Sections 302 and 404 of the Sarbanes-Oxley Act have focused the attention of corporate accounting and finance functions on the importance of accurate reporting and shorter close cycles. As a result, many companies are undertaking projects to upgrade their consolidation and reporting (C&R) systems. However, these software implementations fail to adequately improve reporting when project management is not based on a data-centric approach to implementation.

Accurate data is always an essential element of business performance management (BPM) systems, but it's of paramount importance in C&R projects. Improving data collection and distribution, and, of course, ensuring accurate financial reporting, is the whole point of this type of software upgrade. Unfortunately, these projects often concentrate too heavily in the early stages on application design. This can cause project managers to fail to realize critical information about their data source systems before the implementation begins. Leaving data for last can be disastrous for the project's schedule and budget. A data-centric mind-set needs to be incorporated into every phase of C&R project management.

Project management processes vary widely depending on the unique characteristics of each implementation. However, for the sake of this discussion, every C&R rollout will be assumed to roughly follow the five-process framework described in the Project Management Institute's Body of Knowledge.

Initiating Processes

The Project Management Institute defines the first phase of project management as the initiating processes. This is the stage during which decision-makers commit to getting the project under way. Selection of the project team and steering committee is a critical component of this phase of an implementation. To keep data issues at the forefront in project-related decisions, managers should make sure that team members who are assigned to data-related tasks have representation in the project steering committee and know exactly what's expected of them. For example, if the task of creating general ledger interfaces falls to the IT function, managers should ensure that the individuals responsible for that activity have a thorough understanding of what's needed when and have input into the methods used to perform that task.

A second major element in many C&R projects' initiating phase is the creation of a current-state-vs.-future-state gap analysis of relevant processes and systems. Some projects' gap analyses fail to consider data issues. To support a data focus, the initiating phase should include creation of a data-flow diagram of current and future states, which the project steering committee approves.

Meaningful chart-of-accounts definitions are another must for data-centric C&R projects. Developing a global chart of accounts is a typical task within the initiating processes. Initial attempts can be ineffective, however, if the organization doesn't have approved chart-of-accounts definitions. Such a situation can lead to G/L flexfield mapping mistakes; these can be resolved only through data-reconciliation efforts, which increase the time and cost of this critical task.

Planning Processes

After the preliminary, initiating steps have been taken, a project enters the planning phase. This is the period during which decision-makers devise a workable scheme for accomplishing the project's business goals. A data-centric attitude is particularly important in five activities during the planning phase: development of the RFP, software-vendor selection, consultant selection, project plan creation, and confirmation of the project's budget. Ignoring data issues in any of these areas can result in a measurable increase in the cost, length, and scope of the overall project.

The RFP for a C&R project should include two data-related factors. First, it should specify the data scenarios or categories that the system will need to include (e.g., budgets, forecasts, flashes); the frequency of those budgets, forecasts, etc.; and the number of years' worth of information the software will have to store. Second, the RFP should provide details on the source system for this data and explain how the company plans to integrate it with the new reporting application.

Data concerns find their way into the selection of a software vendor when, during the decision-making process, the purchasing company requests access to the software under consideration. Project team members should be able to test a prototype of each candidate software system using actual data from the organization's source systems. In addition, as a company undertakes performance testing of its various choices, it should include expected data volumes and proposed application integration approaches in the criteria it considers.

Another area in which data considerations are key is the consulting-vendor selection process. Many projects initially assume the company's source data is perfect. However, a data-centric project team will require its consultant to have a realistic plan of attack for data integration, as well as a contingency plan in case the source data turns out to be in poorer condition than expected. Project managers also need to ensure that the firms they're considering have successfully completed similar projects in the past. If consultants don't sufficiently prepare for potential data integration problems, the project's time frame and costs may balloon during execution. One key to keeping costs down is to secure access to lower-priced project members who can spend time on data-reconciliation issues.

Before the project plan is finalized, the implementation team needs to perform data mapping, integration, and reconciliation tasks for representative data from all source systems. These activities should always occur before final application design decisions are made, since the only way to be entirely sure that the software will include all of the required data is to work with representative data samples. This approach can preclude design changes late in the game.

The project planning stage is also the time to schedule testing that will reveal any trouble in the new system's use of corporate data. The plan should account for at least three months of lag closes -- test closes performed on the new software after the production closes, on the old software, are finished. Lag closes can be performed for multiple months nearly simultaneously.

The last main data consideration in a project's planning phase is establishing the expectation that all project members -- both internal and external -- must use a common data-reconciliation methodology. Unless everyone involved in data reconciliation uses the same methodology, data problems can cause substantial inefficiencies.

Execution Processes

The execution phase of a C&R implementation involves coordinating resources to carry out the project plan. During this process, team members should use application prototypes to demonstrate the fulfillment of complex functional requirements. Doing so can facilitate communication that might highlight data problems, such as problems with intercompany reconciliations or currency translation adjustments, once the implementation is under way. Including prototypes as part of the formal functional requirements is always good practice in C&R projects.

The people who ultimately will manage and use the software and data sources on an ongoing basis should stay closely involved in this phase of the implementation. The project is in jeopardy if knowledge transfer from external vendors to internal resources is not robust. Project leaders need to make sure employees have hands-on participation in data-related components of key project tasks and step up their participation level as the project progresses.

User acceptance testing also requires close attention. To maximize the benefits of user acceptance testing, project managers must ensure that it's managed via timed and guided acceptance phases and that the application review involves real data and real reports. This will enhance end users' understanding of the application and processes during the testing phase, and it may bring to their attention potential data problems before the system goes into production.

Control Processes

Control processes are the activities by which a project team ensures that the implementation meets its objectives. In this project phase, team members monitor progress and take corrective action when necessary. The first step in integrating data considerations into project controls is to proactively prepare for any source-data or extract, transform, and load (ETL) issues that may emerge. To plan for the unexpected, the project manager needs to be sure the project plan includes task contingencies that can be swapped out without affecting the project's overall scope or cost. For example, before the implementation begins, the project team must understand the relationships between the level of detail in a budget and the cost and schedule of the project.

Even managers who enter a C&R project with the understanding that data problems may be looming out of sight must keep a vigilant watch over potential cost overruns. It's a good idea to negotiate deals that share the burden if data problems raise costs or extend timelines. Bonuses can reward consultants and employees for early task completion, and financial penalties can punish them for missed dates. As the adage goes, "what gets measured gets done, and what gets rewarded gets done well." Negotiate contracts in which payments are made at key data-related project milestones, such as when one period's source data is in the prototype, with responsibility assigned appropriately for problems like source-data inaccuracies or mapping errors. Addressing these topics early in the negotiations will keep project participants focused on the data.

Such a reward structure can prevent project managers and consultants from treating data as an afterthought. Too often, project leaders' high-level perspective leads them to downplay the importance of crucial low-level data-related tasks -- to consider them details that require less attention than application or infrastructure design. Project management best practices require decision-makers to establish meaningful levels of documentation and communication about data-related tasks and to make sure everyone involved in the project fully understands them.

Closing Processes

The data focus becomes less critical at the end of the C&R implementation, when project managers aim to formalize acceptance of the project and bring it to an orderly end. Still, successfully completing a data-centric project requires the evaluation of the application's usage and verification that change procedures going forward will consider impacts on historical data and information-retrieval methods. This evaluation, along with lessons learned during the project's postmortem meeting, can provide valuable information that decision-makers can use to make the company's next BPM implementation more efficient and robust.

The activity and time requirements of each of these project management processes will vary based on the complexity of the application being installed, the corporate infrastructure, the number and diversity of users, and the data the new system needs to retrieve. However, maintaining an overall data-centric focus is extremely important in every project -- after all, C&R upgrades should revolve around the understanding that accurate financial reporting is the end game. In these days of Sarbanes-Oxley compliance, a data-centric C&R project is the best way to start.

Chris Iervolino is a senior managing director at ITEC Consulting Inc., a BPM consulting organization specializing in all aspects of corporate performance application design, implementation, and integration.