Tag Archives | systems

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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business intelligence and finance

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Value Drivers: Building Reliable Systems

See Also:
Value Chain
Valuation Methods
Responsibility Center
Cost Driver
Asset Market Value versus Asset Book Value

Value Drivers: Building Reliable Systems to Sustain the Growth of the Business

If your objective is to sell your company for the highest possible price, then you must build reliable systems that can sustain the growth of the business. Before we get started on discussing this important value driver, here are a few quick definitions:

  • Systems refer to a group of related processes.
  • Processes have purposes and functions of their own and are components of a system. Taken independently, a process alone cannot do the work of a system.
  • Procedures are the approved way we do things and often include a sequence of steps.
  • Steps are the actions we take to get something done. A solid management team is one of the first important value drivers to focus on when preparing your business exit. In addition to building a strong management team, you also must build reliable operating systems that can sustain the growth of the business. The second value driver is the development and documentation of business systems that either generate recurring revenue from an established and growing customer base or create financial efficiencies. For most businesses, this includes all of the core processes that generate revenue or control expenses. These systems may include processes related to production or service delivery. But it also may include people-related processes such as a succession planning or a performance management approach.

Look at your business from a buyer’s perspective. If you leave shortly after a sale, then what remains? If the answer is top management and highly efficient business systems, then you can be more confident that you will be able to get top dollar for your business.


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Business Systems Related to Customers

In addition to the business systems related to revenue and expense, some systems are related to customers, such as tracking systems, and the delivery of your products and services such as distribution systems. The documentation of these systems and their related processes and procedures is important to ensuring that quality and consistency can be maintained after the sale. They also signal to the buyer that everything is in place for their future success. Some examples of items worthy of documentation are:

  • Financial control systems and accounting policies.
  • Policies to ensure compliance with legal and regulatory matters, especially those related to employer/employee relationships and safety.
  • Data management and information systems that tie the company together

Again, put yourself in the shoes of a would-be buyer. Buyers want assurance that the business will continue to move forward after new ownership and that operations will not break down if and when the former management leaves. Obtain this assurance when there are documented systems in place that will enable the buyer to repeat the actions of the former owner to generate income and grow the business.

Examples of Business Systems

There are several business systems, which enhance business value whether you plan to sell your business now or decide to keep it. These systems include:

  1. Human capital management including: recruitment, selection, hiring, and retention; performance management; training and development; compensation and benefits.
  2. Production including product or service quality control and improvement.
  3. Product or service research and development.
  4. Inventory and fixed asset control.
  5. Sales, marketing and communications.
  6. Procurement including the selection and maintenance of vendor relationships

Obviously, appropriate systems and procedures vary depending on the nature of a business. But at a minimum, document those resources and activities necessary for the effective operation of the business. After you have built reliable systems to sustain the growth of the business, the next value driver to focus on is establishing a diversified customer base. We will discuss this value driver in detail in the next Exit Planning Review™ Article.

If you have any questions about increasing the value of your business prior to your exit, please contact us to discuss your particular situation. We can help guide you through the process of identifying the current value drivers in your business and creating a road map for increasing value to meet your overall exit objectives. Download the Top 10 Destroyers of Value whitepaper.

value drivers: building reliable systems

Strategic CFO Lab Member Extra

Access your Exit Strategy Execution Plan in SCFO Lab. This tool enables you to maximize potential value before you exit.

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

Click here to learn more about SCFO Labs

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