Business Intelligence
Oxymoron No More—Thanks to Today’s IT
by Eric Hayes, CPA, CVA
The term business intelligence (BI) has been around since the 1950’s according to Wikipedia, and it refers to technologies, applications and practices for the collection, integration, analysis and presentation of business information and sometimes to the information itself. The purpose of BI is to support better decision making.
In today’s competitive world, managers find themselves making important business decisions while trying to navigate the ups and downs of the economy. Critical, informed decision making is key to avoiding mistakes that can end up being costly for, if not devastating to, a company.
Never before has there been an array of software tools to enable data managers to provide information from an analytical and benchmarking perspective to enable decision makers to rely on trends and current data instead of intuition when making critical decisions. Access to this information, sometimes in real time, has made the difference between being responsive and proactive to changes in business activity to being reactive and missing opportunities without it. We used to think that only large Fortune 500 companies with years of experience in data mining and warehousing could afford the kind of technology that could make this concept a reality, but that certainly isn’t true anymore.
Terms such as Key Performance Indicators (KPIs), Dashboards and Filters have become commonplace in small and mid-sized businesses that understand the importance of keeping on top of internal and external factors and other indicators to enable them to shift direction as changes in the economy dictate. It stands to reason that a key decision maker’s enhanced ability to change direction based on trends in the marketplace can help avoid potential pitfalls that come with being reactive rather than proactive to change, provided that decision makers have access to timely and accurate reports that allow them to make informed decisions.
Key Performance Indicators (KPIs)
KPIs can be specifically designed to provide benchmarks with which to compare actual results, and make adjustments as the decision maker deems necessary. Any measurable goal can have a KPI associated with it, thus, with timely information, a manager can ascertain whether or not predefined measures are being attained, and what action, if any, needs to be taken if results are unsatisfactory compared to target performance levels.
Filters
A busy manager doesn’t have time to sort through volumes of data. Filtering allows you to display only the critical information needed to assess the status of key determinants of the health of the business. Key data extraction from back office software can help immediately identify problem areas or dictate courses of action that can be acted upon in a timely manner. This can apply to items such as regional sales by product, product line, etc., and can be tailored to each individual manager’s area of responsibility, allowing them to focus on their area of control. District managers, on the other hand, would filter the data in such a way to monitor sales by store located within a certain region and compare results according to predetermined benchmark levels, while excluding data that would have no bearing on their area of responsibility.
Dashboards
Like any good information system, business intelligence is well suited to the concept of dashboards which can be thought of as tools used to assemble and display information about company performance ... virtually the same function as your car dashboard. With the advent of software tools available for small and mid-sized businesses to utilize business intelligence in their decision making processes, the dashboard can be a malleable template upon which statistical data can be displayed in a variety of ways to assist the user in determining issues that need immediate attention or assist in plotting new courses of action. The dashboard can be developed entirely to suit each user’s needs and preferences.
Implementation of business intelligence in the business environment has become much easier to attain thanks to the wide array of affordable software now available. It’s no surprise that arming yourself with relevant and timely data about your business will enable you to make better decisions and react to changes in the economy with greater speed and accuracy. Today’s IT can deliver critical and timely information the way you need it and want it displayed right at your fingertips.
Eric Hayes, CPA, CVA, is with Seely, Mullins and Associates, PC. He is a member of the ASCPA IT Steering Committee.
AZ CPA – November 2008
