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Finance as a community is underserved by the analytic application arena and IT in general. While applications such as budgeting, planning and forecasting exist, there are few true analytic applications for the office of the CFO. It is not a foregone conclusion that everyone needs to do planning, forecasting and budgeting in the same manner or in the same order. In fact the art of business intelligence and analytics has yet to move out of infancy and into maturity in finance. Through this blog, I hope to enlighten and challenge business intelligence users who try to maintain their leadership through analytics and financial performance management.

 

 

As I speak with analysts, customers and partners I am always awed by the degree of passion people have about their particular tool of choice in the presentation of the data.  But I keep wondering if the passion isn't a bit misplaced and should be more about the findings from said data, or about the data itself.  The data sources and the content providers are the real foundation of Business Intelligence.  I am a probably a heretic to focus on the commonality of the tool offerings and to want to defocus on the tools and interface layer, but of late, most of the companies with whom I have been speaking are relaxing standards to allow users access to the tool of choice!

Interesting that it has come full circle and now I am seeing the market heat up in favor of Excel.  Excel 2010 is offering the more sophisticated analytic user the type of functionality they need without the extensive support of IT and without a learning curve beyond their usual skillset.  But then, I never expected to hear the major financial institutions say they are seriously looking at putting their data in the cloud and that the use of any tool will do as long as the business decision is relevant and actionable. 

So, if data in the cloud and personal tool selection become the mantra of the Business Intelligence community, then access to the appropriate data and content becomes the overarching issue.  Oracle is attempting to play nice and "support" a mixed environment in their infrastructure.  An Oracle backend in an SAP shop is OK as long as there is some footprint for potential upsell.  The result being a quagmire of pipes and connectors typical of the early days of Business intelligence.  Due to the level of sophistication we have achieved with MDX and JDBC, ODBC, ODBO, and other alphabet soup connectors, the customer wins and CAN participate in a multi-vendor, cloud deployment without impact to the analysis which is the critical task at hand.

I support all the vendors in the Business Intelligence space.  They each have a following and they are constantly inventing new ways to try and make data meaningful.  Each user should have the right to manipulate and study the data in the environment of choice.  The back-end should not have to dictate the front-end.  The cloud makes this paradigm easier, but the tools vendors have the capability and wherewithal to make this a reality today and enhance their own connectivity to be ubiquitous in anyone's environment.

 


Posted July 13, 2010 11:17 AM
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SAP has been the odd bird in the nest of BI without a mainstream database of its own.  No longer.  With SAP's smart acquisition of Sybase, they gain a wealth of tried and true technology and a devoted user community that is concentrated in Banking and Finance.  Sybase IQ has quietly led the market in columnar-style databases and analytic data structures. This appliance / database sector has been frenzied and volatile of late with mergers and acquisitions.  It was always odd to me that no one had yet elected to dance with Sybase, one of the stalwart players.  In recent months SAP has started to seem less compelling as it struggled to keep its partnership and co-opetition model under control.  IBM and Oracle are not friends, but have been a necessary evil without an SAP-owned database.

Clearly SAP now enters the realm of Business Intelligence and Performance Management without having to rely on IBM and Oracle to deliver an acceptable database solution. The more conservative markets have their favorites and breaking new ground is difficult.  Sybase has been acceptable in the past and can be so once again.  It also means that the alternate database companies will have a newly revitalized formidable competitor in their midst.  I have seen Sybase IQ compete favorably against all the major database platforms including the new analytical engines.  SAP has changed the game.  I, for one, am looking forward to see how this plays out.


Posted May 12, 2010 11:12 PM
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Finally, someone has started down the right path to converge Human Capital Performance Management and Corporate Performance Management under a government mandate using Business Intelligence as the driver. William Laurent's column in "Information Management" addresses the gap between responsible management execution and forced government oversight.  http://bit.ly/cM2PjU

While we assume that BI techniques are the underlying technology for Performance Management, the truth of the matter is that there has always been a glass ceiling where management maintained an academic interest instead of a true actionable deployment.  If every layer of an organization were run on the basic tenets of Business Intelligence there would be a bi-directional alignment of revenues, costs and operational initiatives.  Does it take TARP to finally instigate a change?  Starting with the Finance community isn't a bad thing, but it needs to be a broader trend.

Accountability, which is the foundation of Governance Risk and Compliance, has been largely absent in the executive offices of not only the finance community, but businesses in general.  Sarbanes-Oxley was a step to gain oversight from a finance perspective, but the operations of the business largely remained unchanged and unaffected.  By holding senior executives accountable and targeting short-term expenses and long-term investments as William Laurent suggests, management will be able to better deliver value and foster innovation. Our economic crisis has shortened time horizons to weeks and quarters from months and years.   In an effort to have very exact forecasts, we are now forecasting within the foreseeable future.  Innovation and long-term projects are being halted and shelved in favor of lower costs and time horizons that require no prediction or trending.  Stifling growth means that there is no way forward for economic expansion.  That puts the economy in a spiral (or keeps it there as the case may be.)

Starting with the TARP recipients and extending to other businesses outside of the Finance community there should be a mandate to fully utilize Business Intelligence and strict cost controls that include executive compensation using defined performance metrics and key leading indicators.  This can then cascade down throughout the organization with departmental goals and objectives consistently reflecting those same operational performance metrics and revenue goals.  In the absence of these initiatives we are actually creating an underclass who is bearing the brunt of the economic downturn with no ability to drive profitable growth of their segment of the business.  The key is tying performance directly to effort and to the ability to deliver on an objective or finite goal.  Collective effort means that everyone has a hand on the oars and they are all pulling together.  No one at the helm is exempt.


Posted February 3, 2010 11:46 PM
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Businesses have to put a stake in the ground and decide what will appeal to their audience.  This market intelligence will identify the customer and then enable the business to  1) identify their transitory behavior and 2) analyze the relative success metrics.  Does the market require innovation, simplification or redirection?  Is the economy dictating a "back to basics" trend where new product introductions need to have high value and an overwhelming enticement of durability and quality to grab a foothold and sustain growth?  In a business market of 3 generations of workers all intermingled, identifying the trend-setters and the market influencers is more difficult than usual.  For any single product segment the sphere of influence could be determined by a different pattern of metrics with the same general composition.  For example, buying a smartphone today has a distinct set of criteria for a decision, but the weighting of any one category changes, not by the age of the user, but more importantly as to whether the user wants a phone first or a social media device first.  This is inconsistent across generations and may be determined by job functions as well.  If I want to determine the profitability of a marketing campaign on a newly introduced smartphone, I need to ensure that my level of outreach granularity does not make the mistake of purely using age and lifestyle demographics as the determinant.  The correct data will determine the strength of the metrics and the outcome of the campaign.  Bad assumptions in data collection will yield bad decisions.  The data will be correct, but the premise and decision-making will be inadequate. If we expand that thought to the financial intelligence of the business - money will be applied to the wrong campaigns and yield poor results and reduced profits.

The Financial Intelligence of an organization has a great deal to do with the internal performance of its employees (more on Human Capital Performance Management later) and its impact on the success of decision-making processes.  Yes, we can use balanced scorecards to measure our success, but only if we are measuring the correct values and have access to the data from the right perspective.  In the smartphone example, the axis of the decision has to be beyond age and lifestyle.  This multidimensional view needs to start with smaller samples and a lower level of granularity.  Micro-campaigns to niche categories of users have dictated a broad spectrum of phones currently on the market, but buyers are often confused by the correct way to select phones and the carriers do a poor job of differentiating the phones for the various groups of users.  A better categorization of the phones would result in better articulation of the advantages which would mean as easier decision process by the consumer.  It is not only about turning our data inside out to look at it from a different perspective, as much as it is understanding if that perspective is still valid and being positively influenced by external thought leaders and market drivers.  This model dictates that the acquisition of data, not just the analysis of data becomes a critical role in the corporation. So, who do you trust to ensure that the correct data is being captured to make the best decisions? Who in the organization makes the strategic decisions to create the data points that are then fed into the Business Intelligence systems?

Posted January 3, 2010 9:05 PM
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The insight of Business Intelligence is still analysis in hindsight and better compared to static reporting. Performance Management is the process through which a corporation evolves in its quest to reach the holy grail of Financial and Operational excellence.

While I hate to call Business Intelligence - "tools", the BI industry has evolved striving to achieve the prettiest picture and the most interactive frames on a page with the promise of insight and achieving the "ah ha" moment.   This has eluded most analysts using Business Intelligence.  Analysts are unable to discern what data is the "right" data and put that data into a relational context to better understand what it is telling them or should be telling them.  A key reason for the inability to isolate the essential data upon which to make insightful business decisions is that most of the relevant data needs to come from outside the corporation.  Internal data supports current marketing and operational thought and previous decisions and is less likely to isolate new metrics for future or real-time decision-making.  There are too many people speculating on how the economy should be acting and too few people leading the economy onto a healthy plateau. The contextual data analysis that is needed will yield business insight with the ephemeral customer behavior regardless of whether the transaction is internal or external to the corporation.  The cogent questions should be, "What was the thought process that initiated the transaction and how do we replicate it - in real-time?"

If a corporation maintains a steady course of action based on a historical context in this economy, they will fall to the recession rather than rise ahead of its recovery.  If, as the government would like us to believe, the recession is over and we are on our way to recovery, the best use of traditional Business Intelligence techniques are to capture buying signals, not buying behavior.  Buying behavior moving forward is based on a different chemistry of values than history dictates.  Our workforce has changed, our demand for quality has increased and the expectation of a reasonable price has been tempered.  The decision criterion that is a return on value is paramount and price elasticity is very sensitive.  If we are to achieve Financial Intelligence and a high level of Operational performance, we must be able to isolate the characteristics of the external market that are driving business growth in this unsettled economy. 

To exceed our own expectations of growth and use the rudimentary tools available today, the Finance department and the Marketing department have to work together.  The cost of Marketing becomes a considerable expense of gaining marketshare.  Using third party data or extensive market research efforts, the corporation has to learn the behavior and influence the future behavior of their market.  Together they have to identify an acceptable level of margin and build a fewer range of products while still addressing the targeted population.  Financial Intelligence is about understanding cost drivers and being able to make slight financial corrections based on operational performance; a more dynamic entity than most Finance departments today.  This results in a much more interactive way to look at the business while being able to use the Business Intelligence and Performance Management systems to drive Financial and Operational excellence.


Posted November 15, 2009 10:21 PM
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