Gathering the Data
Consider this scenario. You have assigned a member of your FP&A team to produce an analysis for the current year and the prior year. The first step for your analyst is to gather the relevant data. This may involve running a series of reports from one or more source systems. The analyst copies and pastes the data in a spreadsheet, massages the data into an analysis, formats a report and then presents it to you. You take one look at the report and you conclude that something isn’t adding up. So what is going on?
Let’s take this apart in a logical order (hence the multi-part blog post). Your analyst took the data from the source system(s) with the assumption that it was validated and correct. Or maybe your analyst is more seasoned and tied the report out to some other source and it aligned. How could you still end up with funny looking data in the resulting analysis? The problem could lie in the chain of transaction integrity. If that is a new term, please read on.
Chain of Transaction Integrity
Chain of Transaction Integrity (CTI) is a growing technology approach to the age-old problem of “garbage” in the data. However, the new twist with CTI is that data in a system, or better yet, multiple systems is analyzed in the context of the full transaction. Let me explain.
Suppose you are a lender who provides home mortgages. If you have ever had a home mortgage you know that there are a lot of steps and documentation that must be completed before the title company hands you the keys to your new home. But as the lender, you may have multiple systems that facilitate the securing of the mortgage. You have credit checks to do, applications to complete, an inspection, government forms, commissions to pay, possible commissions to receive, deposit funds to apply, bank accounts to withdrawal fees from, record fees collected and so forth. All of these events are captured in a data source somewhere and most likely in multiple systems. If you look at them individually, the data may seem complete and accurate when in fact if you consider that data point within a chain of transactions, problems can be found.
Let’s take the inspection component of a mortgage. The inspection is ordered and preformed. Your mortgage system checks off those boxes. However, your AP system does not note an invoice from the inspector for that property. Or your AP system says an inspection was done but the mortgage system has no report. Or your AP system recorded an inspection fee that is out normal of range. So your analysis would be incorrect as the total inspection costs (AP sourced) divided by total inspection by vendor (mortgage system) is not correct. This is a simple example but think about this over thousands of transactions and the staff you have who simply troubleshoot system issues every day.
As we all know, once the books are closed it becomes increasingly difficult to correct bad data. You may have to push the correction into another period or, worse yet, it goes undetected for many transactions over many periods. This creates an often hidden, systemic problem which can impact financial and operational performance.
Monitoring Chain of Transaction Integrity
Therefore, you should have a real time (or near real time) way of to monitor the CTI. That is where Foreside Group can help. By implementing a CTI tool for your organization, you can be alerted when there is a problem in the entire chain or at certain points along the chain. Whatever root cause (system config, new hire training issue, programming bug, inexperience, input error, fraud, etc.), you now have an early warning system to allow you to fix or adjust in a timely manner. Think of our inspector submitting an invoice for a resident that doesn’t have the report attached. You can quickly rectify either the invoice or get the report into the mortgage system.
CTI helps drive business performance by improving data accuracy and saving time and money while enhancing your customers’ experience.
Look for the next part of this series to see why CTI is the building block of a world class data-based modeling and decision-making solution. Subscribe to our blog and follow us on LinkedIn.
Contact Foreside Group to find out more about our CTI monitoring solutions and services. As we like to say, “When you partner with Foreside Group, you manage the business, we manage the complexity.”