As a business executive or manager, you’re bombarded with a flood of data, reports, and metrics that can often blur what really matters. The challenge is identifying the signal amidst the noise. The solution could lie in the management style known as Management by Exception (MBE).
Management by Exception is about shifting the focus: spending 80% of your time addressing issues, anomalies, or red flags while devoting just 20% of your time to monitoring the usual, predictable things. It’s a radical departure from the traditional 80/20 rule, where managers often find themselves mired in routine activities, leaving little room to address what matters — outliers and opportunities for improvement. Technology plays a critical role in supporting this philosophy by helping identify exceptions and enabling managers to act quickly and decisively.
Why Management by Exception Works
The idea behind MBE is simple: Why spend your day reviewing data that’s already where you expected it to be? Instead, MBE encourages leaders to spend more time managing variances — those instances where a budget was far off, a line item skyrocketed, or a project went over schedule. By focusing on the exceptions, leaders gain insight into underlying causes, allowing for more fact based decision-making.
Unfortunately, too many businesses fail to embrace this methodology. We’ve seen countless organizations that don’t have the discipline (or the tools) to track performance against original expectations. Instead of addressing root causes, they are constantly firefighting, stuck looking in the rearview mirror rather than steering the ship forward.
Continuous Learning and Improvement
Management by Exception is also about more than just reacting to problems — it’s a philosophy of continuous learning and growth. When an exception is identified, it isn’t simply noted and forgotten. Instead, it becomes a learning opportunity. Why was the budget so off? What caused that line item to spike? By digging into these questions, businesses can adjust their strategies and tactics moving forward, streamlining processes and increasing efficiencies.
This continuous learning cycle is especially important in industries like construction and senior living, where margins are tight, and even minor missteps can have significant financial consequences. By focusing on variances and exceptions, managers can improve future bids, adjust pricing models, and pursue operational excellence as a competitive differentiator—making sure they’re always learning from their mistakes and improving.
Real-Time Data Keeps You Out in Front
It’s hard to overstate the power of real-time data. 80% of companies surveyed by Gartner saw their revenues increase after implementing real-time analytics. A second survey by the Centre for Economics and Business Research showed that 44% of companies gained a competitive advantage thanks to real-time data analytics.
Market conditions change rapidly, so relying on data that’s even a day old can leave you vulnerable. Imagine being able to spot a cost overrun as it’s happening rather than at the end of the month. Or realizing that a project is falling behind schedule and reallocating resources immediately to avoid costly delays.
In the construction industry, for example, fluctuations in material costs and labor availability can make or break a project. Real-time insights into those variances can be the difference between profit and loss. The same is true in manufacturing, where even a slight delay in production can have a ripple effect throughout the supply chain. MBE helps companies achieve operational excellence.
Moving Beyond the Rearview Mirror
One of the biggest pitfalls we see is businesses relying too heavily on historical data. While it’s important to understand what happened last month or last quarter, the real value comes from using that data to make proactive decisions. MBE, supported by technology, allows businesses to look forward, not just backward.
Rather than spending hours poring over last month’s results, the most successful companies use real-time data to make adjustments on the fly. They can tweak budgets, change bids, and allocate resources faster and more effectively because they’re not waiting until the end of the month to see what went wrong.
The beauty of MBE is that it doesn’t require a full-scale technology overhaul to get started. Your business can begin by implementing the MBE philosophy using existing systems and tracking methods while gradually introducing more sophisticated tools like Sage Intacct to streamline and automate the process.
How Technology Accelerates MBE
While Management by Exception doesn’t necessarily require a complete software overhaul, the right technology tools can help your business take its MBE practice to the next level.
A lot of organizations begin implementing MBE using their existing systems, manually tracking exceptions and addressing them as they come up. However, this is where the limitations of traditional methods often appear. Without real-time insights or automated tools, you’re always looking backward — relying on month-old data and trying to make strategic decisions based on what happened weeks ago.
Today, however, your business has access to technology that can offer real-time visibility into performance. Tools like Sage Intacct allow you to track performance against expectations in real time. By integrating data from multiple departments — finance, operations, sales — you can identify exceptions as they happen, prompting quick action and making sure that decisions are based on the most up-to-date information.
Sage Intacct has fully embraced AI to enhance real-time decision-making and support Management by Exception. Sage’s AI-powered solutions, including Sage Copilot, mean your business can monitor performance continuously and gain real-time actionable insights. There’s also Sage Intacct’s General Ledger Outlier Detection, which reviews millions of transactions weekly, identifying anomalies before they become issues, and lets your managers focus on variances faster. Additionally, AI automation in Sage Intacct accelerates routine processes like invoice processing and error correction so that you can concentrate on high-impact areas of the business.
In addition to Sage Intacct, Domo is another tool we use to help companies achieve their MBE goals — here’s an interesting article from Domo on the topic.
The Path Forward
Management by Exception is a powerful way to lead, allowing managers to focus their time and attention on what truly matters. Supported by technology, MBE enables your business to address current issues and learn from them to make smarter, faster decisions. Contact our consulting team to learn more.
