Management control is an important strategic tool that can be used to achieve goals and objectives. Typically in business, it is applied to monitoring and managing activities, resources and finances. The proper use of management control can help organizations achieve desired results, especially when this tool is supported by a digital platform and ecosystem that can provide consistent, real-time data to support it. There are several ways to use management control to improve organizational performance. Before that, however, it is necessary to fully understand its usefulness and, more importantly, to start a process of implementing it, or improving the existing approach.
The strategic importance of management control
Management Control(Management Control in English) is a fundamental component of business management and is used to ensure the achievement of an organization’s strategic objectives. From a digital perspective, Management Control systems can include tools that help create the budget and track performance against it by setting specific indicators and KPIs. They also help managers identify and correct problems early so that the organization can continue to achieve its strategic goals. SAP S/4HANA, as an ERP, has a number of tools for implementing management control, especially from a data-driven perspective, a strategy in which the benefits of an enterprise management control system become more apparent.
A well-designed industrial management control system can help an organization be proactive in decision making, moving away from the traditional reactive approach. In some cases, if the available data are particularly accurate and valuable, it is even possible to go as far as predictive management.
Management control strategies and tools can also help ensure that resources are allocated in a way that supports the organization’s strategy. Finally, corporate management control can provide important feedback on the effectiveness of an organization’s strategy.
How to use management control systems to achieve business objectives
There are three main components of a management control system:
- Financial controls: ensure that the company spends its resources properly and makes a profit
- performance measurement: they track the company’s performance against its goals. SAP has a wide range of tools to support this type of analysis: for example MaterialLedger is an outstanding tool for product pricing.
- reporting systems. provide managers with the information they need to make decisions about how to improve company performance.
There are several ways to use management control systems to achieve business objectives. One common approach is goal setting. Managers set specific goals for the company, then use performance measures to track the level of achievement of those goals. If the company does not meet its goals, managers can use financial controls and reporting systems to identify why and take corrective action. Another common approach is budgeting. Traditionally, in fact, budgeting and management control are two areas with many elements of overlap, since the latter also includes a strategic financial part.
Management control with SAP: the advantages of an integrated system
To run a business successfully, it is important to have systems in place to aid decision making and control operations. One of the most popular software suites for this purpose is SAP. SAP offers a number of modules that can be used to create management control systems, standard or customized to suit business needs.
One of the advantages of using SAP for management control is that the system, thanks to its modular approach, can cover all kinds of needs and can be adapted to meet a company’s specific requirements. In addition, SAP has great historicity: in a business context this is always synonymous with robustness, both in terms of support and community.
In addition, the cloud-based approach that distinguishes SAP’s offerings in recent years provides the ability to ensure universal access even for mobile workers, an indispensable feature in the modern workplace.
Choosing the right strategy and solutions for management control
Precisely because management control is a key strategic part of a modern company’s organization, it is necessary to choose both the platform and, more importantly, the ideal strategy to help manage and control the organization. Good consulting can be a valuable support in making these kinds of decisions effectively, consciously, and rationally. Most importantly, in the post-design stages, specialized practitioners and experts can provide ongoing support and also the training necessary for the broad and shared adoption of a management control system.
In Regesta every year we hold a Pathway dedicated to Management Control. See testimonials from participants of the first edition.
