, senior management, and regulators to make important decisions about a company's performance.
However, these reports fail to provide CFOs and operations managers with specific data to counter new challenges that threaten the efficiency of a firm's daily operations. That's where ad hoc reporting comes in.
What is ad hoc analysis?
It's a business intelligence evaluation that allows you to customize reports for a specific use. Ad hoc analyses are dynamic reports that address unique business concerns.
When undertaking an ad hoc analysis, you'll seek to solve a business challenge you've never encountered before, as explained in the examples below.
In such instances, your periodic reports won't be of any help. The emerging challenges could require you to incorporate new company data, which will alter your business decision.
What is an example of ad hoc analysis?
Ad hoc reporting is applicable in every industry. Here are quick examples to consider.
Property management experts
A property management agency with a large client base notices a spike in operating costs. An ad hoc report will help the company to track the expenses per type. The report will also show the properties with high operating costs and when they occurred. This information will help the business to make quick decisions to lower its running costs.
Financial experts rely on accounting metrics such as accounts payable, accounts receivable, and business data to track the performance of various investments. Ad hoc financial analysis allows them to drill down to specific accounts, combine these data sets, and use the resulting information to make crucial decisions such as reviewing pricing models.
Sales and marketing units
Sales and marketing departments can use ad hoc reports to establish the impact of a marketing campaign in an area by tracking key metrics such as net sales, leads generated, and customer reviews. These reports can further narrow down to specific salespeople and their performance.
Sales managers can use such information to identify which products appeal to their clients and which don't. Incorporating customer reviews in the analyses help the team to identify product gaps that would improve client satisfaction if corrected.
Additionally, you can use individual performance reports for sales teams to identify the training needs of various units, such as product knowledge gaps. Identifying and resolving such deficiencies early enough helps improve the team's performance.
How ad hoc reporting differs from traditional static reports
Before we delve into how you can use ad hoc reporting in finance, let's find out how these reports differ from their static counterparts.
- For starters, static reports have a predefined reporting period. It could be weekly, monthly, or quarterly depending on the reporting frequency of the organization. However, you can generate ad hoc reports anytime as needed.
- Traditionally, companies have predefined structures for their static reports. They also have dedicated reporting teams who prepare these reports at the end of the reporting period. On the contrary, ad hoc reports are self-service and feature a user-defined structure.
- The rigid nature of static reports limits them to reporting predefined business performance over time, thus making them unsuitable for daily business operations decisions. On the other hand, ad hoc reports provide current data, allowing you to make day-to-day business decisions. For instance, they can show how products perform, thus allowing businesses to decide whether to continue or discontinue investing in them.
- Another striking difference between static and ad hoc reports is their sharability. Usually, data analysts distribute static reports in the form of PDF files. However, ad hoc reporting tools allow you to export your reports to your dashboards and share them via online company platforms.
How to use ad hoc analysis?
Ad hoc reporting tools allow you to easily create customized reports whenever you need them without relying on your data analysts. This self-service feature increases efficiency in decision-making, consequently improving business performance. Here are quick steps to get started with ad hoc financial analysis.
- Access to your company financial data - Your ad hoc analysis tool should be able to connect to your static reports. Usually, this happens via an API connection. You don't have to worry much about this step. However, you'll need the IT department to set you up with the correct user profile. Your user profile will define the kind of data you can access in line with your company's data governance policy.
- Extract current financial data - Ordinarily, this step would involve running SQL scripts to extract income statements from financial reporting systems. However, the best ad hoc reporting tools allow you to access such data without writing code.
For instance, the system may incorporate a drag-and-drop menu or a search function that allows you to select the data fields you want to access and extract them to your working space. Here you can arrange the information how you wish, depending on the business problem you want to address.
- Visualize your ad hoc report - Once you extract your target data, you'll need to organize and present it in a way that is easy to interpret. Focus on the data that matters and make your charts simple and easy to interpret.
Remember that purpose of ad hoc analysis is to help you find immediate answers to short-term business problems. However, nothing stops you from honing your data literacy skills to help you produce high-quality reports within the shortest time possible. So don't spend too much time trying to make your charts perfect.
How to choose the right ad hoc analysis tool
There are many ad hoc analysis tools in the market, and sometimes it's hard to tell which is right for you. But you won't go wrong if your choice of ad hoc reporting tool meets the following qualities.
- Simple and easy to use - The best ad hoc software allows users to access data. Choose a self-service business intelligence system with a simple user interface that non-tech-savvy users can understand.
However, the tool should also be versatile enough to handle complex data manipulations by advanced users. For instance, the system should allow you to run multiple queries from different sources and output the results on the same chart. Your company will not have to invest in additional business intelligence tools.
- Visual data output - Once you have prepared your ad hoc report, you'll need to present it in graphs and charts for interpretation by your audience. The best systems in the market feature multiple data visualization capabilities such as line graphs, bar charts, doughnut charts, and scatter diagrams.
Once you run a query on a specific data set, the tool will automatically plot a chart. You can choose the type of chart you need from the available options. You have the option of customizing the chart area. For example, you can chart titles, label axes, add a legend, and change the color. These features allow you to personalize your reports to suit your needs.
- Data sharing - Another feature of a good ad hoc analysis tool is sharing your final reports with other business users. For instance, you should be able to save your ad hoc reports directly to your dashboard templates.
Additionally, the system should support data sharing via e-mail and other company collaboration tools, especially for remote teams. Examples of such platforms include Slack, ClickUp, Jira, and Confluence. This feature allows you to share ad hoc reports quickly with decision-makers for the smooth running of your business.
- Scalable operations - Consider your organization's future when choosing an ad hoc analysis tool. A quality ad hoc system should be scalable to match your organization's growth. Such a system saves you the cost of acquiring new software and training your employees.
- Truly self-service - 97.2% of the world's corporates use big data for decision-making. For this reason, ad hoc analysis cannot be left to IT teams alone. A truly self-service ad hoc analysis system allows teams to work independently without relying on data analysts for reports. This arrangement increases your company's efficiency and reduces duties on your IT staff.
Why use ad hoc reporting tools?
Using ad hoc analysis tools comes with immense benefits to finance teams and other business stakeholders, as explained below:
- As discussed earlier, an ad hoc report provides a solution to a specific business problem that needs to be solved immediately. Therefore, these reports facilitate decision-making among business executives for the smooth running of daily business operations.
- The self-service nature of ad hoc reporting systems encourages business users to hone their data analysis skills. This move results in more cross-skilled executives in your organization, thus improving their productivity.
- Ordinarily, a company would employ more data analysts to cope with increasing reporting tasks as the organization grows. Adopting an ad hoc analysis system saves the firm money and productivity hours when all stakeholders can access crucial data by themselves.
- Ad hoc analysis apps are designed to simplify data analysis. Using such applications makes it possible for any business executive to create quality reports and dashboards, which previously were a preserve of seasoned data analysts.
- The best ad hoc tools support diverse businesses reporting needs. Their customizable feature allows you to personalize most of these applications to suit your business requirements.
Challenges of adopting ad hoc tools
Adopting ad hoc analysis tools comes with its share of challenges. Here are some impediments you're likely to face when you adopt ad hoc analysis tools in your organization.
- Employees require basic data literacy skills to use ad hoc analysis tools. Only users with advanced data analysis skills can exploit the full potential of these systems. Since only a quarter of the workforce is confident in using data analysis tools, organizations must equip their workers with the necessary skills to use ad hoc reporting software. It may take a while before all employees can use these reporting applications effectively.
- Ad hoc data analysis relies on data to create meaningful reports. Such applications work well when company data is centralized. In cases where company information is decentralized, you risk using incomplete data, which can be misleading. To solve this problem, ensure you link all company applications to the ad hoc reporting app.
- Adopting ad hoc reporting tools in organizations with weak or non-existent data management policies could be disastrous. You should disclose crucial company data to employees on a need-to-know basis. For this reason, all ad hoc analysis tool users must have the prerequisite permissions before accessing crucial company data.
- Ad hoc reporting systems aren't the same. They differ in the scope of reports they can generate. If you fail to consult widely to incorporate all units in your organization at the procurement stage, there's the risk that the tool you purchase won't meet all your business needs.
As companies continue to rely on data for decision-making, it's clear that ad hoc analysis will continue to inform day-to-day operations in organizations. Therefore, companies need to make a deliberate effort to invest in quality ad hoc analysis software and equip their employees with the digital literacy skills necessary for operating such applications.