Understanding Business Intelligence - Part 2
In our previous article, we explained what Business Intelligence (BI) is and what it can do for your organization. In this issue, we will address how BI works in the real world (not only in the technology world). We will explain this by what some authors describe as the BI Cycle.
Business Intelligence should be considered as a performance management framework or an ongoing cycle by which organizations set their goals, analyze their progress, gain insight, take actions and measure their results, just to start all over again.
BI helps managers make better and faster decisions at both, the strategic and operational levels. Analyzing information leads to insights that suggest different approaches to improve the way we do things. This cycle keeps repeating as you continuously monitor your key performance indicators to determine what strategies work and which ones require more work.
The BI cycle could be described as an iteration of analysis, insight, actions and measurements which allow further analysis to continue again:
Analysis
When we gather data about our business we select only what we consider that is important. For example, we collect information to determine which factors affect our costs, our revenue or data that is important to our customers, to our partners or to our employees.
We do this because we have a mental model of what our business is and how to influence in the results of our business. This mental model simplifies reality so we can make decisions easier and faster, not considering all the complexities that the real world has. Our mental model however, can also block us from seeing what might be obvious to others.
BI systems usually provide freestyle analysis that can help you break the limitations of our mental models and eventually help conceptualize new models. The ability to navigate through layers of data, slice and dice rows and columns, create and calculate metrics on the fly and sort by any criteria enable users to ask the questions they consider important at that time and do the analysis in any form they choose. Insight
- perceptiveness: the ability to see clearly and intuitively into the nature of a complex person, situation or subject
- clear perception: a clear perception of something.
There are different types of insights. There are operational insights, like the cause of a decrease in sales of a certain product line. There are strategic insights, for example, the best strategy to penetrate into a new market category is through educating your target audience about your new product.
Insight is the product of broad, “out of the box” thinking and analysis that only we can recognize as useful. If an individual has an important insight, it generally becomes useful when shared with others. And this is typically not an easy task. Insights that bring change to mental models are usually resisted and sometimes unwelcome.
Business intelligence leads us to the insights, but it also provides us with the data, patterns and logic to support our insights. It also helps us present the justification of our insights.
Spreading insights is about helping people see things in a new way and understand the benefits. Action
Business intelligence allows you to make better and faster decisions. Actions always follow these decisions. Decisions backed by good analysis and insights give courage to the action maker. To implement these decisions you will always need some strong organizational support. When actions are backed by strong analysis and business intelligence, the purpose of these actions is usually clearer and easily justified, hence making it easier to gain the support that you need.
When business intelligence is delivered quickly, it accelerates the BI cycle and this gives more time for taking actions. Faster loops in the BI cycle and tighter feedback provide more chances for these action-based experiments and testing. Measurement
Business intelligence provides improved and more frequent information. This information helps organizations to measure results and compare against quantitative standards. And this again, leads to another cycle of analysis, insight and corrective action.
But what’s also very important is that business intelligence provides the capability of setting the standards for benchmarking purposes. This benchmarking will provide you with feedback on the financial aspects of your operation and also well beyond the traditional financial measures.
We measure what we think is important. BI systems are designed to “digest” large amounts of complex data that come from different sources and then combine this data using complicated algorithms for allocating and aggregating. As a result, BI delivers consistent reporting on the metrics, ratios and business drivers that managers need to understand, analyze and take actions regularly. These are called Key Performance Indicators or KPIs.
The following table describes some examples of KPIs:
| Business Area |
Key Performance Indicators |
|
Operations |
Units produced |
Inventory turns |
|
% defective |
Sector headcount |
|
Average wait time |
% orders scheduled to requested |
|
Vendor performance |
Returns |
|
Average cost on hand |
Average days in inventory |
|
Sales & marketing |
Unit sales |
Amount sales |
|
Average selling price |
Amount value per customer |
|
# products per customer |
Items per order |
|
Sales per salesperson |
Sales per territory |
|
Return amount |
Sales growth |
|
Gross profit |
Gross profit % |
|
Customer service |
Cases opened |
Cases closed |
|
First call resolution count |
First call resolution rate |
|
Cases per problem type |
Support rep. performance |
|
Cases per segment |
Cases per product family |
|
Cases per support representative |
Increase/decrease in cases |
|
Average handle time |
Average resolution time |
|
Finance |
Actual vs. budget |
Actual vs. forecast |
|
% variance |
% margin |
|
% profit |
Quick ratio |
|
Debt-to-equity ratio |
Asset turns |
In our next article, we will discuss how to enable business intelligence by describing the main components. If you need assistance or would like more information on BI, please feel free to contact us at info@baass.com.
WMS Key Featuring Scoring System
When it comes to choosing the right warehouse management system (WMS) for your business, it’s important to develop a scoring system for each feature desired by your company or demonstrated by the software vendor. Using a scoring system makes it more efficient during the WMS system selection process. By using a system of this nature, it prevents selection team members from forgetting how a particular system addressed a feature or confusing systems after seeing multiple demonstrations. The scores also come in handy when making a decision as to which of the solutions reviewed is best suited for your organization.
Please find attached an example of a scoring system that can be downloaded and used during your WMS system selection process.
Download Document
- If you need assistance or would like more information on the steps needed to start the search for a WMS system, please feel free to contact us at info@baass.com. Hopefully this article has provided some insight on preparing your organization to begin a search to improve their warehouse operations to gain efficiencies.
Sage Accpac - Slicing and Dicing Data
Accounting Technology, 10/1/2007 - 10/31/2007)
Added to this is the separation between analysis packages intended for internal accountants that have the support of massive IT and computing hardware resources, and those for small accounting firms serving SMB and sole-proprietor clients.
Though this scaling issue does make for some markedly different analysis software packages, there are a basic set of five features that any effective financial analysis software package should encompass:
The ability to draw data from any general ledger. Proprietary packages have the advantage of doing a good job drawing data from their own product suites, but are of little or no value to accountants whose clients are already set up on other GL platforms. Accountants should have the flexibility to work with any general ledger the client presents with at least some rudimentary analysis.
Comparisons to industry data.This is a simple subscription service that nonetheless dramatically enhances the value of the analysis. Whether it is comparison with other users of the same analysis feature-a nifty and unique feature of Thomson's Financial Analyzer CS-or with RMA data, it is an important feature.
The ability to communicate reports in a variety of formats.The days of email reporting in PDF format are rapidly coming to an end. Accountants need to be able to communicate and collaborate on analyses, not just compare notes via email. A basic feature should be an Internet portal or intranet collaboration system.
The ability to update information dynamically. Except for the smallest of client companies, information can change so rapidly that waiting for printing and distribution can mean lost opportunities. Immediate, real-time update of reports should be an important feature for any analysis package.
Recommendations in context.Whatever the analysis infers, it needs to be tied to goals and budgets or it becomes a simple wish list of goals never to be achieved.
All eight of the solutions profiled for 2007 meet most, if not all, of these basic requirements, and are geared to the needs of accountants servicing diverse clients in a variety of for-profit and nonprofit environments.
Financial Analyzer CS
Financial Analyzer CS is designed to seamlessly and easily transfer client demographic and accounting data from Client Write-Up CS or Trial Balance CS in order to quickly analyze financial performance, and then compare that data against both the compiled results from other participating Financial Analysis CS users or against the Risk Management Association industry data from its Annual Statement Studies.
Tightly integrated with the CS Professional Suite, Financial Analysis CS also prints reports directly to Engagement CS and to FileCabinet CS for paperless processing, and allows client access to the reports via the NetClient CS portal on the accountant's Web site.
It enables the accountant to review, analyze and compare clients' financial data, tracking material changes in client balances to fulfill audit requirements. The data is then converted to graphs and conditional text for ratios to make financials easier for clients to understand, and captured in a PDF file for email transmission to the client as well as the creation of client and firm dashboards that allow professionals to aggregate information in a single location. The Client Dashboard enables firms to view client data in a single customizable view, including client contact information and documents. The Firm Dashboard aggregates critical firm data, such as technical/system information and links to relevant documents/ reports.
Financial Analyzer CS gives the accountant enhanced capabilities to advise both small and large clients, as well as niche clients in similar businesses (e.g., doctors, restaurants), by offering a variety of options for analysis and comparison (current ratio, revenue per customer, operating or production costs, and more). Additional user-defined categories can be used to track and compare specific balances for clients in a particular industry or to create custom ratios.
Its tight integration with other CS professional products makes Financial Analyzer CS an effective tool for that suite. Its clean style, effective use of charts and data and the ability to compare with multiple sources of industry data at a cost-effective price make this a strong choice for basic, but practical, analysis.
ProSystem fx Profit Driver
ProSystem fx Profit Driver is a financial diagnostic and analytical solution for accountants that transforms client data into an interactive strategic planning tool, enabling professionals to instantly show their clients outcomes of what-if scenarios, and develop detailed plans for reaching goals.
Profit Driver integrates with ProSystem fx Tax Engagement and Tax, as well as data in spreadsheet form. This data is used for dynamic budget versus actual reports that enable the use of projections while budgeting. Accountants can review the drivers for the budget in up to 40 consecutive periods, use them as the basis, and from there, spread the projection to create monthly or quarterly budgets; enter actual results throughout the year to track performance; annualize the statement at year-end and append to the prior-year model.
Profit Driver is designed to provide both insights from existing accounting data and benchmarking against industry standards covering thousands of scenarios, including verticals, broken down by asset size, sales size and historical data. The industry data from RMA is scheduled for an update in late 2007. Profit Driver also offers a one-page Scorecarding capability, presenting the health of a company and an evaluation of its financial position.
A unique goal-seeking feature of Profit Driver offers an interactive system to define specific financial objectives and clearly identify the steps needed to achieve goals in such mission-critical dimensions as debt, cash flow and working capital, instantly allowing the accountant and client to evaluate, forecast and implement strategic business decisions to achieve desired results.
Though designed for use with the CCH engagement and tax systems, ProSystem fx Profit Driver contains enough unique features to make it worthy of consideration for accounting firms seeking to enhance their client support and value-added services.
Sage Accpac Insight, Version 5.3B
Sage Accpac Insight uses Universal Database Access functionality to integrate information from Sage Accpac ERP and Sage Pro ERP systems as well as other ODBC compliant databases into reports based on critical operational and sales data, as well as customer, product, vendor, employee, project and geographic data.
Insight converts data from the accounting system into a single data warehouse, capturing data needed for business intelligence and combining the data from remote offices and disparate departments. It uses this data warehouse to allow budgeting, scheduling and other business management in addition to analysis. While Insight can work without the Data Warehouse module, its capabilities will be limited.
Eight modules provide additional functionality suited to the scope and needs of the client, from basic reporting capabilities to full-feature enterprise consolidations. Author is a required module for all implementations that creates new templates for Microsoft Excel; Viewer allows reports to be run quickly against the reporting database; a Web Deployment Server publishes the reports on the company intranet or on the Internet; an Enterprise Budgeting module creates complex budget models containing multiple worksheets; the Consolidations module produces merged accounts for statutory or management reports; the UDA module extends the capabilities of analysis and modeling to other databases; and the Alerts module automates the reporting process by scheduling data updates and report refreshes.
The upcoming version 4.0 will include new features for Microsoft Office 2007 compliance as well as new features for reporting, filtering for Sage Accpac ERP data and report generation and presentation.
Sage Accpac Insight is a powerful tool that converts ERP data into analytical and budgeting reports invaluable to the medium-to-enterprise market. Its ability to utilize data beyond the accounting system makes it a more flexible tool than many of its competitors, and must-have software for Accpac ERP system users.
Caseware Scenarios 2006
CaseWare Scenarios displays an integrated income statement, balance sheet, cash flow, business drivers and analytics on a single screen. Its core purpose is to enable accountants working with data from client engagements to create multiple scenarios using actual data or other scenarios as a starting point, incorporating what-if and goal-seeking functionality.
This allows firms to see immediately the financial implications of changes in variables such as interest rates, sales and days receivables, or to ascertain how certain variables must be adjusted to reach any given goal. Scenarios may be used to present information clearly to clients, to identify how firms may grow their businesses, address problems or take advantage of proposed loans.
It can also, through tight integration with CaseWare Benchmarking, demonstrate how a firm has performed relative to its peers. And it allows for integration of process improvement initiatives through tracking compliance with best practices.
Version 2006.00 introduced Details. Scenarios now allows users to break each element into multiple sub-elements, and therefore allows users to track a much greater quantity of information than previously. This gives users a more detailed, more complete and more industry-specific picture of the financial performance of each entity or consolidated group of entities.
CaseWare Scenarios is not meant to be an enterprise-strength data-dicing tool, but rather an effective and economical scenario generation tool for users of CaseWare Working Papers. Its analytical style offers both industry data comparisons and an effective use of available accounting data, making it a perfect tool to add to the value of a client engagement without extensive investment in either time or resources.
ProfitCents
Aimed at accounting and financial professionals rather than corporations, the ProfitCents product family provides for analytical reporting for individuals, for-profit companies and nonprofits, with additional capabilities for integration of business information gleaned from reports of publicly traded companies. The result is the ability of an accounting professional to provide base-level analytics to a wide range of clients from small businesses to the enterprise.
The ProfitCents For-Profit Business Analysis includes financial analysis applications that produce reports, audit and review reports and projection/forecast reports. ProfitCents Basic is a four-to-five-page starter report for sole proprietors and tax-only business clients who may be intimidated by performance ratios. ProfitCents Public is a two-to-four page report on the performance of public companies that is useful in guiding investment decisions.
ProfitCents Infinity is a five-to-seven-page report that includes text, graphs and more detailed ratio analysis. ProfitCents Extreme is a six-to-eight-page report designed for management meetings with business clients. And ProfitCents Analytical Procedures is the most detailed report, combining ratio analysis with detailed industry comparisons and an analytical procedures documentation worksheet.
The top of the line is Sageworks Analyst, an analytical program for deeper financial analysis and more granular forecasting. Tightly integrated with Microsoft Excel, Analyst allows forecasting directly from historical records using both trend analysis and data regression techniques. It creates a customizable, interactive projection model in Excel with industry comparisons, scenario analysis and "what -if" and debt modeling.
The ProfitCents line of analytical products fills a critical niche in the business intelligence marketplace, enabling accountants and other advisors to meet the needs of sole-proprietors and SMB clients with real-time industry data sourced and updated daily. Its unique commitment to this niche will make it invaluable to the majority of accounting firms.
Microsoft FRx Version 6.7
Microsoft FRx 6.7 is an internal analytics program that allows managers to create more effective financial reports and identify trends. Its focus is less on external comparisons or trends analysis in favor of a better understanding of the company's fiscal periods, chart of accounts structures, transaction details and balances.
A built-in link to the general ledger -for the Microsoft Dynamics line and other major GL packages-is used to build the basic data set. The data can be presented in pre-configured reports, or customized through the use of row formatting, column layout tools and "reporting trees" that produce a more visual view of the data.
An FRx Report Designer provides reporting capabilities, with export capabilities to Excel, a Microsoft OLAP (online analytical processing) cube, HTML, an ASCII text file, an Extensible Business Reporting Language (XBRL) instance document or Extensible Markup Language (XML) document.
Additional Modules for FRx include a currency translator; an FRx WebPort to publish, store and manage reports online; and an FRx report server that provides for automatic report generation. A new module for this version, the FRx Report Manager, automates the process of manually compiling report books containing many different document and file types.
Its three versions offer a basic desktop edition for use on a single workstation; a professional version that includes the currency translator, WebPort and Report Manager on a single server; and an enterprise edition that is expanded further with the FRx Report Manager and additional FRx Report Server engines (four engines).
Microsoft FRx 6.7 is a streamlined analytics package whose strength lies in its flexibility and economy for mid-sized to enterprise-level organizations. It does an excellent job of translating accounting data into management information with a minimum of IT expertise or training.
Exact Business Analytics
Exact Business Analytics (EBA) is a flexible business intelligence tool that draws its data from any ODBC-compliant source or business function. It uses this data to produce ad-hoc analyses and personalized information views with full OLAP graphing and reporting capabilities that can be automatically distributed to users on a pre-defined schedule or accessed via the Web. The system is readily extendable and scalable for multisite, multicurrency and multicountry operations.
Because it draws from an unlimited number of internal data sources, EBA is able to integrate accounting information with sales, marketing and other information. This data is compiled not into reports but into "views" that serve as the foundation for soft-copy Dashboards. Each dashboard, which can be tailored to the needs of each individual user, can replace literally dozens of paper-bound reports.
The core analytics package is extended with four add-on modules. The eDeployment module automatically refreshes and distributes EBA Views to users in their preferred format. An Extension Builder provides the ability to extend EBA integration beyond the pre-built mapping and to other data sources, enabling access to any ODBC-compliant database. The Dashboard Designer module provides the capability to create and customize dashboards designed to serve specific business needs. And a Web Access Server provides an efficient platform for sharing information across the organization or with customers, suppliers and other business partners.
Exact Business Analytics is a powerful and robust system intended for the needs of an enterprise-level organization. Its key strengths are its ability to draw data from virtually any source and to output that data in paperless views that can be dynamically updated, interpreted and organized into management Dashboards suitable for executive decision support.
Panorama NovaView 5
Panorama's NovaView business information suite is an enterprise-strength package of analytics, reporting, dashboarding, scorecarding, advanced visualization and modeling designed to convert enterprise databases into decision support through drill-downs, drill-ups, data slicing and data nesting.
Built for use with leading data systems from SQL and Oracle to SAP and SyBase, NovaView combines the ability to run on the business intelligence layer of these platforms with a firm rooting in MDX, the multi-dimensional format of SQL. This provides exceptional flexibility for large organizations that can support its complexity, and though it is tightly integrated with Microsoft's MDX business intelligence services it operates at a vastly higher level. The key difference is that NovaView avoids the need to extract information from the metadata layer before it can be manipulated and formatted.
Panorama NovaView 5 is a suite of 10 applications that encompass that encompass NovaView Analytics, NovaView Smart Reporting, NovaView Dashboard, NovaView Visuals, NovaView Scorecards, NovaView Spotlight, NovaView Business Modeler, NovaView for Microsoft Office, NovaView Server for MDX and the NovaView Software development Kit.
Just as Indy cars aren't built for street racing, Panorama's NovaView is not built for just any enterprise. It is designed for high-performance organizations with a database structure to match. But for those organizations, Panorama's close integration with Microsoft and its inherent strengths have made it one of the fastest growing business intelligence platforms in the world.
Times are a-changin' for IT
By: Greg Enright
Managing change within an organization has never been easy. Most corporations are akin to a luxury cruise ship: they don’t turn around easily, and when they are forced to, much time and patience are required.
It used to be that the ship never really needed to alter its course much at all. A successful company made its widgets, sold them, and kept steaming toward the port of profit.
Today’s corporation is faced with many more obstacles — and opportunities — that force change upon them. Among the obstacles is a more nimble set of competitors, thanks in part to technologies that have opened up new ways of conducting business and outmaneuvering rivals. Among the opportunities are the very same technologies that offer corporations the chance to steam out ahead of the fleet.
The management of these technologies presents the IT department with a paradox. Deploying them, educating users about them, and ensuring they are running effectively creates more overhead for IT staffers, putting one more responsibility on their already overflowing plates. But such technologies also present the IT department as a whole with an opportunity to move further into the waters that are the overall business. Increasingly, the types of software offerings that are enabling more change to take place are those that can also play a role in influencing the core strategies adopted at the executive level.
Take collaboration platforms, for example. Today, it is easier than ever to get various arms of a company interacting with one another, thanks to many of the Web 2.0-type applications that foster an increased transfer of ideas. Where in the past a meeting would have to be set up so that involved parties could bandy about their suggestions for company-wide change initiatives, today such banter can take place within the confines of an interactive interface. In effect, the technology does not merely allow for more proposals for change to be presented; it encourages them, simply because it’s so darn convenient and accessible.
One inherent danger that such software presents, however, is the increasing amount of time and effort that contributors end up expending on the collaboration process. In many cases, the time required to keep up with all the extra communication can severely eat into the time a person needs to carry out their core tasks. With technologies such as these being so closely linked to the acts of change within an organization, it naturally follows that those who know the most about their deployment and use — the IT department — will attain a more prominent voice in the setting of corporate strategies. With the art of change management becoming so closely tied to technology, IT can’t help but assume a bigger role in the act of setting strategy within their outfits. Advertisement
This trend is yet another example of the IT department’s rise to a more strategic role. They are simultaneously helping to chart their firms’ courses and enabling the ship to move more easily. The times, they certainly are a-changin’.
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