By TopDown Team
November 30th, 2011
The Common “Problem/Challenge”
The common “IT” challenges facing many businesses today are:
- Information/Report Generation – providing users (especially in the Finance group) the information they need to perform business and to decision making by management.
- Standardization of IT platform – businesses have disparate systems spread through various operations, countries and branches. This situation is often compounded by acquisitions.
- Internal IT system support capacity – in addition to supporting technology infrastructure, some IT groups are tasked with report templates for users who do not have access to the data sources themselves, or who lack the technical expertise to generate reports with tools that they find. Template building requests further tax the already stretched resources of many IT departments.
The paramount dilemma is how to prioritize allocation of limited financial and man-power resources to address these business challenges.
In an increasingly competitive global-market, in which relatively small, regional companies are no longer shielded from larger, more established companies, priority should be given to that action that will secure the business’ competitive position in the shortest possible time.
Based on evidence with TopDown Consulting’s sizeable client base, common characteristics of the most successful companies are:
- They have, accurate and deeper real-time Insights into their business, with all sections of the organization having timely access to the same data.
- Through their insight, they are able, very quickly, to provide management with quantitative and qualitative data on which to base Actionable responses.
- Their insight is based on an Integration of information from disparate systems
Our experience also confirms that these characteristics do not necessarily depend on the prior existence of a standardized IT platform. The key is the ability to pull data from the organization’s disparate systems into purpose-built, shared databases/data warehouses that authorized users can access to gain insight. These successful companies also have multiple purpose-built databases .e.g. to capture information that can give insight to customer activities, operational activities, etc.
Depending on the technology used, the database/data warehouse could also be designed with modeling capability to test the impact of various market, economic and business scenarios on operating results and strategic goals (i.e. to do “what-if analysis”)
Since these databases/data warehouses are not part of the business’ transaction processing system (i.e. books of record) they require less stringent controls. Therefore, authorized analysts and users can be granted “freer” access to common data that will allow them do their work.
In the absence of such a shared database/data warehouse, analysts assemble their own data in individual Excel workbooks. This soon gives rise to data synchronization problems that result in what is described as “multiple-versions-of-the-truth”—a major cause of concern and contention when there are conflicting data upon which a decision or performance evaluation is being based.
In the past, businesses faced with the same challenges automatically gave top priority to standardization of technology and operational platform by implementing what is generally described as an Enterprise Resource Management solution (ERM or ERP). However, experience shows that while an ERP implementation will address mandatory control and reporting requirements (i.e. GAAP, IFRS, local and international regulatory reporting and audit requirements), they do not always satisfy the business analysts need for “free” access to data. Since ERP systems maintain a business’ books of record, it is understandable that the underlying database/tables containing the information must be restricted and protected from unauthorized and unapproved updates/changes. Thus traditional ERP systems do not always lend themselves to ad-hoc database queries and data analysis. After expending resources (time and money) to implement a traditional ERP solution, such businesses find themselves still very dependent on analysts needing to assemble their own data in their individual Excel workbooks in order to do their jobs or to respond to management request for data input to support decision making.
Of the many data warehousing solutions available, my bias is in favor of Oracle-Hyperion Essbase database technology, the industry-leading multi-dimensional database system, also described as an online analytical processing (OLAP) server as the data analysis layer.
Essbase makes it easy to store data that reflect the major elements (dimensions) which a business uses to analyze its operations. For example, profitability analyses can be done product, channel or segment, and even for individual customers.
For financial institutions these profitability calculations may be adjusted for risk, and used to drive Risk-Adjusted Performance Management (RAPM), or to develop realistic hedging strategies. Both are imperative for financial services institutions operating in this rapidly changing and complex industry.
Essbase can also used to budget, for full balance sheet and the associated profit and loss statement and designed to give insight into the impact of exchange rate fluctuations on operating results and forecast.
A workforce planning database can be used for Position/Succession planning and employee-related expense. Many businesses also use Essbase for Capital Expenditure planning, etc.
As a data warehouse system, Essbase will be compatible with all major transactional database systems. Also, all leading dashboard developers have adapters that allow connection to Essbase to create visual and graphical reports for (business intelligence) dashboards aimed at senior management.
Last but not least, because Essbase is a user-focused solution, the administration of the database is usually handled by the main user department (mostly the Finance or Planning and Analysis departments (FP&A)). The IT department’s involvement is generally limited to the hardware and network requirements of the system. Therefore an Essbase solution will empower most finance department and other business users and free-up the IT department to concentrate on pressing technical issues.