A Practical Guide to Process Improvement

Revised Edition

E- B O O K

The information contained herein is proprietary to Workiva and cannot be copied, published, or distributed without the express prior written consent of Workiva © 2016.

A Practical Guide to Process Improvement

Process Improvement: A Universal Framework for Effecting Change

Why You Should Strategically Invest In a Regulatory

Reporting Documentation Platform

A note to readers

The recent economic crisis has led to an influx of change in business documentation.

As a result, many mandates have been implemented across the globe. Organizations of all types are now responsible for responding to multiple regulators, sometimes in multiple countries. SEC, EIOPA, FRB, FDIC, PRA, OCC— the list seems to grow daily. The regulatory reporting burden has drastically increased, and for many, it may be just the beginning.

Innovative strategies to optimize reporting team productivity is a must. Organizational ability to meet deadlines and regulatory obligations while maintaining flexibility to meet the change in these mandates and requirements up to the last minute are critical.

This guide was developed in partnership with our internal experts and derived from thousands of hours spent working on-site with customers. Within theses pages, you will find an actionable strategy that some of the world’s largest companies have used successfully to optimize documentation processes and increase productivity.

Process Improvement: A Universal Framework for Effecting Change

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Introduction

Today’s managers are being asked to do more with less. Their mandate is to cut expenses and eliminate resources, yet still deliver high-quality products and services that achieve big returns.

For many managers, it’s a near-impossible task. They often struggle to identify inefficiencies in their departments and resort to small cost-cutting measures that make a trivial difference to the bottom line. They want to do more, but they don’t have the budgets or resources. Without the ability to make changes that will save their organizations millions of dollars, they can’t win the attention of process management resources inside the enterprise.

What they need is a way to apply process improvement thinking on a smaller scale—a way to make big, lasting changes that will help their organizations run smarter and leaner without breaking the bank.

We believe financial reporting is an area where managers can make tremendous leaps in efficiency and cost savings—using the resources they have, within the boundaries of their existing budgets. By applying a process improvement framework to their existing workflow, managers can effect change that produces measurable results in a relatively short amount of time.

The history of process improvement

In 1991, H. James Harrington authored a book that offered a new perspective on how to transform core functions in the enterprise. Called Business Process Improvement, the book was based on Harrington’s work as a quality expert for IBM, where he led teams that looked for ways to perfect the organization’s systems, processes, and products.1

Their work led to the realization that every enterprise has two primary drivers: people and processes. By changing its processes, businesses can see tremendous improvements in both profits and performance. The idea is both simple and powerful, calling on enterprises to identify areas in their existing processes where they can increase margins, reduce costs, and accelerate schedules.2

The fundamental aim of process improvement is nothing less than massive breakthroughs in performance. It does not attempt to make incremental changes, but revolutionary ones. And it has worked. Traditional process improvement initiatives have been used to achieve tremendous results across many Fortune 1000 companies.

But these solutions also have an Achilles’ heel—they are built to address processes of massive scale. To implement them requires a multimillion dollar commitment and a team of experts over a period of years. As such, they are generally confined to addressing a small percentage of enterprise processes—those deemed large enough to merit such a large investment.

The 80 percent problem

It has been estimated that 80 percent of potential process improvements projects at any given company aren’t being addressed because they aren’t big enough to attract actions from upper management. This means inefficient operating processes are costing organizations time and money that could otherwise be saved.

Financial reporting is one such process. A fundamental part of every business, financial reporting has always played a key role the enterprise. It is becoming even more essential as the value of data grows and compliance requires an ever-greater share of the reporting cycle.

Business process improvement for reporting

At Workiva, we’ve worked with thousands of companies to help them improve their reporting processes. As a result of our work, we’ve realized that many organizations have similar reporting processes across different industries and business lines. To help them identify the constraints in their processes, we’ve developed a framework that illuminates weaknesses and inefficiencies. Called the Universal Process Framework, we have found that it can help organizations of every size think more strategically about their reporting functions.

“Measurement is the first step that leads to control and eventually to improvement. If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t control it. If you can’t control it, you can’t improve it.”

—H. James Harrington

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Even more importantly, we’ve designed the framework to give individuals within an organization the power to effect change, including the managers and team leaders who work with reporting functions every day. In this paper, we’ll explain the thinking behind it and demonstrate how you can implement the Universal Process Framework in your organization.

Traditional business process improvement methodologies

Since H. James Harrington first introduced process improvement, the practice has undergone significant evolution. Many different methodologies have sprung up, each of which offers a unique approach on how to optimize existing processes for exceptional results. Today, it continues to change as data and data analysis become increasingly important in making decisions and measuring operational effectiveness.

Some of the best-known methodologies include:

Lean – The Lean system operates with the goal of maximizing customer value while minimizing waste and attempts to create more value for customers with fewer resources

CEM – Short for “Customer Experience Management,” CEM requires businesses to identify and define customer expectations at every touchpoint and to create repeatable processes that align a business with its customers’ success

Six Sigma – Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects and minimizing variability in manufacturing and business processes

TQM – Total quality management consists of organization-wide efforts to develop a climate in which an organization continuously improves its ability to deliver high-quality products and services to customers

While these methodologies have demonstrated success, they are also synonymous with large-scale efforts initiated at the executive level. They are costly, require extensive training, and often have lengthy implementation times that span years.

Financial reporting isn’t an area that these initiatives ever reach. Part of the 80 percent of processes that don’t attract the attention of improvement teams, it is an area that has high value to the enterprise yet is often overlooked. Managers need a solution that allows them to create change in their own departments, using resources they already have at their disposal.

The significant role of financial reporting in the enterprise

Financial reporting requirements have grown exponentially in the last decade, both from internal and external requesters. From corporate boards and oversight committees to the Dodd-Frank Act, the SEC, and SOX regulations, reporting now consumes significant amounts of time and resources in organizations of every size. Finance teams have had to shift their workflow to adapt, and they have not always thought strategically about how to best approach these growing requirements.

Report quality affects organizations on every level

Financial reports are increasingly under scrutiny from a variety of sources. They often indicate an organization’s competitive position and commitment to social issues and play a key role in how a company is perceived by the public. Not only is reporting key to good decision-making, but it is also a valuable source of insights into an organization’s strengths and weaknesses. Companies with piecemeal reporting systems can be vulnerable to compliance errors and other missteps that can cause damage to their brands and long-term reputation.

While these methodologies have demonstrated success...they are costly, require extensive training, and often have lengthy implementation times that span years.

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The problem of inefficiency in financial reporting

As financial reporting has grown, it has experienced the same issues of other important business functions: inefficiency and wasted resources. According to a study published in Harvard Business Review in 2013, knowledge workers waste up to 50% of their time hunting for data, identifying and correcting errors, and seeking confirmatory sources for data they do not trust.4

At the core of the problem is financial professionals who, crippled by the lack of proper technology, must devote many hours to menial functions such as formatting and data input. This is time that could be spent analyzing reports for compliance or performing other functions with much higher value to the organization.

But how can managers determine where the inefficiencies are in their organizations? The puzzle of how to identify non-value added time prohibits many managers from clearly seeing where the constraints exist in their reporting processes.

Introducing the Universal Process Framework

In the process of working with thousands of clients on financial reporting, we began to recognize similar ways in which organizations run their reporting functions. To help visualize this process, we developed the Universal Process Framework.

This framework helps managers map their current reporting processes and identify their unique constraints quickly, simply, and cost-effectively. It separates the reporting process into three phases that happen sequentially, as follows:

1. GatherIn this first phase, source data is gathered from all of the places it exists. Often in the form of both structured and unstructured data, this phase involves discovering where the data is, requesting it from those who have access to it, bringing it all together into one place, and verifying its accuracy.

2. AggregateOnce the data has been collected, it needs to be aggregated into a single format. This part of the process often involves manual labor, as data is cut and pasted from various sources and formatted correctly. At the end of this phase, all the data is in one place.

3. ShareIn this final phase, aggregated data is curated for the needs of the end product—such as an annual audit report, a budget report, or a monthly ops report. Depending on the needs of that report, this phase may involve arranging selected data into tables, creating an infographic, or converting it into other formats.

Why process improvement matters

To the business unit

• Quality

• Efficiency

• Flexibility

• Cost

• Tactical agility

To the organization

• Revenue

• Growth

• Scale

• Profit

• Strategic agility

Knowledge workers waste up to 50% of their time hunting for data, identifying and correcting errors, and seeking confirmatory sources for data they do not trust.5

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An overwhelming 70% of senior finance executives said they know reporting teams spend too much time on reporting mechanics, too little on analysis.6

The connective tissue between the phases is where much of the workflow takes place. What actions must happen in each one, and what are the things that delay the process from moving from one phase to the next?

In fact, these phases rarely progress in a clean, linear fashion. During the aggregation phase, for instance, teams often discover that some data is missing, which means they have to go back and search for it. They may also question the accuracy of some of the data, requiring them to take additional measures to verify it. In the final phase, they often struggle with reconciling different versions and determining which changes should or should not be made. Each of these delays comes with a cost, both in time spent and also in the potential quality of the end result.

How to use the Universal Process Framework

By looking closely at the workflow along each of the three phases of the Universal Process Framework, managers can begin to identify areas where inefficiencies occur in their reporting processes. Often, managers will find that workers get stuck gathering data, obtaining approvals, or spending hundreds of hours on formatting and other mundane tasks.

The simple power of the framework is that it clarifies the prevalence of unsustainable reporting processes throughout the organization. Further, it spotlights processes that are not repeatable and therefore constantly need to be re-created. These constraints keep an organization from being able to quickly and consistently produce accurate reports without excessive manual labor.

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Organizations with cultures that value continuous improvement are far better at changing their processes and staying competitive.

Power, Brad. “Understanding Fear of Process Improvement.” (2012). Harvard

Business Review. Retrieved from https://hbr.org/2012/09/understanding-fear-of-process-improvement

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Frequent constraints in financial reporting

Here are a few of the common constraints managers often uncover when using the framework:

• No change controls

• No reliable version control

• Process can’t be duplicated

• Excessive manual labor

• Excessive formatting time

• Inconsistent numbers

• Inadequate time for reviews

The high cost of non-value added time

These constraints all have one thing in common: they require huge amounts of non-value added time. Many financial professionals are spending their time on menial tasks that don’t require their expertise when they could be directing their considerable skills toward activities that could benefit their organizations—activities such as analyzing the data for patterns or trends, ensuring that the organization stays in compliance, collaborating with other teams to raise reporting quality, and more.

These high-value activities are often ignored or postponed due to the demanding work of non-value added tasks. Formatting spreadsheets and wrangling different versions consumes vast amounts of time for little return and takes time away from more important functions, such as thorough reviews to catch errors or omissions. Over the course of months and years, the cost to the organization is significant.

Consider the 2013 study from Ventana Research, which found that:7

• 72% of finance professionals said their most important spreadsheets are shared with others

• 56% of users said combining spreadsheets is a time-consuming process

• 81% say they have to combine data from multiple spreadsheets

• 75% of professionals say it would be useful to make real-time connections to company data from within a spreadsheet

• On average, participants spend approximately 12 hours per month updating, revising, consolidating, modifying, and correcting spreadsheets they collaborate on with others and reuse frequently

Conclusion: Using the Universal Process Framework to effect change

The Universal Process Framework gives managers a way to take control of their financial reporting processes on their own, without the need to involve costly outside resources. Once they have identified their constraints, managers can investigate technologies to eliminate some of these non-value added tasks and free up their people to focus on activities that are more productive and profitable. Ultimately, the enterprise reaps tremendous benefits when their finance teams are able to focus on what matters most—making sure their reports are complete, accurate, and compliant.

The ongoing legacy of continuous improvement

The Universal Process Framework is most effective when it is used on a regular basis to evaluate how an organization is improving and where inefficiencies still exist. When examining processes becomes part of an organization’s culture, issues are more likely to be identified before they become systematic. In addition, teams are able to implement new insights on a regular basis, rather than waiting for an official change initiative.

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An important key in cultivating ongoing change is the support of senior leadership. Managers who use financial data to tell the stories of how their organizations have evolved and where new opportunities exist, often find that senior leaders are all ears. Executives need these stories, too, as they deal with shareholders, partners, and investors. When they are able to obtain clear, trustworthy reports in a timely manner, they often become finance managers’ greatest allies.

The financial reporting function has become more important than ever in the last few years, and it will continue to become even more vital in the years to come. By showing that it can add value to a company’s bottom line, financial professionals can have a bigger voice in the decisions their organizations make, both today and in the future.

Resources1Harrington, H. (1991). Business process improvement: The breakthrough strategy for total quality, productivity, and competitiveness. New York: McGraw-Hill.

2Ibid.

3Ibid.

4Redman, T.C. “Data’s Credibility Problem.” (2013). Harvard Business Review. Retrieved from http://hbr.org/2013/12/datas-credibility-problem/ar/1

5Ibid.

6”Finance 360° Insight.” (2013). EPM Channel. Retrieved from http://www.epmchannel.com/wp-content/uploads/2013/01/Finance-360-Degree-Insight-by-EPM-Channel.pdf

7”Spreadsheets in Today’s Enterprise.” (2013). Ventana Research. Retrieved from http://ww2.ventanaresearch.com/SS212012_SS21BRESRegistration.html

Why You Should Strategically Invest In a Regulatory Reporting Documentation Platform

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Introduction

Executives who oversee regulatory reporting face a growing dilemma.

The overwhelming complexity and increasing costs of regulatory reporting and compliance have been plaguing board members and senior leaders in corporations around the globe. According to a Thomson Reuters Annual Cost of Compliance survey, 70 percent of firms indicated they were expecting regulators to publish more regulatory information in the next year, and 28 percent said they expected significantly more.1

As a result of increased regulation, corporate regulatory reporting teams face the daunting choice of either doing more work with existing resources or requesting budgetary exceptions from senior leadership to get more help.

In the short term, it appears that budgetary exceptions and acceptance of increased costs have been the only answers.

According to the same survey, 68 percent of firms expect an increase in their compliance budgets this year, with 19 percent expecting significantly more. The largest global financial institutions are expecting even greater compliance budget impacts—33 percent expect significantly higher budgets.2 Managers know that in this challenging economy, allowing costs to grow uninhibited is simply not sustainable. The pressure continues to build.

In the longer term, and as enterprises face increasing pressure from shareholders and analysts to rein in overall costs, many organizations have adopted cost-containment policies. In a survey conducted by the consulting firm Resources Global Professionals, 82 percent of executives cited cost containment as one of their highest priority objectives and said they continue to pursue additional savings opportunities across their organizations.3

Unsurprisingly, in an environment that mandates doing more with the same or fewer resources, data quality has suffered. The Economist Intelligence Unit reported 52 percent of CFOs see data accuracy as the biggest obstacle in their jobs.4

Trying to do more with less usually leads to increased errors, exposing organizations and their leadership to penalties coupled with even more regulatory scrutiny. In fact, penalties and fines sought by regulatory authorities are at all-time highs and are likely to continue to rise in the absence of systemic changes.

This concern was further reinforced by the 2015 Federal Reserve regulatory reporting survey by Ernst & Young, Regulation now: the new standard and how firms are adapting, which found 40 percent of regulatory reporting departments at large banks and financial institutions perform an excess of 500 manual adjustments to regulatory reports.5

According to those surveyed, “managing data quality” and “maintaining data granularity” are two of the greatest challenges faced by their firms.6

More pressing, personal liability of compliance officers for errors is also on the rise. Fifty-nine percent of respondents in the Thomson Reuters survey expect the personal liability of compliance officers to increase, with 15 percent expecting a significant increase. The stress of dealing with this conundrum exacts high costs on employees and is a major contributor to what is now being called “regulatory reporting burnout.”7

What can be done?

Allowing resource costs to rise uncontrollably is, in the long run, out of the question, so savvy senior managers are looking for better ways to meet these demands by introducing new, innovative methods and ideas to the process.

Leaders responsible for making value-driven decisions to deal with growing regulatory reporting requirements need to consider applying new tools and solutions to improve their entire reporting processes. They must endeavor to build an enterprisewide strategy that can deal with the rising complexity of regulatory reporting documentation.

Trying to do more with less usually leads to increased errors, exposing organizations and their leadership to penalties coupled with even more regulatory scrutiny.

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A scalable strategy that can handle the constant change in expectations and requirements can produce high-quality compliant submissions governed by those requirements, and at the same time-savings can deliver sustainable and meaningful cost and time savings.

For many organizations, the idea of this strategy is not new. It had just been deemed, from an operational perspective, as currently out of reach. The biggest impediment has been the underlying mismatch between the needs of modern business reporting and documentation and the technology currently used to create this documentation.

This mismatch leads to inefficient, incredibly expensive business reporting document processes.

Two previous white papers, Process Improvement: A Universal Framework for Effecting Change and A Practical Application of The Universal Process Framework, discussed and demonstrated how teams could use the Universal Process Framework to improve smaller business processes, such as the financial statement close, fair value modeling, or small individual components of regulatory reporting. We have shown that through the application of appropriate technology, teams can achieve significant results in terms of both improved efficiency and quality.

Here, you’ll see how to apply this same approach to optimize a large regulatory reporting framework, either one that is part of a larger process or one that contains its own smaller subprocesses. Applying a worthy framework as part of a corporate business reporting documentation transformation project not only pay for itself quickly, but can have a multiplier effect throughout the organization as related processes are also improved.

Dodd-Frank reporting

As a result of the 2007–08 global financial crisis, there was a move to regulate systemically important financial

institutions (SIFIs) around the globe.

In the United States, many of these regulations have been implemented under the

Dodd-Frank Act, which among many other things, has driven regulatory reporting for banks and SIFIs to

incorporate large, highly complex reports. These reports are

reviewed by regulators such as the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and the

Office of Comptroller of the Currency.

In addition to CCAR, many other reporting processes will benefit greatly from using methodologies described

in this paper,such as:

• Dodd-Frank Act Stress Test (DFAST) – a complementary, though distinct, exercise from CCAR relying on

similar processes, data, and supervisory exercises

• Resolution Plan (Living Will) – describes a plan for rapid and orderly resolution in the event of material

financial distress or failure of the company

• Recovery Plan – outlines a company’s strategy for weathering financial distress

Of these mandated reporting requirements, banks and SIFIs would likely claim the CCAR process is not only

one of the most critical reporting processes of the Dodd-Frank Act, but is one of the most difficult to

produce each year.

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Specifically, you’ll see how to use the Universal Process Framework to think through a large regulatory reporting process, such as those required of large banks and financial institutions doing business in the United States under the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Though the example is specific to banks and financial institutions regulated in the United States, the same ideas can be applied to large regulatory and non-regulatory reporting processes in any country worldwide and across all industries.

This paper examines the Dodd-Frank reporting submission requirements for CCAR, the Comprehensive Capital Analysis and Review. CCAR is designed to assess whether an institution has sufficient capital to continue operations throughout times of economic and financial stress and has a robust forward-looking capital planning process accounting for the company’s unique risks.

Depending on the size of the organization, a CCAR submission may include hundreds of participants creating thousands of pages of documentation, which include many thousands of data points in text, tables, and charts.

Surrounding the CCAR submission are hundreds of pieces of supporting documentation subprocesses. These include, among others: risk model documentation, review and challenge documentation, policy and procedures, audit documentation, a great deal of business-as-usual documentation, various summary and board presentations, and supporting narratives.

All together, this accounts for an enormous amount of additional pages and data points. The massive effort of producing an annual CCAR submission, not to mention the necessary review processes requires the work of hundreds of employees along with many outside consultants. The hard and soft costs related to these processes are astounding and repeat year after year.

To analyze and understand all the components of the CCAR reporting process, businesses can apply the principles of the Universal Process Framework and from there, endeavor to optimize those processes.

Understanding the stress testing and CCAR/DFAST submission process

The typical CCAR documentation submission can be categorized into three main parts: the capital plan, supporting documentation, and additional reference material.

Senior management must first decide, within some proscriptive requirements, how it will tell the bank’s capital plan story. It must submit, at a minimum, certain mandatory elements and detailed documentation supporting those elements: FR Y schedules, an assessment of the expected uses and sources of capital, its capital policy, its process for assessing capital adequacy, and a discussion on plans that might change the bank’s capital adequacy or liquidity.

The submission will include other sections, ranging from responses to regulator feedback, scenario design, process documentation, model documentation, and for many banks, their DFAST and even Internal Capital Adequacy Process (ICAAP) information.

The CCAR leadership committee must then plan on what scenarios to run and decide which teams will own the various sections and documents of the submission.

Next, a designated team generates stress-test scenarios to be used to test the bank’s capital adequacy under duress. Additional scenarios are also collected from the Federal Reserve Board. The purpose is to demonstrate that the bank’s capital actions plans will not put its capital levels below the thresholds set by the Fed. The stress tests and the results are central to the submission.

Various subject matter experts (SMEs) work with modelers to create methodology documentation on how scenarios are created, what formulas and algorithms are used and why, and ensure the scenarios are rigorous and based on sound data and solid methodology.

Next, SMEs and leadership review and challenge the scenario results, assumptions, and methodologies to ensure they are well thought-out, rigorous, and fulfill all of the Fed’s requirements. The mountains of resulting scenario data and other financial statement data are summarized into hundreds of tables, which must be embedded in the submission documentation.

The report teams then aggregate all the documentation and data and submit it to various review committees.

After review, the SMEs and core team consolidate and edit the plan narrative to reflect a single voice, and then tick and tie every number in every chart and table mentioned in the narratives.

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The teams gather all supporting documentation—which is more detailed and includes more qualitative and quantitative information than is presented in the main capital plan document—and again tick and tie the associated numbers.

Finally, leadership, along with internal and external consultants and legal, review and approve the submission, which ultimately receives sign-off from the board and CEO.

The entire process and associated subprocesses are built using hundreds of independent text and spreadsheet files, which eventually must be integrated manually into a single submission.

All of this is against the backdrop of growing regulatory requirements and the need to keep the consistent confidence of stakeholders and analysts.

It is a tremendous balancing act. Regulatory requirements can change right up to the last minute, along with internal and external stakeholder expectations. As soon as the submission is submitted, it immediately begins again.

Applying the Universal Process Framework

Workiva developed the Universal Process Framework based on working with more than 2,500 customers and their thousands of documentation processes. This framework supports and visualizes reporting processes in order to find the constraints and opportunities for improvement in them. Using that as a starting point, it is now possible to engineer a leaner, more efficient business reporting documentation process.

The Universal Process Framework helps managers map their current reporting processes and identify their unique constraints quickly, simply, and cost-effectively. It separates the reporting process into three sequential phases: gather, organize/package, and consume/analyze.

Gather

In this first phase, source data is gathered from all of the places it exists, often, in the form of both structured and unstructured data. This phase involves discovering where the data is, requesting it from those who have it, bringing it together into one place, and verifying its accuracy.

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Figure 1: Universal Process Framework

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Organize/Package

Once the data has been collected, it needs to be aggregated into a single format. This part of the process often involves what we call manual labor, as data is copied and pasted, saved, and resaved from various sources and then correctly formatted. At the end of this phase, all the data is in one place.

Consume/Analyze

In the final phase, aggregated, normalized data is curated for the needs of the end products, which can be from one to many consumable reports and in formats ranging from documents, to spreadsheets, to presentations and slides.

The connective tissue between the three phases is where much of the workflow takes place. What actions must happen in each one, and what might delay the process from moving from one phase to the next?

Through this simple and powerful exercise, the framework clarifies the prevalence of unsustainable reporting processes throughout the organization.

Further, it spotlights processes that are not repeatable and therefore constantly need to be re-created. These constraints keep an organization from being able to quickly and consistently produce accurate reports without excessive manual labor.

Mapping CCAR to the Universal Process Framework

Here’s an example of the CCAR process and some of its constituent subprocesses applied to the Universal Process Framework.

What this figure shows is the many ways to interpret key findings between the phases where most of the work is done. Key takeaways:

Gather

Data usually flows from a combination of structured systems. But there is also often a reliance on unstructured data, down to individual constituents’ personal computers and personal drives. This data is known to be inconsistent and hard to find year over year. It lacks governance. Some data is presented as images, such as tables and charts, which are hard to authenticate and difficult to update if changes are made throughout the reporting process.

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Figure 2: Current CCAR process

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Changes to assumptions or variables in the source models and scenarios cause numbers that are being sent to multiple reporting process owners to change. Qualitative data (narratives, methodologies, summaries, etc.) are gathered as individual source files, such as word documents, PDFs, presentation slides, etc. These are also incredibly difficult and time-consuming to gather.

The gather phase is plagued by version control issues, collaboration issues, and data consistency issues specific to a lack of a centralized data source or an automated data distribution process. These problems can cause the same data to be sent over and over again to multiple reporting groups and owners.

Organize/Package

Both structured and unstructured data are aggregated and processed into visuals (tables and charts) to be used throughout the CCAR submission, capital plan, supporting documentation, and reference material appendices.

In most inefficient processes, this data is difficult to track, validate, and support with a clear governance story to regulators and reviewers. Additionally, the same data is being provided to multiple teams to place into their own parts of the submission documentation.

Due to the documentation processes being generally manually managed by different groups, this repeated sending of data for manual entry causes significant data risk issues and an abundance of ticking and tying time. Reviewers must look at data not only in tables and charts, but also in text.

Manual entry and manipulation of data across documents and file types significantly increases the risk for error. This evinces itself in several ways:

• Governance issues: The sheer amount of quantitative data across file types causes an inordinate amount of ticking and tying. Something is almost always missed.

• Formatting problems: Consistently formatting documents for font usage and table presentation is also burdensome and time-consuming. Each data change prompts reformatting.

• Voice consistency: Because multiple sources contribute to a master submission, editing for voice is a constant challenge. Storyline and voice consistency across all documents is critical.

• Version control: The lack of collaboration and questions of “Where is the pen?” and “Who has the pen?” are frequent.

• Communication and feedback: The whole bank is liable for the submission, so achieving consensus across all authors is challenging.

• Review: Senior-level reviews and their subsequent changes incur additional timefor the cycling that results.

Consume/AnalyzeAll of the different aggregated reporting components are finally put into consumable formats. These include a combination of those prescribed by regulators, as well as those needed for final reviews and reporting to the board.

Quantitative and qualitative data are reviewed a final time for consistency and to ensure lineage back to source systems, and governance is addressed. Any last-minute changes are a huge issue at this point, mostly due to timeliness and deadlines.

Data issues, quantitative, or qualitative push the process all the way back to the data gather stage, and they make their way slowly through the aggregate stage, through tick and tie and reviews again and again. All final presentations and documents are given a last check for a “single voice” as well as consistent formatting, font, and color schemes. The submission is then sent to regulators. A roll forward starts the next time-period reporting process.

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By looking closely at the workflow along each of the three phases, managers can begin to identify areas where constraints occur in the CCAR reporting processes. Often, managers will find workers get stuck gathering data, obtaining approvals, or spending hundreds of hours on formatting and other mundane tasks. In processes where there are multiple documentation teams and multiple process streams, these issues compound and multiply quickly.

These constraints have one thing in common however: they require significant amounts of non-value, manually- intensive time that translates to massive costs to the organization, not to mention decreased full-time employment job satisfaction. Formatting spreadsheets, ticking and tying thousands of numbers in tables, charts, and text, and compiling document versions together again and again consume vast amounts of time for little return.

Most problematic, they take time away from the most important components of the reporting process. The all-important reviews, strategy, review and challenge, and certification components are often squeezed or omitted due to the process inefficiencies.

Many trained and highly educated professionals spend time on these menial tasks, when they could be focusing on more beneficial activities, such as analyzing data for patterns or trends and ensuring the organization is in compliance. Time is precious, and there is little time left for managers to reach out to other teams and forge collaborative relationships to raise reporting quality. Over the course of months and years, the cost to the organization is significant.

The inefficiency multiplier here is that inefficient processes and cycling not only occur for the main submission document, but also individually for each of the hundreds of supporting documents as well. Additionally, using processes that are not sustainable or repeatable year over year compounds the already overcomplicated and expensive submission process.

Employing a business reporting documentation platform

The fundamental problem most companies face is that their underlying regulatory reporting framework—typically built on manually integrating desktop-based text and spreadsheet files—is simply inadequate for the complex reporting job at hand.

Instead, companies need to employ a business reporting platform purposely designed to enable teams to manage their processes efficiently, repeatedly, and sustainably.

There are several such platforms available, each catering to different markets. Here are some of the essential benefits these platforms can offer.

Accessibility and version control

The reporting team should be able to access its most current document from anywhere, anytime. This is best accomplished by using a cloud-based or software as a service (SaaS) reporting platform.

Working on a centrally accessible document eliminates the time spent consolidating multiple files and multiple versions of those files prior to submission. Having a single document also eliminates the “Who has the pen?” or “Where is the pen?” problem pervasive in current documentation processes.

The platform should also allow the user to connect supporting documentation to the same workspace as the main submission documentation. This ensures all reporting constituents are consistently collaborating with all the necessary documentation, as well as enabling cross-referencing across documentation.

The platform should offer automated formatting controls and access controls that enable teams to grant permission to access the report in its entirety or down to the section or paragraph level. This should include ownership and editing privileges to view only or restricted permissions.

The platform should also provide automatic audit tracking. If changes are made, it should be easy to see who changed what, when.

While freely available tools may work fine for collaboration among small groups and small documents, they lack the amount of control and security required, and are wholly inadequate for sensitive large-scale reporting.

21

Qualitative and quantitative linking and assurance

Multiple documents created throughout the reporting process will contain the same information, such as legal disclosures, descriptions of processes or entities, and more. Additional data points will appear repeatedly in text, tables, charts, and other supporting documentation and presentations.

The reporting platform should allow the team to link information to centralized, controlled, auditable areas that allow for instant updating of linked text, data, tables, and charts. This is sometimes referred to as having a single source or golden source of truth. When the information changes at the source, the tables, charts, or even sentences referencing that information all update simultaneously.

Data governance needs to be made easy through linking, with clear ability to trace lineage. Linking the usage of data and text throughout the report ensures consistency and eliminates redundant updating, allowing the reporting team more time for value-added tasks. The reporting team doesn’t have to tick and tie thousands of numeric data points by hand.

This is doubly important today and helps to minimize risk, in light of liability and fines for submitting incorrect data, for example, under both Dodd-Frank and the Sarbanes-Oxley Act.

Automated certification process

A robust business reporting platform will automate the complex process for sign-offs and certifications. As a result, the overa ll time for report development is significantly reduced.

Being able to communicate from within the platform—for example, to comment directly on content and data—also increases transparency, eliminates inherent delays in using phone, email, or other written feedback processes, and allows for feedback tracking.

Interconnecting tangential reporting processes

The platform should also enable teams to interconnect tangential reporting processes, so they can be together using the same collaboration and data linking architecture. This helps drive massive optimization across the organization.

It is also where businesses see the greatest ROI.

CCAR, for example, encompasses many subprocesses, such as the capital plan and narrative, process and methodology, review and challenge, business-as-usual documents and spreadsheets, and presentations. Optimizing the core submission components will drive efficiency, but implementing a solution that incorporates all reporting processes and tangential processes at the same time will have a greater ROI multiplier effect.

Repeatable and templatized framework

Take on the challenge of rolling forward your current processes from period to period in a purposeful manner. The platform should include methodologies and tools to support an organized roll forward and repeatability of the frameworks built for the reporting process.

You’ll find this helpful when rolling forward documentation and permissioning, task management and certifications, formatting and style guides, as well as quantitative and qualitative linking. This repeatability ensures that your optimization will increase as time goes by and will ensure sustainability of the platform as well.

Conclusion

Studies have shown that organizations can transform their documentation processes enterprisewide by applying the Universal Process Framework. The framework enables them to visualize their process constraints, and then use the right data and documentation archite

About Workiva

Workiva (NYSE:WK) created Wdesk, a cloud-based productivity platform for enterprises to collect, link, report, and analyze business data with control and accountability. Thousands of organizations, including over 65% of the 500 largest U.S. corporations by total revenue, use Wdesk. For more information, visit workiva.com.

Resources1”Cost of Compliance Survey.” (2015). Thomson Reuters. Retrieved from http://thomsonreuters.com/en/press-releases/2015/05/cost-of-compliance-survey-shows-regulatory-fatigue-resource-challenges-personal-liability-to-increase.html

2Ibid

3Engels, B. “Best practices for Cost Containment.” Resources Global Professionals. Retrieved from www.financialexecutives.org/eweb/upload/chapter/FtWorth/FWO_BestPracticesForCostContainment.pdf

4“Beyond Spreadsheets: How the New Breed of Asia-Pacific CFOs Make Decisions.” (2014). The Economist. Retrieved from http://www.economistinsights.com/sites/default/files/Qlik%20executive%20summary%20-%20Final.pdf

5“Regulation Now: The New Standard and How Firms Are Adapting.” (2015). Ernst & Young LLP. Retrieved from http://www.ey.com/Publication/vwLUAssets/EY-2015-federal-reserve-regulatory-reporting-survey/$FILE/EY-2015-federal-reserve-regulatory-reporting-survey.pdf

6Ibid

7 Ibid., p. 1

8Huang, H. “The Total Economic Impact™ Of Workiva Wdesk: The Business Benefits Of Using Wdesk To Manage SOX Compliance At A Large Auto Parts Retailer.” (2016). Forrester Consulting. Retrieved from https://www.workiva.com/sites/workiva/files/Resources/Market%20Research/workiva-tei-auto-2016-final-20160509.pdf

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