Non-financial partners must embrace business intelligence

Business intelligence (BI) has been a priority for finance directors for years, with its ability to offer insights into operational performance and improve the analysis of data to support decision making.

It is uncommon to find a finance function that does not make use of BI software as a source of competitive advantage and as an integral component of creating a winning corporate strategy. But it is not uncommon to find that team struggling to make sense of that data.

Today, with forecasters warning of the potential of a double-dip recession, finance directors are grappling with increased volatility and complexity. Demands for enhanced performance and transparency are ever more stringent.

An effective BI system is essential for FDs to pick their way through a barrage of data. But for FDs to collect better BI and enterprise performance management data – and to be able to analyse it more effectively – they require non-financial partners across their business to buy into the process.

While the finance and IT functions have been at odds with each other in terms of ownership over the collection, application and analysis of data produced by the BI process, the use of BI tools to share and analyse data is becoming pervasive throughout all levels of an organisation.

Garbage in, garbage out
The amount of information being ploughed into organisations’ BI systems from human resources, marketing, research and sales departments can at times appear over­whelming for the FD sat at the other end.

Although the data being entered into BI software comes from a number of disparate sources from within the organisation, the buck always stops with the FD in regards to the reliability of the information being used and fed back to the business as reports and strategy.

But the BI function is not just the finance directors’ responsibility, says Jim Martyn, finance director at Oracle, one of the major vendors of BI systems. “It is the FD’s responsibility to make sure the numbers add up, but with the input coming from other business partners it is critical that you have influence in those areas.

“I work in a company where I don’t own all the resources. I need to engage with the people involved in the process of producing that data. You must have a certain influence with them and agree how that data will be produced,” says Martin.

Companies are increasingly dependent on data from more varied users within their organisation, but in many instances the workers have not been educated about the relevance of the BI function.

Without the correct input, a business can miss out on opportunities to sell new products and services. Staff in marketing and sales departments will not always view entering reams of client data into a BI package as a core priority.

The success of the application of BI data to shape an organisation’s strategy relies upon the integration of data from a variety of sources. There is a need for the FD to safeguard the quality of this data. But without the buy-in from non-financial partners the information will be useless.

“Business intelligence is just a piece of software. It sucks data in from the inputs of other people. If you put rubbish in, rubbish will come out the other end,” says Martyn.

For instance, if a company’s sales team does not take the care and attention required to provide detailed and accurate data, the business can risk missing out on the opportunities to provide new products and generate new business.

“BI will collect the data put in by the sales team. You need to be able to pressure them into putting in the correct data,” says Martin. “Be close with the sales director; the data needs to be right or you will get rubbish and the FD might not always spot that. If the data is not right, you are always going to struggle.”

Not a management crusade
David Edwards, finance director at law firm Brodies, agrees that the BI process requires the active participation of employees below the executive level. To get the buy-in from other departments, it is important that employees feel part of the process.

When developing Brodies’ BI system, Edwards says the company created a panel that included all aspects of the business.

“Implementing BI across the company must not feel like a management crusade. We brought together a group made up of lawyers and partners from all six departments so that they could see what they would get from the process,” Edwards says. “That was a key part of the process; it gives a much better platform with which to integrate the data. We made sure that everyone felt part of that journey.”

Edwards says the time between discussions and implementation needs to be short.

“We had to make sure the period between that discussion and having that culture in place was not very long. BI software is not a plug-and-play solution. It requires the training of partners,” he says.

By involving other departments in the discussion around implementing the company’s BI strategy, Edwards adds that the wider strategic benefits were more apparent in areas such as marketing and human resources because of a better understanding of the client and the ability to create targeted marketing strategies.

Ruthless efficiency
But while the intelligent application of BI provides myriad benefits to departments throughout the organisation, the benefit for FDs is that it frees up time to provide added value to the company’s strategic goals.

“It allows the finance function to get better information to the desktop of the partner. Previously, when we used collected data, there was not as much time to analyse that information. This enables us to send data back into the business with analysis. As a finance director, you can really add value by providing analysis,” says Edwards.

“The key part of my role is using BI to better understand our clients. That is a clear need at the level of what we do.”

BI systems also act as an internal information system, allowing business to offer more innovative pricing models and cutting the time it spends on tendering business and negotiating with the client. “It puts us on the front foot and allows us to go in with the best deal possible,” says Edwards.

He adds that the application of BI on external metrics is just as important, if not more so, than understanding a company’s internal costs. It can be used to understand the productivity of an individual or a department, but there is less understanding or information about the profitability of an individual client.

“In terms of the ongoing use of business intelligence, it gives us a tool to effectively go in and price a job,” he says. “When working on a tender we can work out the cost of the job quickly, work out the margin and where the price should be.

“Business intelligence allows us to be ruthlessly efficient in managing our jobs. Better tools enable us to focus on leverage. When a client comes to us for fixed-fee work we need to be able to manage that process. They will want the best and we need to be able to analyse how best to staff that job,” he adds.