Introduction to Controlling
Controlling is an essential part of corporate management and accounting. It refers to the planning, management and control of corporate processes to ensure the achievement of strategic and operational goals. As the interface between management and operational areas, controlling performs an important coordination and analysis function. The role of the controller has changed over time, so that today they act as a business partner in many companies, assisting with decisions regarding the achievement of goals and the coordination of business units.
Definition and importance of controlling
The definition of controlling includes the systematic collection, processing and analysis of information (data) required for the planning and control of entrepreneurial activities. The tasks of controlling are diverse and include both operational and strategic aspects, such as monitoring target/actual comparisons and identifying deviations in order to initiate targeted measures to optimize processes.
Controlling is an important part of business administration studies and comprises various sub-areas such as operational controlling, strategic controlling and financial controlling. The basis for successful controlling is data and its analysis, which can come from various sources, e.g., accounting, financial accounting, customer databases, production, etc. By using controlling tools such as key figures, target/actual comparisons, controlling cycles and analyses, controllers can make well-founded decisions and support management in controlling corporate processes.
Goals and functions of controlling
One of the core tasks of controlling is the planning and monitoring of goals derived from the corporate strategy. Here, the objectives are broken down into individual sub-objectives and measures that are aligned with the various corporate divisions and processes. The monitoring and control of target achievement is carried out through the regular analysis of target/actual data, which allows deviations to be identified at an early stage and countermeasures to be initiated.
Overall, controlling is a multi-layered subject area which, due to its relevance for the success of companies, is of central importance in the modern economy. In the following sections, this paper will discuss in detail the various aspects of controlling and its tools, areas, and future trends to provide a comprehensive understanding of the role and functions of controlling in today’s business environment.
Basics of controlling
Controlling is an essential part of business administration and plays a central role in corporate management. It is used to manage, plan and control corporate processes in order to ensure that targets are achieved. This section explains the basics of controlling, including the distinction between operational and strategic controlling and the distinction between controlling and corporate management.
Planning, control and information
Planning in controlling involves the systematic preparation of decisions based on information from various sources such as accounting, financial accounting, customer databases, field service reports, complaints management, the R&D department, the marketing department and the human resources department. This involves setting objectives derived from the corporate strategy and defining appropriate measures to achieve these objectives. Planning is important at both the operational and strategic levels.
Control in controlling refers to the monitoring of target achievement and the identification of deviations between target and actual status. Regular target/actual comparisons enable controllers to identify deviations at an early stage and initiate targeted measures to optimize processes and improve target achievement. Control tasks are an integral part of controlling and serve to ensure the effectiveness and efficiency of business processes.
The information function in controlling comprises the systematic collection, processing and analysis of data required for the planning and control of entrepreneurial activities. The information serves as a basis for decision-making and enables informed decisions to be made and supports management in controlling corporate processes.
Operational and strategic controlling
Operational controlling refers to the short-term planning and control of corporate processes and is closely linked to management accounting. It is used to coordinate and control the operational activities in the various divisions of the company in order to achieve the goals set and to ensure the efficiency of the processes.
Strategic controlling, on the other hand, has a long-term planning horizon and is geared towards managing the overall corporate strategy. It includes the analysis of internal and external influencing factors, the formulation of long-term goals and the development of strategies to achieve these goals. Strategic controlling serves to secure the company’s long-term success and competitiveness.
Distinction between controlling and corporate management
While controlling is responsible for the planning, management and control of corporate processes, corporate governance is the responsibility of management and involves the implementation of strategies and the management of operational activities. Controlling supports the company’s management by providing information, analyses and recommendations in order to make sound decisions and ensure the company’s success.
Controlling tools and methods
This section presents various controlling instruments and methods that can be used in a company to optimize the planning, management and control of corporate processes.
Cost and performance accounting
Cost and activity accounting is a central instrument in controlling that serves to record, allocate and analyze costs. It enables the identification of cost drivers and the evaluation of the profitability of processes and projects. Cost and activity accounting consists of various sub-areas, such as cost element accounting, cost center accounting and cost object accounting, which together provide a comprehensive picture of the cost structure in the company.
Budgeting and Forecasting
Budgeting refers to the process of planning and allocating financial resources to specific business areas and activities. It is an important tool for managing the financial performance of the company. Forecasting, on the other hand, is the creation of forecasts for future developments based on current data and trends. Both methods are closely linked and support management in decision-making and adjusting strategies.
Indicator systems and balanced scorecard
Key figure systems are essential in controlling in order to measure and evaluate the company’s performance on the basis of quantifiable variables. They enable the monitoring of target achievement and the comparison of business units and activities. The Balanced Scorecard is an extended system of key performance indicators which, in addition to financial indicators, also takes into account qualitative aspects such as customer perspective, internal processes and learning and development potential. It provides a holistic picture of the company’s performance and supports strategic management.
Risk management and controlling
Risk management and controlling are important aspects of controlling that deal with the identification, assessment and management of risks. They help to identify potential threats to the company’s success at an early stage and to take countermeasures. Risk management and controlling instruments include, for example, risk inventory, risk analysis and risk assessment, and the implementation of control and monitoring mechanisms.
Project controlling refers to the planning, management and control of projects to ensure their success. It includes the monitoring of time, costs and resources as well as the quality of the project results. Project controlling tools such as milestone trend analysis, earned value analysis or risk management help to monitor project progress and identify problems at an early stage so that appropriate corrective measures can be initiated. Project controlling is an important part of operational controlling and serves to ensure the efficiency and effectiveness of projects.
Overall, the various controlling instruments and methods offer the company a wide range of options for optimizing the planning, management and control of corporate processes. The choice of appropriate tools and methods depends on the specific requirements and objectives of the company. Professional and goal-oriented controlling can help to increase corporate performance and ensure sustainable success.
Controlling areas and industries
This section presents various controlling areas and industries in which controlling plays an important role.
Marketing controlling refers to the planning, management and control of marketing activities to ensure the achievement of marketing objectives. Various key figures, such as ROI (return on investment) or conversion rate, are used to measure and evaluate the effectiveness of marketing measures.
Personnel controlling deals with the planning, management and control of personnel processes. For example, key figures such as turnover rate, employee satisfaction or productivity are used to measure and improve the performance of personnel.
Production controlling refers to the planning, management and control of production processes. For example, key figures such as productivity, output, or scrap rate are used to measure and improve the profitability of production.
Logistics controlling deals with the planning, management and control of logistics processes, such as the flow of goods or warehousing. For example, key figures such as lead time or inventory costs are used to measure and improve the efficiency of logistics processes.
Industry-specific controlling (e.g. banks, health care, non-profit organizations)
In various industries, industry-specific aspects play an important role in controlling. In the banking sector, for example, there are special key figures such as the cost-income ratio or return on equity, while in the healthcare sector the focus is on aspects such as flat rates per case or patient satisfaction. Non-profit organizations also use special controlling methods to achieve their goals.
All in all, controlling can help to increase corporate performance and ensure sustainable success in various areas and industries. The choice of suitable controlling methods and instruments depends on the specific requirements and objectives of the respective area or industry.
IT systems and software in controlling
IT systems and software have become increasingly important in controlling in recent years. They support controlling departments in processing, analyzing and presenting data more effectively and efficiently. This section presents various IT systems and software solutions that can be used in controlling.
Business Intelligence (BI) and Data Analytics
Business intelligence and data analytics refer to technologies and methods for collecting, analyzing and presenting data to support decision-making. They enable controlling to collect and analyze large amounts of data from various sources to identify trends and correlations. The knowledge gained can be used for the planning, management and control of corporate processes.
BI systems offer controlling various tools to collect, structure and prepare data. The systems can also generate custom dashboards and reports to visualize key data and metrics. The use of BI systems enables controlling to make decisions on a sound data basis and thus increase the efficiency and effectiveness of the company.
Data analytics, on the other hand, refers to the application of statistical methods and algorithms to gain insights from large amounts of data. For example, methods such as data mining or machine learning are used here. The application of data analytics enables controlling to identify correlations and patterns in the data and to create forecasts on this basis.
Controlling software solutions (ERP systems, specialized controlling tools)
ERP (Enterprise Resource Planning) systems are software solutions that enable integrated management and control of business processes. They cover various areas such as finance, human resources, purchasing and sales. ERP systems can also be used in controlling, for example, to ensure efficient data processing and provide information needed for the management and control of corporate processes.
In addition to ERP systems, there are also specialized controlling tools that are tailored to the specific requirements of controlling. These tools enable, for example, the creation of budgets, the monitoring of key figures or the performance of target/actual comparisons. The best-known controlling tools include SAP BusinessObjects or IBM Cognos, for example.
The use of IT systems and software solutions in controlling offers numerous advantages, such as higher data quality, better data availability or greater efficiency in data processing. Nevertheless, systems must be carefully selected and implemented to ensure successful use. Careful planning and intensive training of employees are essential to ensure high acceptance and effective use of the systems.
In addition, data security must also be ensured to prevent misuse or data loss. Data protection and data security are therefore important aspects that must be taken into account when selecting and implementing IT systems in controlling.
Overall, IT systems and software solutions offer controlling a wide range of options for processing and evaluating data more effectively and efficiently. The choice of suitable systems depends on the specific requirements and goals of the company. Professional and goal-oriented controlling can be supported by the use of IT systems and software solutions to increase company performance and ensure sustainable success.
Conclusion and summary
Controlling is an important component of corporate management that deals with the planning, management and control of corporate processes. It is a comprehensive concept that includes various tools and methods to enable effective and efficient corporate management.
A central aspect of controlling is key figure controlling, which is used to measure and evaluate the company’s performance. These key figures enable controlling to make decisions on a sound data basis and thus increase the efficiency and effectiveness of the company.
The term controlling covers various areas and industries in which controlling plays an important role. IT systems and software solutions are also playing an increasingly important role in processing and evaluating data more effectively and efficiently.
Overall, professional and goal-oriented controlling can help to increase corporate performance and ensure sustainable success. Careful selection and implementation of controlling tools and methods as well as IT systems and software solutions are essential.
The term controlling is thus a comprehensive concept that encompasses various aspects of corporate management and plays an important role in ensuring the success of a company.