Surviving Economic Downturns with Performance Management and Business Intelligence Solutions

Originally published July 22, 2008

Rising fuel prices, the mortgage crisis, a weak dollar, low consumer confidence – the difficulties of the current economic landscape are clear. Most businesses understand what they need to do to survive in these kinds of economic conditions. Budgets need to be watched more closely. Hiring initiatives and employee headcounts have to be evaluated. More energy has to go into sales efforts.

The problem with the typical business responses to harsh economic conditions, however, is that they don’t always go far enough – and are often influenced more by immediate business pain than longer range planning that can help a business not only get through the rough period, but also emerge with stronger processes in place.

One area that even the best-run companies often overlook is the important role that certain processes and solutions provide in helping an organization weather an economic downturn. In particular, properly integrated business intelligence and performance management solutions can have a large, positive impact on operational efficiencies, cost-cutting efforts and individual employee performance. In fact, these solutions can not only help a company ride out hard economic times, but also put it in a better position when business picks up again. They can help improve discrete processes as well as the overall corporate culture, resulting in short-term gains and long-term, foundational benefits.

Using IT Strategically and Tactically

How do these technologies help? First, business intelligence solutions work hand-in-hand with performance management, but with a stronger focus on data. A business intelligence solution can be used, for example, to extract valuable but previously overlooked information that might help increase sales, optimize inventory levels or spot relationships with customers that could lead to more business opportunities.

Performance management solutions enable more effective management of an organization by delivering a complete, secure and integrated view of your operations and processes, from senior executive offices down to departments and individual employees. A well-tuned performance management solution can provide greater clarity and insight into your organization’s profitability, customers, supply chain, operations, financial health and more.

Business intelligence and performance management solutions can be used for both strategic and tactical initiatives that can support a business during an economic downturn and position it for strong growth after the economy recovers. As strategic tools, these technologies should be used to concentrate corporate efforts on business essentials like focusing on short-term operation goals, creating tighter controls and awareness on spending and inventory, increasing focus on core competencies and key customers, and communicating goals to employees.

Business intelligence and performance management solutions can be deployed to accomplish these essentials through a few actions that can boost short-term results while building a foundation for long-term success.

Recommendations for Improving Business Operations

Using business intelligence and performance management solutions can help companies effectively manage business essentials and create a strong foundation for the future.

Roll out business decision-making tools to every decision maker. Companies may deploy powerful business intelligence and performance management solutions, but then keep these solutions locked in the executive suites. Wider deployment of the technology can help ensure that employees at all levels have a deeper understanding of the company’s overall goals and how their daily work can contribute to those goals. For example, a web-based portal can contain high-level performance data by day, week or month. Depending on their roles, employees are provided with links for drilling down into specific projects or departments to understand better how their performance matches the overall corporate objectives. This also helps produce richer reporting created in the context of corporate goals.

Establish proper cash flow management. Business intelligence technology is invaluable for helping cash flow. For example, it should be used to create a framework for cash flow metrics that are easily understood; for data mining that can be used to predict cash flow problems, such as write-offs and bad debt; and for setting goals for receivables. Implementing these kinds of tools can help raise awareness at every level of the cash-flow impact of buying decisions, hiring, expenses such as travel and inventory levels. A business intelligence solution can be used, for example, to expose greater detail on expenses, with the result that some types of spending may be reduced or eliminated for a set period of time – or permanently. Similarly, effective business intelligence can help identify ways of streamlining supply chain processes so that inventory can be reduced.

Increase business planning capabilities. With business intelligence, companies can create technical and business process systems that turn planning into an ongoing core process instead of an occasional activity. This allows a company to move faster in a bad economic environment and to be highly competitive in a good one. Business intelligence technology can be used to automate the planning and budgeting processes so that there is greater predictability, shorter cycles and more people involved in planning. Regular, constant input and revisions make the business-planning process a more valuable tool because it allows employees and managers to learn quickly from good decisions and bad ones. This builds up awareness and an enterprise-wide habit of continually thinking about ways to improve the business.

Distribute scorecards and metrics to build awareness of business performance. Creating a framework for widespread distribution of performance measurements can help boost a company’s overall performance by creating a cascading set of metrics. Performance management solutions can be used to create and distribute performance metrics throughout the organization to ensure that employees at all levels have a deeper understanding of corporate performance. In other words, businesses can create corporate, department, team and individual performance indicators that help everyone understand how their daily work can contribute to the overall goals of the organization. At the same time, it helps everyone see the links between all levels of performance and how, when the “sum of all the parts” is moving in the same direction, the business survives an economic downturn and is well positioned in better economic times.

Evaluate underlying data models. Having and maintaining clean data is crucial to support business operations. Effective business intelligence technology can be used to establish good data models that provide properly structured data with high-quality technical metadata. Additionally, companies should establish dedicated personnel resources that are responsible for ensuring that processes used in capturing and storing data are done properly. For example, many organizations rely on data that is sourced from numerous external systems. The extraction, transformation and loading (ETL) processes used when importing this data must be well planned and executed properly. Otherwise, there will be gaps in a company’s data stores that can affect business-planning decisions. Business intelligence technology can be used to create and manage rigorous processes for capturing and storing data information that provides high-quality data for business decisions.

Increase reporting cycles. Business intelligence and performance management solutions can be used to increase reporting cycles. Quarterlies become monthlies, monthlies become weeklies and weeklies become dailies. Information is available more quickly, and employees can make better, faster decisions to improve the company’s performance. More frequent reporting leads to greater awareness of potential problems – and possible opportunities. It expands business decision-making possibilities and also contributes to potentially better performance at all levels of the organizations.

Even a brief survey of modern economic history reveals that all downturns end and that businesses recover. Going beyond the standard tactics of “tightening seatbelts” and deploying business intelligence and performance management solutions can help organizations perform better during the hard times and be all the stronger when the market rebounds.

  • Markus SprengerMarkus Sprenger

    Markus is a BI Global Solutions Director and Avanade's primary business intelligence (BI) expert. He defines and directs the implementation of Avanade's solution strategy relative to Microsoft's BI products and alliances, including the creation of intellectual property (IP) and reusable implementation assets that accelerate customer deployment.

    Markus leads a team of solution architects who work closely with the Microsoft Office Business Applications product group. His team influences the Microsoft product road map through the escalation of technical learnings, challenges and feedback from Avanade customers and the global BI community. Markus joined Avanade in 2005, and has more than 10 years of experience in designing and delivering Microsoft-based BI solutions. Prior to joining Avanade, he owned a business intelligence consulting company in Germany and worked in the management of a BI-focused ISV.

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