How Much Detail is Needed?

Without overdoing it

As everywhere — feasibility is decisive. Very often, the transition from the absence of accounting to its implementation happens grotesquely zealously. That is, the company tries to detail accounting as much as it can possibly imagine. It’s almost like a person who has been lying on the couch for 30 years, suddenly trying to meet Olympic champion standards. There is neither sense nor real prospects in this.

Competencies for perceiving results

First, you should detail only to the extent you are capable of conducting quality analysis. Collecting sales statistics in 20 dimensions is great — but only if the conclusions built on such analysis help make specific management decisions. If you are limited in your ability to make such decisions, then excessive detail may only harm, because it takes away the manager’s attention, increases the costs of administering such accounting, and requires implementation costs. This problem also applies to large companies, because it often happens that an analysis tool was once developed, a decision-making methodology based on this analysis was developed, but over time, only the analysis remained without decisions. The tool is maintained for years, spending significant effort, but it brings no benefit.

Feasibility

Therefore, second, you should put on the scales not only the possible benefit but also the price of such a tool. You need to find balance, and each company, at different times of its development, has its own. From time to time, you need to review the tools being used, get rid of ineffective ones, and introduce new ones that meet new needs and capabilities.

Conclusion

But almost always, when you have the opportunity to collect data without extra costs, you should try to do so, because in the future this process will help have a base for more detailed and complex analysis than you are able to do now.