Business Intelligence:Optimizing Data Across the Enterprise

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Learning Objective

After participating in this event you will be able to:

• Define how to utilize mass data (internal and external) for better decision-making

• Make better informed decisions by comparing your financial performance against relevant peers

• Use leading indicators to anticipate changes in your company's environment

• Reduce time and increase accuracy of recurring processes requiring external data, like currency translation

THE RESOURCE FOR CORPORATE FINANCE, ACCOUNTING & TREASURY PROFESSIONALS

Michael Huzinec

Director, Business Analytics, Baker Tilly

The Need for Speed: How to get data to make

great business decisions – Fast


Background

• CPA, Finance & Accounting Degrees

• Business Intelligence & Corporate Performance Management Field for over 15 years

• Exciting times in this area as information is exploding and technology advances are presenting both opportunities & challenges

2011 © Baker Tilly Baker Tilly refers to Baker Tilly Virchow Krause, LLP an independently owned and managed member of Baker Tilly International.


Discussion Summary

• The Data Explosion & New Types of Information

• The Business Opportunities…and Challenges

• The Role of Finance in Driving and Managing the Opportunities

• Key Considerations & Creating an Information Strategy



The Data Tsunami

Overwhelmed with too much data?

“…40 exabytes (1,073,741,824 gigabytes) of data created in 2008…more than created in the previous 5,000 years combined…” IBM Institute for Value “Every 2 Days We Create As Much Information As We Did Up To 2003” Eric Schmidt from Google



An Explosion In Volume…

• It’s only going to get worse…

…Variety, Velocity & Volatility



The Growing Data Sources

ERP

Data

Core & Legacy Internal Data

New Age External, Internal,

Environmental & Market Data

+



The Information Challenge Is Only Getting

Harder…

Inefficient Access 1 in 2 don’t have access to the information across their organization needed to do their jobs

Lack of Insight 1 in 3 managers frequently make

decisions without information they need

Inability to Predict 3 in 4 leaders say more predictive information

would drive better decisions

Variety of Information

Volume of Digital Data

Velocity of Decision Making

Volume of Information & Velocity of Decisions

Source: IBM Institute for Business Value

Scope & Size of Data Sets

Complexity, Connectedness & Growth Rate



Leveraging Cloud & Other Technology to

handle the Data “Tsunami”

Create True Competitive Advantage

in your market

• Maximize value from unlimited data

available

• More data available to businesses of all

sizes

• Better tools, lower costs

• Mobile technologies

• Tools to crunch big data

• Memory, dasd, etc. virtually unlimited now

• Need to get the decision makers the

right info at the right time in the right

context

Increased

Relevance &

Impact

Competitive

Advantage

Status quo:

In line with

market

Lower cost

and increase

speed

Resource Use

Dat

a U

tiliz

atio

n

Low High

Hig

h

Low



Businesses that can effectively leverage information to drive better decisions and understanding

All other enterprises

Profit Growth

12x more EBITDA

Return on Invested Capital

33% more Revenue Growth

32% more ROIC

12.5%

9.4% 7.3%

0.6%

11.9%

9.0%

“Business analytics is the key to

enabling organizations to turn oceans

of data into actionable decisions for a

competitive advantage.”

The business value of Leveraging

Information for Better Decisions

$166B opportunity

Source: IBM Global Business Services, The Global CFO Study 2010 Revenue, EBITDA Growth: 5 yr CAGR (’04-08); ROIC: 5 yr Avg (04-08)

Data is provided for illustrative purposes and is not intended to be a guarantee of market opportunity.



Three examples of how companies can leverage

new information to make better decisions

Manufacturing – Better Field Service & Production Decisions

Leveraging machine diagnostic data to determine which parts of

machines in the field will or are breaking down

Proactively service machines

Don’t ship product with potentially defective parts

Integrated and flexible solutions are critical to creating competitive advantage

Financial Services – Better Investment Decisions

Tracking all available data on investment decisions

React faster and make better investment decisions based on alerts

and insight into what’s being said

Marketing– More targeted marketing spend & effectiveness monitoring

Monitoring the effectiveness of events and campaigns

Recruiting company advocates with social clout

….All of these solutions focused on better

decisions impact the budgeting and planning

processes.



Finance Challenges and Opportunities

Challenges: Old Finance

Too transaction focused

• Static Processes

• Traditional Reporting takes up the

majority of time

• Manually intensive Ad-Hoc and what if

analysis

• Few integrated data sources available

for analysis

• Little to no energy left for valued insights

…Little time to help drive insights and

better decisions

… What are the questions you could answer with more relevant information, in a timely manner, that would make the biggest impact?



Opportunities: New Finance

Apply the new technology capabilities to… • Integrate ERP, CRM, CPM, BI, social technology, other

external and internal data sources • Focus on decisions which greatest impact

organizational goals • Use of mobile devices (tablets, cell phones) • Leverage enterprise social technology • Use alert based technology to drive adjustments to

plans and forecasts

and ultimately drive improvements across your organization… Consider… A finance organization that can harness their role as keepers of the data to continually support improving operations based on better information and decisions

Ability to adjust plans quickly to new information and insights is quickly becoming a must have for organizations to compete effectively

Finance Challenges and Opportunities


Source: IBM Global Business Services, The Global CFO Study 2010 Revenue, EBITDA Growth: 5 yr CAGR (’04-08); ROIC: 5 yr Avg (04-08)

Data is provided for illustrative purposes and is not intended to be a guarantee of market opportunity.


How Finance Can Help Drive an Information

Strategy and Better Business Results

• Roles and Responsibilities

• Define finance’s role in achieving business objectives and strategy

• Understand roles and responsibilities for decisions

• Information Requirements

• Identify all information requirements

• Push better data to the decision makers

• Plan to leverage information that may be collected

• Opportunities Roadmap

• Decisions possible with better faster information

• Use tactical quick hits with big opportunities

• Shift focus to more value driven activities



Key Considerations

1. Data available to all businesses sizes– CAN’T ignore it –

companies are already competing and winning with it

2. Technology costs have plummeted and capabilities are

now unlimited

3. Better information is available, quicker than ever before.

80% of new information will be non traditional formats

4. Leverage new technology platforms and previously

unavailable access to new data sources

5. Leverage benchmarking data to assess areas for process

improvement

6. Requires a structured way to think about / apply new

capabilities for turning information into better decisions



Creating an Information Strategy

Define

Analytics

Trusted Information

Information Platform

Information Strategy

… Consider if you could leverage the unlimited amount of data to drive better and faster information into your organization to

ultimately make better decisions



Thank You


Polling Question

THE RESOURCE FOR CORPORATE FINANCE, ACCOUNTING & TREASURY PROFESSIONALS

Best Practices on External Drivers Alex Ortiz, Director of Product Marketing,

Host Analytics


Agenda

• 5 Best Practices

• Historical Challenges and New Solutions

• 3 Case Studies in Using External Drivers


Best Practice #1:

Put In An Early Warning System


BP #2:

Use Leading Indicators

“Leading indicators extend the value of lagging indicators and provide a

mechanism for gaining competitive advantage. According to a Wharton research

study, companies that build and verify a set of leading indicators earn a 2.95%

higher return on assets and a 5.14% higher return on equity. Yet, less than

25% of companies attempt this.”

- Michael Smith, Analyst

Source: The Gartner Business Value Model: A Framework for Measuring Business Performance Publication Date: 26 March 2010 ID Number: G00175097


& Use Economic Indicators

That Influence Your Co.

The ten components of The Conference Board Leading Economic

Index® for the U.S. include:

• Average weekly hours, manufacturing

• Average weekly initial claims for unemployment insurance

• Manufacturers’ new orders, consumer goods and materials

• Index of supplier deliveries – vendor performance

• Manufacturers' new orders, nondefense capital goods

• Building permits, new private housing units

• Stock prices, 500 common stocks

• Money supply, M2

• Interest rate spread, 10-year Treasury bonds less federal funds

• Index of consumer expectations


BP #3:

Compare Results Versus Peers

Better or worse than peers?

15% yr/yr rev. growth

Consider benchmarking with key financial ratios: • Revenue growth rates • R&D spend/sales • Operating margin


BP #4:

Eliminate Risks of Keying In Data

Tax accountant drops a minus sign… …causing a $2.6 billion error…

…resulting in the President apologizing to shareholders that they would not get a $4.32/share distribution at end of year

—From the Risks Digest

Example:

Start Here: Target recurring manually processes, like monthly currency rate translation, for automation.


BP #5:

Use External Drivers For More Accurate Forecasts

Ventana Research: What would make your revenue forecasting process more accurate?


Agenda





Most Companies Lack Leading Indicators &

Competitive Benchmarks Q: Please assess the amount of information you receive through reports in each of the following areas.

80%

85%

Ventana Research


1980’s Technology Not Built

For External Drivers

Internal Data

Leaving Out External Drivers

Economic Indicators

Industry Benchmarks

Currency Rates

Built for:


The Cloud Shows Us A Better Way

Aggregation Integration


The Cloud Is Built To Handle External Data

Better Models Better Data Better Decisions

1st & 2nd Gen 3rd Gen Benefits

+ =


Agenda





1. Better Planning With Indicators & Benchmarks

Challenges

• Unreliable 5-year financial and operational plans

Solution

• Real-time access to 1,300+ external indicators via the cloud

• Easily add external drivers to their planning process

• Dashboards highlight changes in external indicators

Benefits

• More accurate medium and long range plans

• Spot new opportunities and avoid risks brewing outside their organization


Challenges

• 50% of revenues outside the U.S.A.

• Foreign currency exchange rate movements can have a material impact on results

Solution

• Updated exchange rates that can be seamlessly integrated into their cloud based Corporate Performance management application

• US $, Canadian $, Euro €, UK £, China Yuan.

Benefit

• Now possible to easily monitor the impact of rate changes on both future forecasts and current consolidated results

2. Monitor Currency Rate Changes


3. Better Board Level Report For Decision Making

Challenges

• Tedious searching for benchmarks

• Manual data transfer risks

• Merging benchmark data into board reports

Solution

• SEC filings with 5 years of history w/ income statement, balance sheet, ratios

• Consistent data structure

• Complete reporting package

Benefit

• Better decision making


Thank You


Polling Question


Q & A


If you have questions about CPE Credit please contact

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Business Intelligence:Optimizing Data Across the Enterprise

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Transcript of Business Intelligence:Optimizing Data Across the Enterprise