Tag Archives | business intelligence

Business Intelligence and Finance

See Also:
Capitalization
Double Entry Bookkeeping
Benchmarking
Market Positioning

Current Business Intelligence and Finance Approach

Business Intelligence (BI) technology has evolved so much in recent history to bring the world more than just operational reports. Unfortunately, with all the capabilities that we have with Business Intelligence, firms are still following conventional wisdom in their implementation strategy which is to invest heavily in implementing an ERP/CRM or other transactional system, build integration into other systems using those tools, and bolt Business Intelligence on top of it all as an after thought.

This approach is entrenched into our standard practice, does it still make sense to follow this practice given how far we’ve come in BI technology? Probably not! Organizations wind up with implementation headaches due to their focus on end-state solutions. However, organizations should also focus on building cost effective, workable solutions during transition.


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Why Plan for Business Intelligence

Three reasons firms should consider business intelligence and finance BEFORE any major system investment:

1. Proactive Integration (PI)

Proactive Integration is the use of Business Intelligence to bridge new systems and legacy systems seamlessly during migration. Industry standard BI providers like Business Objects offer solutions that can integrate any standard data source. In Addition, technical resources are more easily accessible and transferable in the Business Intelligence space than they are in the ERP Space. It is much more effective, efficient and far less costly to build a solution in Business Objects than to buy, implement, and customize the same work though ERP providers like Oracle or SAP. Business Intelligence can transform data from multiple data sources into actionable, easy to use solutions. That is what Business Intelligence does best! Why not use Business Intelligence to manage, reconcile and control transactions flowing between legacy and new systems? Why not make that process painless while eliminating a large investment of time and capital?

2. Inevitability of Business Intelligence

Whether we are talking about operational reports, analytics, or dashboards, BI has been growing at staggering rates year after year. Business Intelligence is now the number 1 information technology investment in large businesses, and is rapidly becoming the number 1 investment in Medium size firms as well. According to John Schwartz, CEO of Business Objects, Business Intelligence is going to become more ambient, making it second-nature to obtain and interact with information, anytime, anywhere.

For example, you will be able to pull real-time reports on your PDA or GPS in your car on your way to a client. With the emerging concept of mash-ups, you will be able to get real-time information from multiple internal and external sources neatly summarized in Dashboards and analytics in a format that make sense to you. Business Intelligence applications are going to be limitless in its applicability the way a PC is. Business Intelligence will define the way we do business. Having BI on every computer is quickly becoming as critical as having a computer on every desk. In light of the inevitability of BI, why invest in throw-away integration solutions or do unnecessary manual work when BI will minimize your integration pains with a minimal and arguably inevitable investment? You need BI anyway. Why not leverage it for data integration?

3. Intelligent Project Management (IPM)

Intelligent Project Management is the deployment of BI in the design and implementation of Project Management. Tools like Microsoft Project help project managers track a project. It is a great tool but it is too complicated to use to analyze a project by itself. It needs BI to allow you to better analyze the progress of your project, allow you to perform what-if analysis, and more. BI is excellent in highlighting patterns and areas of concern in testing scripts. BI can also greatly reduce the time you need to identify dependencies and conflicts, thus making it easier to communicate these issues to your PMO. What if a company chooses a certain implementation path over another on a project? How much time and money will that cost or save the company? What if we wanted to track risk against one implementation path versus another?

IPM is here to make your answers to these questions easier and far more intuitive.

Benefits of Intelligent Project Management

Are you contemplating or presently implementing a new systems project?

Wait!! Don’t risk losing your data in the process of migrating from your old system to your new one – Avoid costly implementation mistakes through Intelligent Project Management (IPM) and Proactive integration (PI).

With Intelligent Project Management and Proactive Integration, you can achieve the following:

Ensure that you can easily manage the flow of information between your old system and new system.

Validate the veracity of your new system and your data during testing. Ensure a much more seamless transition and flatter learning curve for users. Prepare your entire organization for every stage of your implementation.

Use Intelligent Project Management as a surefire way to reduce risk and save capital. Be able to track risk against one implementation path versus another.

To learn more financial leadership skills, download the free 7 Habits of Highly Effective CFOs.

business intelligence and finance

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Electronic Data Interchange (EDI)

See Also:
Technology Assessment Criteria
How to evaluate IT systems
Technology Strategy for Small to Medium Sized Companies
How Redundant is Your Data Communications Link?
How to Respond to an Imminent Disaster Threat

Electronic Data Interchange Definition (EDI)

What is electronic data interchange (EDI)? EDI is a standardized format for computer-to-computer communications transmitted via electronic networks. In addition, EDI reduces paperwork and administration relating to information transfers within a company or between companies. It also reduces mistakes and data entry errors.

Using EDI can result in time and cost savings for a business. Electronic data interchange communication can also allow businesses to exchange invoices, purchase orders, and other business documents electronically. EDI documents are also transferred in virtual real-time, leading to faster transaction processing. Furthermore, less paperwork and personnel intervention can reduce administrative costs related to transaction processing.

The American National Standards Institute Accredited Standards Committee X12, or ANSI ASC X12 develop and maintain the technological standards for electronic data interchange.

electronic data interchange

 

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Comparison Analysis

See Also:
Forecasting
How to Prepare a Break Even Analysis
Sensitivity Analysis Valuation
Budgeting vs Forecasting

Comparison Analysis Definition

Describe comparative analysis as comparison analysis. Use comparison analysis to measure the financial relationships between variables over two or more reporting periods. Businesses use comparative analysis as a way to identify their competitive positions and operating results over a defined period. Larger organizations may often comprise the resources to perform financial comparative analysis monthly or quarterly, but it is recommended to perform an annual financial comparison analysis at a minimum.

Financial Comparatives

Financial statements outline the financial comparatives, which are the variables defining operating activities, investing activities and financing activities for a company. Analysts assess company financial statements using percentages, ratios and amounts when making financial comparative analysis. This information is the business intelligence decision makers use for determining future business decisions. A financial comparison analysis may also be performed to determine company profitability and stability. For example, management of a new venture may make a financial comparison analysis periodically to evaluate company performance. Determining losses prematurely and redefining processes in a shorter period will favor compared to unforeseen annual losses.

Comparative Format

The comparative format for comparative analysis in accounting is a side by side view of the financial comparatives in the financial statements. Comparative analysis accounting identifies an organization’s financial performance. For example, income statements identify financial comparables such as company income, expenses, and profit over a period of time. A comparison analysis report identifies where a business meets or exceeds budgets. Potential lenders will also utilize this information to determine a company’s credit limit.

Comparative Analysis in Business

Financial statements play a pivotal role in comparative analysis in business. By analyzing financial comparatives, businesses are able to pinpoint significant trends and project future trends with the identification of considerable or abnormal changes. Business comparative analysis against others in their industry allows a company to evaluate industry results and gauge overall company performance. Different factors such as political events, economics changes, or industry changes influence the changes in trends. Companies may often document significant events in their financial statements that have a major influence on a change in trends.

comparison analysis

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Are You Collecting Business Data?

See Also:
Value Drivers: Building Reliable Systems to Sustain Growth
Mining the Balance Sheet for Working Capital
Inventory to Working Capital
How to Run an Effective Meeting
How to evaluate IT systems

Are You Collecting Business Data?

It seems simple enough. You’re making a decent gross profit. You know who your customers are, you know how much you are charging them for your product and you know how much they are buying. So no worries, right? Well, do you know how much it costs you to sell to each customer? What if you are generating substantial sales from one customer, yet find yourself spending a large amount servicing that customer in terms of custom orders and/or shipping costs? The biggest question is… Are you collecting business data?

Not only must you know how much you are making by product line, but you should have an idea of what your gross profit looks like for each customer, especially your key large customers. Perhaps you are missing out on opportunities to reduce shipping costs through aggregating shipments. Maybe you are missing out on opportunities to head off costly service calls through greater communication with the customer up front.

What You Need to Know

In addition, you need to know how you make money. As simple as it sounds, many entrepreneurs don’t figure this out. Are you making a larger margin on the product sale itself or on the sale of complementary products and/or services?

How long does it take you to collect receivables? Do you find yourself spending an inordinate amount of time trying to collect on a relatively small customer? What are your credit terms?

Greater detail can help you wring more costs out of your business plus identify opportunities for additional sales. You need to be able to put together realistic, detailed projections of your future monthly performance in terms of your gross profit as well as your working capital in order to gauge future capital requirements so you can plan for them today.

Do not wait. Start collecting that business data and build that model today!

Download your free Internal Analysis worksheet to start developing and enhancing your strengths as well as start reducing and resolving your weaknesses.

are you collecting business data, business data

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are you collecting business data, business data

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Are You Collecting the Data You Need to Run Your Business?

“It seems simple enough. You’re making a decent gross profit. You know who your customers are, you know how much you are charging them for your product and you know how much they are buying. So no worries, right?

Are You Collecting the Data You Need to Run Your Business?

Well, do you know how much it costs you to sell to each customer? What if you are generating substantial sales from one customer, yet find yourself spending a large amount servicing that customer in terms of custom orders and/or shipping costs?

Not only must you know how much you are making by product line, but you should have an idea of what your gross profit looks like for each customer, especially your key large customers. Perhaps you are missing out on opportunities to reduce shipping costs through aggregating shipments. Maybe you are missing out on opportunities to head off costly service calls through greater communication with the customer up front.

In addition, you need to know how you make money…”

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collecting the data you need to run your business

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Access your Strategic Pricing Model Execution Plan in SCFO Lab. The step-by-step plan to set your prices to maximize profits.

Click here to access your Execution Plan. Not a Lab Member?

Click here to learn more about SCFO Labs

collecting the data you need to run your business

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The Next 100 Years: Forecasting the 21st Century

I just read a thought provoking book about forecasting the 21st century. It is titled, The Next 100 Years: A forecast of the 21st Century, by George Friedman. Friedman is the CEO of Stratfor a private intelligence and forecasting company located in Austin, Texas. Barron’s has labeled Stratfor the “Shadow CIA”. They have a web site and paid subscription news blog that post several times a day events happening around the world. I have been a subscriber for several years now and read more insight into what is happening in the world than what you get out of the best newspapers.

The Next 100 Years: Forecasting the 21st Century

Mr. Friedman has written a scenario of how the world might look over the next century. It is a very good book and will help you put things into perspective from a geopolitical basis. The major take aways for me are as follows:

First, a lot of the major issues in the news today will become background noise over the next 100 years. For example, the jihadist movement and Afghanistan.

Second, there will be a population bust in the developed countries. As a country transforms into a manufacturing and technology economy from an agrarian one, the birth rate declines. The world needs 2.1 births per woman for a stable population. Per the United Nations in 1970 there were 4.5 children born worldwide. In 2000 the number was 2.7 children born worldwide. In 2050 it is projected that there will be 2.05 children born worldwide. Less than the 2.1 births required to maintain the worlds population. For the U.S. this means that immigration will take up the slack in the low birth rates.

Third, space based weapons will be the next big thing. And finally, Mexico will be a major global power and will go to war with the United States.

All these scenarios and a few more get you to thinking about how important are the issues of the day when looked through a longer lens. He may not be right, but, he can’t be all wrong!

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Forecasting the 21st century

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Forecasting the 21st century

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