Utilizing technology to make better business decisions
Each year businesses make significant investments to collect and capture more information about their clients, sales, products, suppliers and even themselves to gain an edge over their competitors. These efforts, while derived from a thirst for knowledge, often produce large quantities of unusable data; they lack true insight unless a solid framework is put in place to organize, report on and analyze it.
This trend has led many CIOs and CFOs to declare these projects as failures, and lessening the focus and funding on these projects. This leads to continued frustration within the business through continued inability to effectively make better decisions by utilizing data and actionable information.
Over time, many organizations decide to try again, fueled by increasing marketplace pressures and the need to improve margins and control costs. These programs are helped by the arrival of more affordable and accessible corporate performance management (CPM), business intelligence (BI) and data warehousing solutions. These solutions, which are now cheaper and faster to deploy, will produce the same results as their predecessors if time is not taken to implement the correct analytical framework to view data.
Several damaging effects can occur from not obtaining the optimal value from your systems and activities. Aside from the basic loss of time and energy spent per user, as well as the loss of your investment in the system itself, company growth can suffer. You must know what verticals or products to focus energy on and how to target price points and manage cost reduction programs. There must be a fundamental understanding about where profitability exists and how those successes can be leveraged throughout your organization.
The strategy, objectives and measurement framework is often overlooked when running CPM, data integration or reporting analytics projects. Frequently, companies attempt to automate what they have instead of stepping back and evaluating whether they possess the right information to make informed and fact-based decisions around the strategic objectives of the organization.
This gap between raw and actionable data can be closed by beginning these projects with a strategic business assessment and understanding. One of the first steps to an integrated road map is to outline the organization’s strategic objectives and identify the performance indicators needed to measure success. The goal is to understand your specific financial and operational metrics, drivers and targets that produce results.
These metrics and drivers provide organizations with quantifiable data to effectively measure whether you are achieving your objectives. For example, if a company has a goal to be the second-largest servicer in their industry, a target measure might be a market share indicator. Customer retention should be tracked and targeted for improvement, as well as net new clients added. Those new clients would be tracked throughout the year as progress towards the strategic objective of accomplishing that market share goal.
For most companies, the metrics that drive business decisions come from a variety of different systems, making it difficult and time consuming to piece together the correct information to make better and more informed decisions. To track customer metrics, data may come from a customer relationship management (CRM) system, while the order information may be in an enterprise resource planning (ERP) system. By pulling these different subsets of data together and integrating it into one system, a richer platform is created to enable better decision making.
Through a well-planned implementation of a BI or CPM program within your organization, the efficiency and quality of enterprise reporting, advanced analytics, strategic planning and forecasting, and other reporting and financial processes can be increased. However, the true value of these initiatives can only be realized when appropriate time is spent to thoughtfully detail the strategic analytical design and outcomes desired from the system.
By following a structured methodology focused on aligning your measures and metrics to specific objectives, it is possible to provide clean, consistent and accurate information to key business stakeholders. This enables improved decision making and better insight into business activities while reducing overhead costs from an IT, finance and reporting perspective.
Some believe that simply throwing technology at the problem is the answer; however, it’s not the optimal solution nor will it solve the fundamental issue. The role of technology is to automate this process and reduce the manual resources and costs associated. This provides a mechanism to ensure data is validated, consistent and accurate on a monthly basis. But it does not, by itself, strategically align an organization’s information and analytic needs to the decision framework and analytic needs.
The current software market is rich with tools that can help with the pulling, integrating, storing and presenting of data from multiple systems. Many are tailored to unique verticals or industries while others are fully customizable to the specific details of your individual business.
Each tool, when implemented correctly, provides a transparent view into your critical business information to help promote confidence in your business decision-making process. These tools, along with a strategic approach to developing the right business metrics and drivers, aligned to the objectives of an organization, can be a competitive differentiator in the marketplace.