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Becoming & Staying An Industry Leader Is Priority #1 for Finance. Yes, Finance!
Tim O'Bryan 270001NMX7 email@example.com | | Tags:  timobryan financialperformancemanag... businessanalyticstoday businessanalytics | 0 Comments | 3,060 Visits
Finance teams are the performance management captain of the corporate ship empowered to provide the executive team, and business and support units with real insight and understanding of past, present, and future performance while guiding them on what the information means to each of their constituents and how it can be interpreted for decision making. That is their most strategic value to the business. However, because of the explosion of information, speed of business, growing systems through M&A and unique information capture needs of different areas of the business not to mention growing business practice demands, such as regulatory compliance to meet the regional, national, and global reporting requirements, the corporation's most important analytical asset, finance departments, remains mired in just completing the basic week-to-week tasks without providing this strategic guidance. As a result, emerging trends, exploitable opportunities, efficiency gains, addi
In the 1960′s, IBM was the 800-pound gorilla in the mainframe business whose technology supremacy went unchallenged and superior performance went virtually unabated into the 1970′s. They were the blue suits bearing information-based mainframes to help companies use data to run their large – sometimes multinational – businesses with greater know-how about customers, products, operations, and financial performance far more adeptly than any other technology could. Yes, they were considered the masters of product innovation largely due to world-class business practices and industry expertise. However, Big Blue got complacent and far too comfortable in their long held pole position. Their inflated confidence and market share eventually disintegrated as they missed the advent of the new information-based technology, which, if they would have had the right analytic capabilities in place, they would have seen it coming; the emergence of the minicomputer. Minicomputers were technologically simpler than mainframes but with stronger computing power while requiring less resources to run them. To be fair, it wasn't just IBM that missed the advent of minicomputers. It was virtually every mainframe company in existence at that time. This new technology virtually wiped out the entire mainframe business such that no mainframe business would be a major player in the minicomputer business at all.
What happened? What was missed? Who screwed up?
In my opinion, there were many failures that caused this emerging technology to go unaddressed by IBM and others, but the chief culprit who could and should have been prepared for it was finance. Yes, I think it's up to finance as the owners of business performance (past, present, and future) to fundamentally understand the business climate – internally and externally – to then advise their corporate constituents on what the information they've analyzed means to them. For this to happen finance needs to get a handle on its core responsibilities before it can begin to really spot these performance-sapping icebergs that can possibly turn into business shuttering threats.
Let's get back to the technology story for a minute if that's okay. Then, I'll finish my point.
Where were we? IBM's out because the mainframe business has gone south – way south by way of the minicomputer. Exit IBM. Enter Digital Equipment Corporation. DEC virtually created the minicomputer business along with a few other aggressively managed companies like Data General, Prime, Wang Computer, Hewlett-Packard, and Nixdorf. Did DEC and others in the minicomputer business learn any lessons from IBM's big miss on the minicomputer market so as to not repeat the same mistake? Of course not. The story of DEC's demise rings almost too tellingly true to IBM's mainframe debacle of the 1970′s. In fact, the management gurus and business journals missed it too. Digital Equipment Corporation was considered by all who had some insight into the company's operations as being the ultimate technology company for decades to come. For certain it was a featured company in the McKinsey Study that became the stellar 1980′s management book, In Search of Excellence. DEC seemed destined for monster success. Still, despite all this fanfare, DEC missed the next wave in computing technology, the desktop computer market.
Again, where was finance watching past performance by measuring and monitoring it, to get analytical insight into what the future might look like to then advise their constituents across the business on what all of this means to each one of them? Answer: Heads down.
The desktop computing market was predictably seized not by DEC or one of its minicomputer compadres but by Apple Computer, Tandy, Commodore, and IBM's PC-division. (Yes, IBM can't be held down for long!)
What happened next? Like Rick Blaine says in the movie Casablanca, "Play It Again, Sam." Apple, Tandy, IBM and the rest of the desktop computer gang focused on making the best desktop computers they could but ended up missing the next new, new thing. Apple Computer and IBM lagged 5 years behind bringing the latest-and-greatest technology rage to the market: portable computers. That market was owned by Silicon Graphics, Sun, and Apollo – all newcomers to this market.
In each case, the leading companies mentioned were regarded as the gold standard given their product excellence and operational execution only to be quickly pushed aside by an out-of-nowhere, technologically superior solution that reset the market's expectations rendering the prior leader's solution frumpy and stale. Missing emerging trends in the marketplace and not adapting to them quickly enough can ring a death knell for most companies. Think Wang, Silicon Graphics, Apollo. For others, this misstep can set them back 5 or even 10 years before they're back on their feet again.
As a note, in the above example, I simply chose the technology sector but we could have easily used the retail merchandising sector (Think Sears vs. Nordstrom) or retail books (Think Barnes & Noble vs. Amazon), or Automotive (Think GM vs. Toyota). Each situation is an example of a failure to see the changing landscape which, I believe, finance is mostly at fault for squandering these opportunities.
How come finance? I think finance failed their companies in each instance because they weren't effective enough in managing the day-to-day, low value tasks which, if they had them under control, they would have greater leverage to spend time on higher-value practices like forecasting and business analytics to uncover data points that can help the entire business spot emerging market forces before it's too late to respond. This responsibility to identify these threats and opportunities lies squarely on finance. If not them, then who else? Be careful because whomever you'll name will probably expect finance to provide them with the meaningful insight into performance results across the business as well as external information, which, again, means it's incumbent on finance.
So, how does finance get to that point where it's able to provide this kind of insight with the resources it has because Lord knows it's not going to get additional headcount? Well, it all starts with finding a way to better leverage the resources it has. This requires finance teams to get the lower value tasks automated as much as they can so that they can off-load these process management steps to take on added capacity for these analytic practices.
What are the world class finance teams doing to be analytic leaders in their industry? World class analytic finance teams have these repeatable practices down to great consistency and repeatability from end-to-end:
These practices are the foundational elements required for finance to be the advisor in providing guidance to the business. Excel at the practices mentioned above and you're soon positioning your analytic experts on your finance team to do the real analysis they're supposed to be doing. It's incumbent upon the CFO's finance department to provide this guidance and leadership given finance's role as the performance managers for the company. It is therefore finance's job to provide insights into past, present, and future performance but also trends, anomalies and market opportunities that become visible only after thorough analysis of the information-based business results gleaned from systems, i.e. ERP, CRM, SCM, etc. and processes, i.e. forecasting, what-if scenario analytics, etc.
This finance role is looked to not only explain past business performance and its financial effects but also advise and guide the strategy in determining where to make investments with the resources at hand. The CFO's analytics team – finance – needs to spend its time not on the everyday execution of basic, low value process steps, like compiling, validating, and reconciling data for various internal and external reporting needs but also analyzing past, present, and future to present guidance on what's happened, what's happening now, and what could happen. Only with an infrastructure in place to easily manage these basic elements of the finance team's mandate can the real value-added analytic insights come to light. Otherwise, their companies will continue to drive through its business climate with a perpetual blind spot on what's coming soon rendering them the next Tandy Computer, Silicon Graphics, or Apollo.
It's up to you finance to not let this happen.
Check out more blogs by Tim O'Bryan by clicking here!
Business Analytics Today Podcast: What's New In IBM Cognos Planningv10.1.1
Tim O'Bryan 270001NMX7 firstname.lastname@example.com | | Tags:  businessanalytics businessanalyticstoday provenpractices timobryan | 0 Comments | 1,092 Visits
Learn the value of the new IBM Cognos Planning 10.1.1 (GA November 22). You will be pleased to learn of this release as it affirms IBM's continued commitment to ongoing support and value-added enhancements to the IBM Cognos Planning solution. The release fulfills our customers latest requests with:
- features for greater ease and speed;
IBM Cognos Planning v10.1.1 delivers additional functionality for contributors (end users), faster access to data for reporting, an improved installation features, and conformance with IBM Cognos BI version 10.1.1 and Microsoft Excel 2010, and other key solutions.
Click here to listen!
Financial Performance Management for the Empowered CFO (using IBM Cognos TM1, IBM Cognos Controller & IBM Cognos BI for Scorecarding)
Tim O'Bryan 270001NMX7 email@example.com | | Tags:  timobryan businessanalytics businessanalyticstoday provenpractices | 0 Comments | 1,151 Visits
The evolution of the CFO from cost extractor and compliance enforcer whose primary concern had been to 'manage the numbers' into providing strategic support and organizational leadership helping drive profitability and growth for the enterprise certainly didn't happen overnight. There's been a series of events over the years driving this change, including the advent of Sarbanes-Oxley (Think Enron/Arthur Andersen/Worldcom) to today's Dodd-Frank as well as greater internal and external demand for performance data. In addition, there's increased CEO and board interest and oversight into the 'World of the CFO' where board members require more than just a simple view of the annual operating plan; They want it all now given that they have to put their John Hancock on documents like no time before. (The threat of a little jail time for malfeasance has a way of getting people to sit up straight and pay closer attention too.)
Given the CFO's more strategic role and influence in companies today it's no surprise that the entire finance function's visibility and criticality requires more demands on it too. In an ideal world, the CFO's finance department has its eye on implementing best practices to streamline inefficiencies and error-prone efforts. Yes, implementing best practices sounds good on paper but the common response I hear from finance departments concerning why they're not being adopted right now makes me think of the Beach Boys' tune, "Wouldn't it be nice…if we only had the time." (Note: Click that link if you want the actual Beach Boys song playing in the background while you read this post.)
Still, I'm consistently hearing that the goals for CFO's and their finance departments remain the same. They are:
Does this ring true with you too?
To read the remainder of this blog please click here.
Strategic Risk Management: It's The New New Thing, Right???
Tim O'Bryan 270001NMX7 email@example.com | | Tags:  provenpractices businessanalyticstoday businessanalytics timobryan | 0 Comments | 1,253 Visits
The global economic crisis, which began with the U.S. housing market's nose-dive in late 2007, continues to burn brightly across nations far and wide. This financial meltdown has served as a jack-hammered catalyst for corporations today to re-evaluate their risk management practices – assuming, of course, they had one in the first place. Most didn't. Apart from very large, globally diverse corporate behemoths, formal risk management practices didn't really exist outside of the top-level business strategy sessions conducted between CEOs, CFOs, and other members of the executive team.
Until recently, boards of directors were simply there to listen and learn what the strategy and execution plan was. Not much more was asked. Part of the problem was that back in the day – let's call it pre-crisis – having some celebrity status for board membership was de rigueur. That's all gone, of course, in the name of being more legally accountable in their roles where board members are actually looking after the business in ways unlike before. (There's a famous story about a Goldman Sach-delivered board presentation where Gerald Ford stopped the presenters and asked, "What's the difference between revenue and equity?" …He was our U.S. president at one time. Ouch.) Yes, now boards are more actively involved in the business including taking an interest in not only the business strategy, but also what the risk assessments are for it and how they're going to be mitigated, including the next-step plans to address them in the unlikely event they come to fruition. For all of these reasons, risk management practices arebecoming more pervasive and universally adopted by organizations, both large and small. These companies are expected to meet the demands of an uncertain and ever-changing marketplace not to mention evermore interested (read activist) shareholders, regulators, compliance hawks, and don't forgot those employees. Yes, regulatory measures like Sarbanes-Oxley, Basel II, Dodd-Franke and other forthcoming reporting requirements have pushed companies to throw much greater rigor around how they've planned and executed their responses to risk events. Companies now are adopting risk management strategies to assess, manage, and mitigate strategic, operational, and functional risks in all shales and sizes. A formalized risk management framework is no longer optional or a nice-to-have.
Still, many companies are way behind the curve. According to risk management trade organization RIMS, only 17% of organizations have implemented company-wide risk management to look at risk categories like operational, legal, financial, compliance, IT, strategic, market, and health and safety risk in total – not in siloed isolation lacking an "enterprise view". To a large degree, internal audit has been commonly given ownership of cross-organization collaboration.
If you're in the camp that hasn't implemented a risk management strategy or is only doing it in some, but not all, areas of the business, consider placing more (or some) focus around strategic risk management. Reason being is that according to the research firm, Corporate Executive Board, 70% of the risks that cause the most harm to corporations are strategic risks.
What is strategic risk, you ask? Well, it's any risk whether it exists today or may crop up in the unforeseeable future that could force the company to change, modify, or overhaul its business strategy forcing it to change the way you do business. RIMS defines it as "a business discipline that drives deliberation and action regarding uncertainties and untapped opportunities that affect an organization's strategy and strategy execution." Still too ambiguous? Well, think of it as defining what risks could be applied to your company's product lines, M&A actions, economic conditions, overall business model, or baseline assumptions that come into play when defining the business strategy. This is one reason bringing the risk team into the business strategy sessions is essential. The Risk Management team (or their leader) needs to have a seat at that table. More often than not the CFO, given his or her management of financial and operational risk, owns strategic risk. Gone are the days where the CFO is simply in charge of reporting prior year numbers – long gone. In this case, CFOs are the overseers of risk while delegating the task of 'selling' the concept to departments outside of finance.
It was reporting in a 2011 Accenture survey that 39% of the organizations surveyed said that risk managers have a seat at the company objectives-setting table; In 2009, it was only 27%. It's getting there but needs to be at 100%. Rome wasn't created in a day but headway is being made.
In summary, if you're new in adopting a formal risk management strategy, given that 70% of the risks that cause the most harm to corporations are strategic risks, take a look at starting with strategic risk management. Then, attempt to apply financial metrics to these risk events and how they align with your business plan. You want to be asking questions that look at your strategic assumptions, specifically what if they're wrong. An example is, what if you're expected EPS growth is X% over the next 5 years…Ask yourself, what's stopping the company from getting there? Also, try setting up a risk committee to review the risk events in question and explore the outcomes and the company's response(s) to these events. Don't take this on yourself. Tackle strategic risk first.
Meanwhile, check out IBM OpenPages too to see if it might be able to help get you where you're going. IBM OpenPages is part of the Business Analytics for Finance platform that includes our first-rate solutions, including IBM Cognos TM1, IBM Cognos FSR, IBM Cognos Controller, IBM Cognos BI, and IBM SPSS.
Check out my other posts, podcasts, and videos @ http
Aesop's Rooster Fable, IBM Cognos TM1, & IBM Cognos BI for Collaboration
Tim O'Bryan 270001NMX7 firstname.lastname@example.com | | Tags:  timobryan provenpractices businessanalytics businessanalyticstoday | 0 Comments | 2,086 Visits
IBM Cognos® TM1
One summer's day, a rooster scoured the barnyard looking for food. As he scratched the straw on the ground he uncovered a jewel. The rooster suspected the jewel might be valuable because of the way it glittered in the sun.
"The object is probably worth a lot", the rooster thought to himself, "but I'd trade a bushel of these shiny things for a single kernel of corn."
The primary moral, of course, is that beauty is in the eye of the beholder. …But, there's something else to be learned from Aesop's fable. What would have happened if the rooster had seen the bigger picture beyond his simple need for a little sustenance? He certainly would have known that the jewel could fetch much more than, "a single kernel of corn." Because he lacked access to basic facilitators from which to discuss this discovery not much was to be gained from it. Imagine if he had collaborative access to his peers, including perhaps more wise and worldly roosters and hens with greater influence and relationships with other rooster groups, large villages, or other rooster- or hen-run businesses? If so, he might have been able to draw greater value out of this discovery. Workgroups could have been quickly setup to weigh options and determine how best to use this newfound resource. One might learn through this group involvement that the 'jewel' should be invested for a later date when times are not as prosperous? Maybe it could be used to purchase new equipment to update the existing company's plant & equipment or analytics technology? Maybe it could be used in smaller bits to payoff the dreaded fox community to keep them at bay from invading the sanctity of their henhouse?
Because the enabled collaboration and feedback mechanism didn't exist the Rooster was willing to settle for the hear-and-now need. Only he benefitted from this, not the other roosters and hens or the local community. Unfortunately, it only solved an isolated need and wasn't effectively exploited.
This scenario is obviously entirely made up but there's a great degree of truth in it, especially how it can impact a business enterprise. Look, 'jewels' exist in every organization. They don't always make themselves known. Basically, good ideas don't only come from the top. Or, "there isn't a monopoly on ideas coming from only the executive suite." They come from all over the business and can have high- or low-impacting repercussions: good and bad, that is. It's what happens with these ideas after they're learned that matters. A collaborative platform for wide participation in enterprise planning, budgeting and forecasting is the enabler that can take those jewels and turn them into something far more valuable that can benefit the entire organization. The key is capturing this information so that it can be acted on. Mis
We know the workforce is filled with employees' great ideas; McDonald's Big Mac Sandwich, 3M's Post-It Notes, Sony's Walkman, and Dunkin' Donuts' Munchkins are just some big-bang examples. All over the organization there's cost savings and process efficiencies (streamlining order-to-cash), growth opportunities (expanding into new markets and product lines), and a risk awareness (unforeseen commodity/raw material price changes) that front-line employees, middle management, and even back-office workers have visibility into that necessitate a feedback loop so they are captured and acted upon.
IBM Cognos TM1
and its planning, budgeting, and forecasting capabilities not to mention analytics power can promptly facilitate the ideas exchange process through managed contributions and enterprise-scale input and high-powered analytics with enabled comments facilitates best practices and the enterprise wide collaboration necessary to drive, monitor, and understand the business better.
IBM Cognos® Collaboration
Learn more by clicking here.
Something else to check out for enabled collaboration is IBM Cognos BI.
Learn more by clicking here.
These solutions have proven value for the small, medium, and large enterprises today. Check them out and learn how to become an enabled-enterprise.
KPIs & Triple-A (Alignment, Agility, and Accountability): Part III
Tim O'Bryan 270001NMX7 email@example.com | | Tags:  provenpractices kpis timobryan businessanalytics strategymanagement businessanalyticstoday | 0 Comments | 2,164 Visits
The power of personally-assigned key performance indicators, or KPIs, is tremendous. If done incorrectly, KPIs might be used like a drunk would use a light post, for support not illumination. You could call KPIs industry-speak for one method to measure employee, departmental, and/or organizational performance. If effectively constructed, they can drive the right workforce actions supporting strategic and operational objectives. Yes, they could be tied to achieving an operational goal, such as on-time customer shipments, best-in-class inventory turns, or an industry-leading order-to-cash (Finance) or procure-to-pay (Procurement) process. Selecting the right KPIs is very important because they will drive employee behavior.
You might want to consider cros
So, how many KPIs is the 'right' amount? Well, I've seen as many as 40 KPIs for certain individuals. Is that a best practice? No. Absolutely not. There are levels of KPIs and, in this particular case, the person in question has their primary KPIs and their secondary KPIs. The primary ones drove their behavior (and, by the way, these primary KPIs determined his compensation as should everyone's primary KPIs…just sneaking in a best practice approach for ya!) So, to answer the question of what's is the right amount of KPIs for each individual, the answer is no less than 4 but no more than 12. If really pressed it's 6 KPIs per employee. If there's too many they're probably going to spread this individual too thin while too few KPIs might mean there's some activity for which isn't accounted.
The most important element to be aware of is the law of unintended consequences. You want these KPIs to drive the right behavior. Be careful what you measure because it will dictate employee actions, especially if you tie it to compensation (which you should). Conversely though, if you don't tie these KPIs to compensation then don't call me if they're not properly focused. Invariably people do what they like doing if they're not directed otherwise. They may be comfortable with some tasks versus others so they do what they like doing most. Everything else may be left at the altar. Hello, runaway bride. A set of KPIs by which they're measured will enforce (stick) the right employee actions while, by the way, tying them to compensation (carrot) helps nudge them in the right direction too.
These personal KPIs ensure people are doing the right things and not working on non-essential tasks that don't directly contribute to the organization's or department's primary goals and objectives. If they don't you at least can have an intelligent discussion with that employee and/or department to see if the related activities are important enough to continue doing. They also provide a benchmark by which to measure each employee's progress not to mention being effective at assigning accountability while better aligning the company. To determine KPI targets most companies will look at industry benchmarks for certain KPIs where actual decisions can then be made regarding what's a reasonable target given not only current conditions but also what the organization's goals are because these KPI targets need to be aligned with those corporate goals and expectations. KPIs clearly linked to enterprise strategy promotes greater transparency from the ivory tower executive suite down to the people in the trenches. People start thinking about how they can achieve their KPI targets and who the influencers are that can help them get there. They're collaborating more. They have a sense of purpose now. They know what they're supposed to do and they're being empowered to do it. No shades of gray. The corporate culture soon changes. KPIs become the stitching in the corporate quilt. Employees start to learn how to use the KPIs as a guide to clearer thinking in problem solving and weighing multiple options. They'll start asking questions about what data elements, departments, and individuals (internal and external to the organization) influence their KPIs. This is the epitome of using data to drive better decisions. It's partly about the actual data put in front of the individuals or teams; the other part is the resulting questions it inspires and behavior it drives. This is the behavior we're trying to inspire when we talk about the power of analytics and smarter decisions.
Of course, for KPIs to be leveraged most effectively you've got the provide the information technology infrastructure behind them to support constant updates to the actual KPI metrics. This would include drill-thru capabilities so that employees, managers, and executives can quickly and easily learn why they're on- or off-target for each KPI, say on-time customer shipments, by drilling-thru for more detailed reporting and analysis. Once they've explored the reasons they're on- or -off target, they'll then need to be able to quickly run scenarios to see the operational and financial effects of each option to help them determine the best course of action based on this analysis. At this point, the forecast is updated to reflect the decision made and its expected outcome(s). This is business analytics. This platform is the holy grail of fact-based decision making for enterprises today. Yes, I know just when you were getting comfortable with Performance Management as a business practice we throw Business Analytics into the mix.
To further reinforce this concept, think of Business Analytics as a single platform of tightly-integrated solutions empowering users to run their 'personal data analysis' where each employee can easily measure and monitor – when possible, in real-time – their KPIs through a dashboard or scorecard. Once they've evaluated their KPIs in their dashboard or scorecard, they're able to drill-thru within the same screen on that metric in question to understand why this item is reported as such (Why are we off- or on-target?). Now, they've got real context around why they're on- or off-target. Perhaps, they discovered there's been a shortage of inventory in their Denver plant or poor weather in northern Europe caused a critical shipment of product to be delayed. At this time they can perform scenario and predictive analytics to evaluate different options to resolve this issue. Once an option has been determined the results can be updated in the enterprise forecast.
These actions are nothing new. It's simply that all of this would be done in a single, integrated platform to run through this decision-making process in its entirety. The real question is, how difficult is it for each employee, manager, and executive to get this type of information which we know they need to make their day-to-day decisions not to mention the more strategic decisions? Better yet, are they even getting this level of information in the first place?
For now though we're hear to discuss KPIs. KPIs drive behavior through better alignment, accountability, and transparency across the business. We'll explore further in future posts.
Between now and then, here's a quick exercise: Think about how your KPIs are created today. Are they manual or automated? Are they trusted by their owners to be accurate and timely? Do they understand what the drivers of the metrics are so they know what actions on their part will influence them? Are these KPIs tied to compensation?
Hope this was helpful. Any feedback is certainly appreciated.
Tim O'Bryan
Email: tim.
Drive Better Performance Thru Greater Finance Integration with the Sales & Operations Planning Process
Tim O'Bryan 270001NMX7 email@example.com | | Tags:  businessanalyticstoday salesandoperationsplannin... businessanalytics provenpractices | 0 Comments | 2,521 Visits
In this blog, I'm going to highlight the critical importance of integrating the organization's financial plan and the actual finance function in general into the operations department-led sales & operations planning process. Yes, in this sales & operations planning process, or S&OP, where future supply and demand plans are compiled, aligning the S&OP with the financial plan results in greater corporate alignment, improved information transparency, and more timely and effective organizational execution. The finance function needs to lead this effort though they're already lord-and-master over what seems like too many critical business processes, including financial planning & analysis, treasury, finance transactional processes, compliance, cash management, tax management, and in most companies today, risk management. Adding this role to their agenda seems like it will only exacerbate an already overburdened finance team. My response is that a financial plan (and forecast), for which finance is responsible, isn't worth the paper it's printed on if it doesn't align with the S&OP process. Here's why:
Operations with finance involved in the S&OP process are able to develop a more robust supply plan and a single consensus demand plan than without finance involved. Yes, with finance actively engaged in the S&OP process, better performance can be attributable to finance, operations, and the executive team's improved understanding of the dependencies and business context of the S&OP process given finance's involvement in financial reconciliation to identify errors, inconsistencies and out-of- balance elements of the plan while even reducing forecast bias given finance's role as an objective participant in the S&OP process.
The key in all of this is that each plan needs to be on a common, integrated platform, with the same level of financial and operational data detail available to both. Granular alignment is critical. This way the impact of changing an assumption or parameter on either end can be seen from a financial and operational perspective. Sure, planning parameters are still unique to each, but the impact of a parameter or assumption change in one domain is directly reflected in the other. Imagine the benefits resulting from this alignment??? Indeed, the insights developed through this integrated process enable the allocation of resources and alignment of commercial and operational activities to support the real revenue and profit drivers of the business: your customers, products and services!
Other outcomes are that the quality of the sales and operation plans themselves improve. In addition, there becomes a corporate culture shift to a more long-term, strategic focus. Everybody's able to see the financial implications from their operational decisions. It puts everything in greater context for both sales and operations, which in turn helps the executive team make smarter strategic decisions because they've got greater insight into the financial and operational plans. The focus is on strategy and not on simply the veracity of the numbers. Also, improved buy-in and commitment to plans from the business results and increased cross-functional collaboration, financial modeling and planning assumptions materializes too.
Other things to consider to help jump-start this process are:
I encourage you to check out IBM Cognos TM1 which has the capability to manage massive data volumes at SKU-level detail with embedded controls, simplified modeling capabilities, and ease
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A Pilot's Cockpit: Aligned Scorecards Used For Better Agility & Execution
Tim O'Bryan 270001NMX7 firstname.lastname@example.com | | Tags:  provenpractices timobryan businessanalyticstoday businessanalytics | 0 Comments | 1,280 Visits
Imagine entering the cockpit of a modern jet airplane and seeing only a single instrument there. How would you feel about boarding the plane after the following conversation with the pilot?
Q: I'm surprised to see you operating a plane with only a single instrument. What does it measure?
Q: That's good. Airspeed certainly seems important. But what about altitude. Wouldn't an altimeter be helpful?
We suspect you wouldn't board the plane after this discussion. Even if the pilot did an exceptional job on air speed, you would be worried about colliding with tall mountains or running low on fuel. Clearly, such a conversation is a fantasy since no pilot would dream of guiding a complex vehicle like a jet airplane through crowded airspace.
This is an often cited story by many business strategists and other management prognosticators which I will attribute to Drs. David Norton and Robert Kaplan, pioneers of the Balanced Scorecard. It's intended to reflect how critical the actual indicators are that we setup for not only pilots but also the indicators by which you establish for your entire workforce because these indicators will serve as the guiding force behind their decision-making.
Why is this so important? Well, many reasons starting with the business environment has substantially changed where no longer can a company operate rudderless without a core set of metrics to steer each of its employees individually and as a collective unit in the right direction. That right direction is the enterprise strategy. The speed at which these decisions are being made seem to have increased exponentially in just in the past 5 years. The days of top-down, command-and-control authority over decision-making are far from over in deference to a more nimble, decentralized execution hierarchy intended on keeping pace with the velocity of the related competition and customer expectations. The need for getting relevant and actionable information to the business users has never been more pronounced than we're seeing today. If you can't react fast enough to the market realities your customers will go elsewhere. We live in a world where product or brand loyalties are becoming more and more a thing of the past. It's about execution. Good execution is about making smarter, more informed decisions that support the organization's goals.
These decisions being made are happening across all levels, geographies, and functional areas of the business everyday. For this post I want to zero in on the first question asked which falls under measuring and monitoring the business. This question is, how are we doing?
Sure, the executive suite is constantly measuring and monitoring overall business performance to ensure the company is on track to meet its strategic targets. In addition, the function leads in marketing, sales, finance, HR, and development all the way down to the individual contributor levels of the organization are measuring and monitoring the performance of their area of the business too. But how does everyone know they're doing the right things at all times? What are their real priorities helping the organization achieve its goals? Is it guesswork? Is it trust-based that the entire workforce is going to naturally make the right decisions supporting top-line goals? How can we be so sure?
This fictional story referenced at the beginning of this post is
really about measuring and monitoring – not an aircraft – but your
business thru a tool called a scorecard.
There are personal, departmental, and enterprise scorecards. A
scorecard includes the key performance indicators, or KPIs, for which,
in the case of a personal scorecard, an employee is responsible which,
if these KPIs are correctly defined, would include measurements that,
when looked at in aggregate, support the enterprise's top-line strategic
goals and objectives. Inevitably, there will be shared targets for some
of the KPIs in a personal scorecard either within a specific functional
area of the business (Think Marketing Director/Marketing Associate
having similar campaign targets) or as shared KPIs across functional
groups like marketing, sales, procurement, and deve
The actual KPIs – typically there's about 6-10 for each individual – are critical because they will define the actions taken by the individual for which they're responsible. The ultimate alignment via scorecards composed of KPIs across these business groups, departments, divisions, business units, etc. is the embodiment of what we call a company's strategy execution framework.
Harvard Business School having done a study on this framework found that, "a 35% increase in Strategy Execution leads to 30% gain in shareholder value". That's a pretty strong argument for at least taking a harder look at it.
How do you deploy such a framework, you ask? Well, in theory it's very simple. You just translate the business strategy and its related goals into a set of performance indicators that outline the targets for which each department and employee within each department are responsible and away you go, right? Yes, I know. It sounds easy in theory. But, in practice it's a little more work.
The key is working top-down with each business and support unit area to translate their contribution towards meeting these higher level targets so that these lower-level, cascaded measurements, or KPIs, will, when rolled up in total, directly tie to the top-level enterprise's strategic goals. This ensures proper alignment of the organization while providing an ongoing set of metrics by which the workforce can measure themselves.
Even more important in defining the right KPIs is the understanding that whatever the indicators are, this will determine the individual's behavior so take care as you define these. Something else that makes this framework so effective is that it makes it that much easier to reset the workforce when those top-level strategies change. the infrastructure is in place to restructure the scorecards. This allows the company to adapt more quickly.
Think about deploying such a framework for your organization. The best incentive I can give you for taking on this effort is that going through the KPI definition process for each set of scorecards it forces discussions across functions, within departments and at the executive level that will expose how achievable these targets really are with the current resources in place today and who is ultimately responsible for what. This is just about the most important exercise I think a company can go through to make sure it's not setting itself up for failure because its strategy isn't attainable given the resources currently in place. Once this KPI definition process is complete and everyone knows who's doing what and where the synergies lye it's all about execution. This framework sets companies up to execute well because they've already identified their needs and resources at their disposal and now it's a matter of delivering. It's go time.
If done right this will be the outcome for your organization:
More coming on this subject. Stay tuned. In my next post I'll tell you some of the best practices in defining the right KPIs for personal scorecards.
Email: tim.
Blog @ http
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Leadership Lessons from the American Civil War & Master Bathroom Remodels
Tim O'Bryan 270001NMX7 firstname.lastname@example.com | | Tags:  businessanalytics businessanalyticstoday leadership timobryan | 1 Comments | 1,231 Visits
"He who hesitates loses."
The ugly truth of this phrase rings true in the case of battles that never occurred in the American Civil War. For those unfamiliar with this war the American Civil War occurred during the mid-1800′s from 1861-1865 on U.S. soil. It was fought between the North (Union States) and the South (Confederate States) and was primarily triggered by the election of Abraham Lincoln in 1860. Its definitive starting point occurred on April 12, 1861 at 4:30am when the first Confederate shot hurtled into Fort Sumter, a Union stronghold, sitting at the entrance to the harbor of Charleston, South Carolina.
The conflict continued until a final peace was made at Appomattox Court House on April 9, 1865 between Union General Ulysses S. Grant and Confederate General Robert E. Lee. At the outset of the war, the North was better organized, better equipped with a much larger conscription of troops not to mention having far more resources at its disposal than its southern counterpart. Despite the South's opening victory at Fort Sumter, a largely symbolic victory for the South, many predicted the North would prevail swiftly and decisively. In 1861, President Lincoln was resolutely confident that a string of Union victories as they marched their way from Washington, D.C. to the seizure of the Confederate capital of Richmond, Virginia would be enough of a blow to the Rebels that the Confederates would be forced to give a total surrender. The key for this surrender to be given though was that the Northern Army needed to move quickly from their current position in Washington, D.C. down to Richmond to dismantle the South's capital and central command post: without the shepherd (Richmond) the sheep (Southerners) would lack direction forcing an end to the war. All pointed to an assured victory for the North. Or so it seemed. "On to Richmond!" was the northern cry. Lincoln gave the job of leading the Union Army to General George B. McClellan. McClellan was revered for his many talents. Smart, pedigreed, and more than capable, McClellan had the trust of all Northerners. March to Richmond, plant the Union Flag and McClellan was assured to be a hero. As I mentioned earlier, no battle never fought was ever won. Despite overwhelming odds in his favor and indisputable evidence that his army far outnumbered the Southerners, General McClellan repeatedly hesitated to march his troops into battle against the Confederate army which stood between him and his ultimate objective, Richmond. The Confederate capital at the time of his hesitations was literally within McClellan's sights but he never made it there because he failed to act. Instead, after a few defensive squirmishes with Southern forces and despite multiple requests from Lincoln to fight, McClellan all-too-eagerly retreated hat-in-hand back to Washington, D.C. giving up ground to the South's General Robert E. Lee who made an aggressive march northward to Antietam into Northern territory. What a turnabout. I wonder if this is what prompted Lincoln to later say, "I can make more generals, but horses cost money." Obviously, Abe had to mind his dollars and cents now given that this would be a long and protracted war.
My point isn't to denigrate the character of General McClellan. Not at all. He did many exceptional things in his life of which he should be proud. What I mean to do is to illustrate an example where sitting idle, even when there's overwhelming evidence to support taking that action, is a missed opportunity. We've all done this in one way or another. We wait to act. It happens to the best of us. A lot of times taking action on something means change from the norm and, regardless of the ultimate benefits, we can resist that change because, well, it's change. These reasons alone are what cause a lot of people to hit their personal pause button and not do anything.
Let's look at this from a different perspective. Have you ever had your master bathroom redone? If so, then you'll know what I'm talking about. Tons of benefits here. Maybe you'd be getting a new jacuzzi tub, a nice steam shower and even more cabinet space not to mention your own sink this time around… Still, most resist a project like this because it'll mean losing your bathroom for quite some time before it's ready for prime time. Big benefits to upgrading your bathroom but there's certainly going to be some inconveniences (read change) before it's usable.
No matter how necessary the project is whether it's redoing your master bathroom or marching regiments of 100,000 men into enemy territory don't let the forces of hesitation get the best of you. Yes, there will be initial adjustment pains as you go through the process but keep your eye on the ultimate prize – and, when applicable, make sure you're keeping everyone else's eye on the prize too.
If you see measurable benefits justifying an investment in something, try to see the benefits beyond the initial ramp up time and just go for it.
(Shameless plug) If you're thinking of deploying Business Analytics solutions to enable critical business processes at a minimum take stock of what the possibilities are. Look at your processes such as the following:
…take stock of what the best practices are in one or two of these areas and see how your company measures up. Perhaps this is an opportunity to drive a planning & analytics optimization initiative across finance and the rest of the organization (Check out IBM Cognos TM1). Or, maybe you want to look at automating your financial statement reporting practices (Check out IBM Cognos FSR), or even review your risk management practices (Check out IBM OpenPages). Look at the processes first. See what's preventing these processes from being at a best practice level. There could be many reasons for this. After you've done this take a look at the enabling solutions that are out there that address these processes. Whatever it is don't hesitate because there might be some additional work in the investigation phase or in the technology implementation phase because, once it's up and running, you'll be glad you did.
The measurable benefits in adopting these solutions, such as automation, embedded controls, workflow management, minimal administration, etc. which allows for higher frequency forecasting, stronger analytic capabilities, access to real-time reporting, effective scenario analytics, best-in-class predictive analytic capabilities, rigorous statutory reporting & risk management enablement, etc.,with you championing the project can be your path to success while the organization benefits from the bottom line ROI. Everybody wins. You can become the figurehead for it too because you acted on it.
"Fortune favors the bold".
Tim O'Bryan/IBM
Email: tim.
IBM Cognos TM1: The Swiss Army Knife of Technology Used For Profitability Modeling & Optimization
Tim O'Bryan 270001NMX7 email@example.com | | Tags:  profitability-optimizatio... businessanalyticstoday timobryan businessanalytics | 0 Comments | 1,099 Visits
IBM Cognos TM1 is like a Swiss Army knife – it has capabilities to do a
lot of different things extremely well. One of the practices it's
being utilized for with incredible results is an emerging, but no so
well understood, practice entitled profitability modeling and
optimization. The power of IBM Cognos TM1 is the primary reason this
practice has emerged. Companies adopting IBM Cognos TM1 as the
technology of choice for this practice is the primary reason they're
thriving moving from 'also rans' to industry leaders. Still, this post
is less about IBM Cognos TM1 and more about the process, Profitability
Modeling & Optimization.
When talking about profitability modeling & optimization it's more illustrative to start with the ever-important strategic element of price. It's that set amount that can make or break a product or service or even the company's acceptance by the marketplace. Price, of course, is most often set by what the market is willing to pay for this product or service. A lot of factors can go into your pricing strategy including things like the brand equity and image of the product or service (Think Tiffany's), expected sales volumes (Think economies of scale), competitive factors (Only game in town?), or if it's a new category being created. Of course, we know that companies profit by selling this product or service at a margin greater than its cost. Then, a profit is turned.Now, what you do with those profits is then up to the company to decide. Do you reinvest those profits? Most do. If so, how do you allocate them across the business for the most profitable return? Maybe you even want to release some of them to shareholders via dividends? What about making acquisitions? These are important decisions to make based on what the future needs of the business are. This is a good problem to have.
Enter Profitability & Optimization.
To sustain competitiveness in the marketplace organizations must be able to model their profitability to maximize profits and optimize the components to profitability that incur costs. Most companies are performing some form of profitability and optimization activities everyday. The BIG difference is that some are much better at it than others. Why is this? What separates them from the others? It comes down to the best-in-class organizations investing in their people, the related processes, and a capable technology.
Ask yourself the following questions:
Now, how would your colleagues in Sales, HR, Marketing, IT, Operations, etc. answer these questions?
It's critical to know that every area of the business is looking at some element of profitability. Running scenarios, what if, and profitability analysis with a 360-degree viewpoint of the data is the lifeblood of value-added analysis for making smarter decisions which, if done effectively, translates into better corporate performance. Without better insight and understanding of the information derived from profitability modeling and optimization, business users are forced to go on their gut and/or out of date information — or, worse, they're waiting until they do get the information they need before they can act…tick, tick, tick. Time is money.
If you and the rest of the workforce don't have this information at your fingertips don't fret because you're not alone. However, things are changing. Companies today are investing more and more into this practice area as technology has caught up in a way that's allowing for massive data volumes to be sliced-and-diced in seconds for this very purpose.
Now is the time to act. The technology is there so I'd ask why isn't your organization there too. Hustle up. I know a lot of companies that are doing this practice very well – and some that aren't unfortunately. They're the ones looking to leverage IBM Cognos TM1 to put them on the path to better PM&O.
If you want to know more about this subject feel free to email me to discuss further.
Click here to see more resources on IBM Cognos TM1.
Tim O'Bryan/IBM
Email: tim.
More Blog entries @ http
IBM Cognos FSR, Aesop and Sun Tzu
Tim O'Bryan 270001NMX7 email@example.com | | Tags:  businessanalyticstoday cognos cognosfsr businessanalytics timobryan | 0 Comments | 1,104 Visits
When I think about the capabilities of our IBM Cognos FSR solution it reminds me a lot of Aesop's fable about the Ant and the Grasshopper. It's about preparing today for more challenging times. If you don't know this fable I've included it below as it's so short it's not worth paraphrasing. The story goes like this:
When I think about the capabilities of our IBM Cognos FSR solution it reminds me a lot of Aesop's fable about the Ant and the Grasshopper. It's about preparing today for more challenging times. If you don't know this fable I've included it below as it's so short it's not worth paraphrasing. The story goes like this:
One summer's day, a merry Grasshopper was dancing, singing and
playing his violin with all his heart. He saw an Ant passing by, bearing
along with great toil a wheatear to store for the winter.
Get your house in order so that when the onslaught of work comes you can focus on the right things. IBM Cognos FSR is one of those solutions that helps with that "preparation" and the FSR solution can grow with those changing regulatory, compliance, and performance reporting requirements. I spoke with our Product Marketing Director, Dan O'Brien, about IBM Cognos FSR and how he explains the capabilities to our customer base. He said the hardest part is explaining how transformational this software is for finance departments. It's almost like "selling cars to people still using a horse-and-carriage. This solution is so far advanced that a lot of customers find it hard to believe that it can really work that seamlessly." No buggy whips required. I've seen the technology in action and its pretty incredible.
Look, we all know that today's hyper kinetic, ingloriously competitive business climate is calling for organizations to react and respond more ably than ever before while at the same time these organizations are being asked to comply with increased regulatory, compliance, and external reporting requirements showing no signs of abatement.
Analytically-driven organizations are not wasting time while these ever-changing, always demanding disclosure management-related processes spiral out of control. At risk is more time robbed by these lower value activities from the real analytical and predictive research finance needs to be doing that's the most value added. Also, we know the outcome of reporting late or reporting the wrong numbers. Why not take a look at IBM Cognos FSR???
Top performing companies have found a way to manage these additional regulatory and external reporting requirements through the use of IBM Cognos FSR. This solution has raised the bar in not only managing the disclosure process, including XBRL capabilities, but this solution also has assisted organizations with their performance reporting needs too. This solution can automate and manage the complex tasks of collecting, editing and reporting various performance and financial data for finance, treasury, reconciliations, portfolio and asset management, audit, and risk management, etc.
Reporting now requires structured and unstructured information which is highly susceptible to errors, especially when handled manually to edit, review, and publish that data into narrative management reports. So get out ahead of these manual intensive, error-prone processes and leveraging an integrated solution that can automate and effectively manage these tasks because the pace of change for what's being expect of the office of finance and it isn't slowing.
I encourage you to take a look at IBM Cognos FSR and see what it can do for your organization because there's only more changes coming. Be prepared for it with IBM Cognos FSR.
"The art of war teaches us to rely not on the likelihood of the enemy's not coming, but on our own readiness to receive him; not on the chance of his not attacking, but rather on the fact that we have made our position unassailable." – Sun Tzu
For more information on IBM Cognos FSR, click here.
Hope you enjoyed.
Tim O'Bryan/IBM
Business Analytics Software
More of my blogs @ http
IBM Cognos Controller 10.1 & the Financial Consolidation process: A perfect automated marriage
Tim O'Bryan 270001NMX7 firstname.lastname@example.com | | Tags:  ibmcognos timobryan businessanalytics financialconsolidation provenpractices businessanalyticstoday cognoscontroller | 0 Comments | 2,551 Visits
If asked to describe their financial consolidation process most corporate finance teams might spit out a few unprintable adjectives as they attempt to explain their effectiveness in harnessing all of the moving parts in this bear of a process. The primary issue they have is managing all of the inputs and one-offs throughout each step, making it difficult to track or audit it because of their lack of transparency, visibility and ultimate control over it. Riddled with disconnected systems that have major control risks requiring manual intervention and maintenance (Think spreadsheet-based systems) and other standalone technologies lacking any audit control make it an administrative nightmare. Financial consolidation isn't a stationary target either given the ever-growing mountain of new regulations, report filings, and financial governance procedures required to which they need to adapt. (Think Dodd-Frank, IFRS, and XBRL to name a few.)As I mentioned in another blog post, "Close, Consolidate, Report & File: Automation & Embedded Controls Else It's A House of Cards", there's so much to manage throughout the FInancial Consolidation process including manual inputs, offline adjustments, in-process reports, and stakeholders to keep a handle on it all. We're not talking about nice-to-have reports here. We're talking about reported Balance Sheets, Cash Flow Statements, 10Ks and 10Qs and other monthly, quarterly, and annual reports that go to shareholders, The Street — and, oh, by the way, these results are the primary drivers of business decisions being made across the organization to run the business. Hard to believe more organizations haven't adopted an end-to-end solution to produce credible, timely, and reliable results while allowing finance teams to really focus on the important stuff like analyzing the results, not compiling them.
To set a little context I'll briefly walk through a sample consolidation and reporting process. See if any of this sounds familiar.
Simplified Global Consolidation Process
Imagine we're dealing with a North American-based organization in Milwaukee, Wisconsin that has subsidiaries and international operations throughout the world. The consolidation process starts with this corporation's subsidiaries and country-specific operations consolidating their data and producing financials for their own legal entity relationships for their local reporting and local ownership and tax purposes. These same entities capture their 'local' data in their 'home' currency through their own general ledger systems and/or receive data from manual inputs and manual processes via tools like spreadsheets. At this point the subsidiaries and countries will prepare trial data submissions in local currency which will then be fed to the corporate finance department in Milwaukee. Typically, files are securely sent to corporate as uploaded to a common repository for corporate handling. Usually, there's a lot of back-and-forth communications with these entities and corporate while they're preparing their data.
Corporate finance receives these data submissions from all of the subsidiaries, country operations, and/or legal entities and consolidates this information into a common reporting currency; in this case, US Dollars. From there, corporate finance will perform additional consolidation activities including inter-company eliminations, group adjustments, such as investment eliminations between subsidiaries, and, ultimately, they will perform the final financial consolidation. Once these activities are completed they will then go through the process of analyzing the financial results and circle back with different participants in the consolidation, i.e. subsidiaries, legal entities, regions, etc. and relevant stakeholders in the process where variances are to be explained. Comparative reporting is then done across periods (last year vs. this year) or against plans (budget vs. actual) or even against budget foreign exchange rates to take out any f/x anomalies which might skew the data. These results are then fed into the management reporting and corporate planning process where the real analytics and decision making ultimately takes place. Then, for financial governance, statutory financial results need to be prepared and signed off for external reporting for investors, analysts, and regulatory agencies.
Phew…and that was a VERY simplified version of this process. Believe me, there's a lot more to this process.
Cognos Controller is a comprehensive, Web-based solution that offers power and flexibility for streamlined, best-practice financial consolidation and reporting – all in one solution. Its full suite of capabilities delivers a complete portfolio of financial results and provides an integrated platform for financial and management reporting. Cognos Controller makes it easy to deliver financial statements and reports to finance stakeholders, as well as managers, line-of-business executives and regulatory bodies. It also provides the de facto starting point for planning, budgeting and other performance management processes.
Just a few reasons why IBM Cognos Controller 10.1:
…and these are just some of the features of IBM Cognos Controller 10.1!!!!
Special Note:
For external financial statement production & XBRL, IBM Cognos Controller data and reports are directly available within external financial documents developed in our IBM Cognos Clarity Financial Statement Reporting (FSR) solution.
IBM Cognos FSR is the market leading solution to control, automate and audit the "last mile" of finance, the challenging collaborative collection and assessment of data from multiple sources that must be brought together into important external documents such as 10Q, 10K or annual reports, or highly confidential documents such as board books. IBM Cognos FSR documents can access IBM Cognos Controller data and text directly, enable collaborative approval, and embed the financial information into any report. The connection is permanent, providing for automatic updates as required, including new versions of the document in future years.
To learn more about IBM Cognos Controller 10.1 here are some additional info for your reference:
IBM Cognos Controller Web Page
IBM Cognos Controller White Paper
Related White Papers & Best Practices
Additional Information:
Financial Consolidation and Reporting is part of a larger end-to-end process fully-enabled by our IBM Financial Performance Management solutions. In the illustration below you can see how our solutions work together to solve this larger process we call, "Close, Consolidate, Report & File".
For more information on this or other Business Analytics topics, feel free to contact me at your convenience.
Tim O'Bryan
Blog @ http
The Close, Consolidate, Report & File process: Without Automation & Embedded Controls It's A House Of Cards
Tim O'Bryan 270001NMX7 firstname.lastname@example.com | | Tags:  businessanalytics financialperformancemanag... businessanalyticstoday ccrf close-consolidate-report-... timobryan | 0 Comments | 1,110 Visits
Predictive Analytics & The Minority Report: It's easier to prevent a crime than solve one!
Tim O'Bryan 270001NMX7 email@example.com | | Tags:  predictiveanalytics timobryan forecasting businessanalytics | 0 Comments | 1,318 Visits
Remember the Tom Cruise and Colin Farrell movie, The Minority Report??? For those who don't recall this movie it's a science fiction thriller based in the year 2054 where Tom Cruise plays Captain John Anderton, the chief of the Washington, D.C. PreCrime police force. The movie's other star, Colin Farrell, plays the Justice Department's auditor in charge of evaluating the PreCrime unit's strategy and tactics before the program goes nationwide. The PreCrime unit has been very successful having prevented any crime from being committed for over 6 years since its implementation apprehending criminals before they've committed their future crime based on what they call foreknowledge. In other words, this department has predictive insights into these future crimes allowing all in the community to sleep safe and sound knowing they're being protected from the bad guys. (Look, I know there are multiple holes in this story (Think of the legality of a pre-crime arrest) but, it's a movie, so you gotta seriously suspend your disbelief like in most movies.) Yes, I'm sure you're thinking this is an extreme and unrealistic example of how predictive analytics can revolutionize the way things are done. Or, maybe this movie's storyline isn't that unrealistic???
Enter the Santa Cruz, California Police Department. Just like most police departments (and businesses for that matter) the Santa Cruz police department spends a majority of their time allocating their existing resources most effectively to produce the best bottom line results. These bottom lime results being fighting or preventing crime while protecting the safety of its community. Apart from identifying who the specific individuals are that will be committing these future crimes like was the case in the PreCrime unit in the movie, The Minority Report, the Santa Cruz Police Department is able to identify specific times and actual locations where crimes are most likely to be committed using their own set of predictive analytic capabilities. This allows them to proactively be there and wait for these crimes to unfold and swoop in before anyone or anything is put in harm's way. They call it predictive policing which utilizes 'Predictive Analytics' to make better decisions about the future. Predictive analytics encompasses a variety of techniques from statistics, data mining and game theory that analyze current and historical facts to make predictions about future events – to identify patterns or likelihoods of afuture outcome – in this case, crime. Erica Goode of the New York Times says that, "Santa Cruz's method (of predictive policing) is more sophisticated than most. Based on models for predicting aftershocks from earthquakes, it generates projections about which areas and windows of time are at highest risk for future crimes by analyzing and detecting patterns in years of past crime data. The projections are recalibrated daily, as new crimes occur and updated data is fed into the program." Amazing.
Predictive policing is working so well that it's being employed by other police departments around the nation. Besides it being an effective way to fight and prevent crime it's a cost-effective and efficient way to leverage resources, especially in light of shrinking police departments trimmed by the global slowdown. Erica Goode goes on to say in her excellent article that, "efforts to systematically anticipate when and where crimes will occur are being tried out in several cities. The Chicago Police Department, for example, created a predictive analytics unit last year."
Besides wanting to share this incredibly interesting story with you showing how far we've come as a society in leveraging data to make better decisions, I also wanted to use it as a way to illustrate how using predictive analytics to manage your organization's resources (read make better decisions) based on knowing what the future will most likely look like applies to business and government just as well as in policing. Think about it. Why shouldn't corporations employ a similar approach in how they run their businesses? And, Police departments aren't stopping there. They're now thinking about "Crime Forecasting" to understand future events to ensure they're prepared for what this future will most likely require of them. The question is, where is your business on this predictive analytic path? Better, where is your competition?
Financial Performance Management & The Agile Enterprise: Two Sides of the Same Coin
Tim O'Bryan 270001NMX7 firstname.lastname@example.com | | Tags:  provenpractices businessanalytics businessanalyticstoday financialperformancemanag... fpm timobryan | 0 Comments | 949 Visits
Ever sat through a presentation and thought to yourself, "I have no clue what that person just said for the past 45 minutes!"
Includes processes like:
KPIs, Led Zeppelin and Your Growing Pile of Yet-To-Be-Read Books
Tim O'Bryan 270001NMX7 email@example.com | | Tags:  timobryan kpis provenpractices businessanalyticstoday businessanalytics strategyexecution strategy | 0 Comments | 1,092 Visits
Books. There's all genres. Business. Nonfiction, Fiction, History, Current Events, Biographies, Mysteries and on and on. Whatever the genre there's nothing like a great book. They can entertain you, inform you of information you'd otherwise never know, challenge your thinking, and even change your life. Many people like to read so much that they'll take on multiple books at a time each serving a different purpose: one, current events; another, fiction; a third, history; a fourth, humor, etc. I suppose the thinking is that depending on their mood they've got a book to satisfy that moment's interest. If you're in this camp then you know you can easily end up bouncing from book to book, day to day slowly chipping away at each one.
Sound familiar to anyone?
The only problem is that over time you end up adding more and more new books to the already 'in progress' collection. As more and more books are added to your bedside collection eventually as Robert Plant from Led Zeppelin sings, "when the levee breaks" you sheepishly put one unfinished book after the other back on the bookshelf because you can't possibly ready all 20 or 30 books at once!!! At this point you've safely returned to your 3-books-at-a-time maximum only to repeat the overload cycle again in no time.
A funny and clearly harmless situation that happens to a lot of us. This is what can happen when someone is left to their own devices unchecked without any accountability. What if there were larger consequences for not completing these books? Maybe there were some higher priority books that needed finishing over others? Maybe one of the books was a library book or a borrowed book with a timeline associated with it? Maybe some books were started because they were more fun to read than the less interesting ones with a time sensitivity attached to them? Maybe one was for a book club where there was a shared interest in its completion so they reader could add value to the reading group? If any of these situations applied we are probably more likely to become extremely serious about one book over the other so we're essentially prioritizing our reading. Again, a harmless example but I think it's illustrative of the competing priorities we might have in our jobs too.
Well, why should it be any different when we're talking about our job-related actions? We are constantly having to prioritize our most important tasks or objectives, both long and short term. If the organization places critical importance on certain goals and objectives whereas everything else is considered less critical wouldn't the organization want to ensure the workers and the entire workforce is being measured against those goals and objectives on an ongoing basis so 'every chapter is read'?
A common way to measure and monitor this performance is through the use of key performance indicators, or KPIs. A Key Performance Indicator is an industry word for a set of financial and non-financial measurements used by an organization to assess its success or the success of a specific activity in which it is engaged. A KPI is a business metric used to evaluate crucial factors to the achievements of a business objective for an individual employee of the company, a group of employees, or the entire organization. KPIs aren't a one size fits all thing. They differ for every organization. For example, KPIs may be something like net revenue or some customer loyalty metric. In the case of the government, a KPI might be the unemployment rate.
A KPI allows an organization to monitor whether it is on track or not. KPIs serve to decrease the intricate nature of organizational performance to a small number of key indicators so as to make it more digestible for us. KPIs are used in our personal lives too. Think of a doctor measuring things like blood pressure, cholesterol levels, heart rate and our body mass index as important indicators of our overall health. KPIs we are trying to accomplish the same in the organizations.
Assigning the right KPI's is less art and more science. A little tip for you…Be careful because what you're measuring yourself and other individuals in the organization by is ultimately going to reflect how you all behave. For example, if a purchasing manager is being measured only by cost, they're likely to start ordering in bulk and paying suppliers late. Good for the purchasing manager, bad for business. This is because the purchasing manager may have been ordering a lesser quality material, the inventory resulting from bulk ordering may outstrip any benefits from ordering in bulk, while the supplier relationships may suffer. Bad for business all the way around. The metrics by which people are measured drive their behavior so be careful what KPIs you select.
Selecting the Right KPIs
First, define the success criteria and then choose the best 5 KPIs which the employee will be measured. Involve the employee in question in the process of determining their KPIs. This is critical and will ensure there's a feedback loop in place which is important as you might have missed a nuance that the employee can shed light on and, besides, you want the buy-in from the employee as the eventual KPI owner and a good way to get it is by collaborating with them about what the KPIs should be. From there the employee will look at ways they can influence those KPIs. If you do this correctly, KPIs can drive the behavior. As Peter Drucker said, "you can't manage, what you can't measure." That said, establishing KPIs will provide that accountability necessary to empower your employees to do the right things and take ownership of them.
First, define your success measures. These might be, how well are we satisfying our customers? How well are we managing risk? …or innovating? …or managing our costs? Then, you will want to define the KPIs that make up that success measure. The KPI might be willingness to recommend, customer retention or loyalty. Those measures can be converted into metrics which can have goals attached and history for comparisons. Once assigned through a collaborative exercise between the individual, their management team, and perhaps an outside consultant they can drive behaviors that foster the team effort companies relish. The employee is most likely going look at the drivers that can effect their measurements and see where the other influencers are in these measurements. It can force greater collaboration among these groups with a sense of "team" that never existed before. Suddenly, programs will spring up to ensure those measures go in the right direction. This is what accountability and ongoing measurement of what's important will ensure these individuals will focus on the right things and evaluate their priorities as they go about their jobs.
Take a deeper look at the impact of measuring and monitoring performance through KPIs. It can make a difference in getting everyone acting with purpose-driven intent not roving around rudderless.
Organizational discipline around doing the right things (read purposeful action) is critical to outperforming the competition. As Van Morrison sang on his excellent album The Philosopher's Stone, it's "not supposed to break down" but a lot of times achieving your goals, personal or professional, do break down because people inevitably get distracted by other non-essential projects because a lot of times they get distracted by doing the things they 'like' doing over others just to keep busy. Then, before you know it they're putting that 'must be completed book' back on the shelf with still unread chapters.
Get started with this in your enterprise through small successes. Promote those successes and expand from there. Slow and methodical. If possible, address the most needy area of the business first.Tim O'Bryan/IBMEmail: tim.
Business Forecasting, Tomorrow's Winning Lottery Ticket # and Measure Twice, Cut.
Tim O'Bryan 270001NMX7 firstname.lastname@example.com | | Tags:  businessforecasting businessanalyticstoday forecast planning timobryan provenpractices strategy businessanalytics | 0 Comments | 1,200 Visits
What if you knew tomorrow's winning lottery ticket number? Imagine the possibilities. Quit your job? Travel the world? Buy that convertible Bentley you've always wanted? Addition to the house? Pay off those nagging debts? Think about the impact of knowing what a stock price will be next week, or knowing when your car is going to break down, or exactly when your roof is about to start leaking? Better, what about if you had early insight into your future health condition? Now, wait a minute! Something seems different here. With regard to the winning lottery ticket number that seems a lot more unpredictable than say, picking a stock or determining when your car is going to break down not to mention forecasting potential health concerns. It certainly is different. I'm sure you can guess the difference between predicting the winning lottery ticket number and the other examples. I'll state it anyway. It's because in these other examples we can draw from historical data, analytical research, individual's input based on their experience, and a vast array of data to more accurately determine what is likely to happen. Once you know this information you can begin to do some planning for these possibilities or scenarios. Seems pretty logical, right? We know how much information is being captured today by companies about their customers, employees's insights, internal operations and external market conditions that there's obviously not a problem with lack of data to do this predictive analysis. Yet, in a lot of companies today this practice does not happen with regularity. Companies aren't using their most valuable resources available for forecasting – their people and their data – to develop this in-house capability.
Look, I don't need to tell you the advantages of knowing what's likely to happen and how an organization can exploit this knowledge. If you're an investment bank in 2006 and have a large amount of CDO's and mortgage-backed securities on your books it might have been helpful to hear from these traders and other knowledgeable people in your operations that these speculative instruments were bound to go belly up. In hindsight the information was all there but there wasn't a culture in place to gather this feedback. Prescience. Only helpful to the enterprise if there's a platform in place to capture these insights and communicate them up the corporate tree so all are aware. Without this kind of enterprise forecasting platform the enterprise won't die…not overnight that is. But, in the long run, it might suffer from multiple missed opportunities which could lead to a slow death by a 1,000 cuts.
The more unbiased participation you can glean from the relevant stakeholders and knowledge experts the more likely you're going to be able to predict what will likely happen. The key is reaching out into your workforce across functional areas, remote operations, corporate support units, to gather feedback as far out into the future as they can most accurately predict with some likelihood which can then be leveraged by business unit managers, executives and other stakeholders to make decisions NOW based on this feedback. If you know something's likely to happen in the future, say a hurricane, are you going to remain in your home if your home is in the hurricane's direct path? No, of course not. You're going to do everything you can to save all of your earthly possessions – maybe even your home, if possible – and get out of there. You're acting now. Not waiting for the day of the hurricane to do something about it. This is the basis for business forecasting.
Only in obtaining honest, unbiased feedback from your workforce will you be able to trust this information to take action on it. If it's not unbiased – meaning the figures that are produced from this effort were top-down dictated (think sales manager telling their sales rep what their next quarter's sales figures MUST be vs. what this sales rep believes the figures WILL MOST LIKELY be – it ends up with little use for decision making. It becomes a performance contract.
This is not your mother's forecast. You should not be repeating the same process you've gone through in your annual budget cycle. This forecast process has a different intention (insights for decision making) than the budget (annual objectives typically tied to performance contracts) and therefore needs to be designed and administered differently than the budget. With a forecast, benefactors of this process include more than just the executive management team but also the actual contributors to the forecast and their managers. This is because there's now a formal means of submitting honest and real feedback about what's really coming. Managers can then take that information and have a real discussion about the difference between what the direct report said was likely to happen and what the targets are. That gap between the two is where the real golden nugget of value exists in delivering a forecast. This changes the conversation from "this is your target, now go get it done" to something like "your targeted number which we captured in the annual budget is different than your newly forecasted number for the same thing…let's discuss this difference and see how/if we can make up the shortfall".
Think of the Titanic and the benefits of an early detection system. Would it have been helpful to identify that fatal iceberg well in advance of its arrival??? Duh. It was later learned that the captain of the Titanic saw the hulking iceberg well before the actual impact but, because of the sheer size of the Titanic and how much open sea was needed for it to veer off course, it was too late to veer away. This is just like your business. If the Titanic knows that it can only change course with at least 500 yards of open sea in front of it then the captain should at least be forecasting and re-forecasting in increments of 500 yards because that's the space it needs to react. Otherwise, we know what can happen. Your business forecasting time horizon and the frequency which you update the forecast, or re-forecast, should be planned similarly.
Other related resources:
Execution: The Discipline of Getting Things Done by Larry Bossidy & Ram Charan
Implementing Beyond Budgeting by Bjarte Bogsnes
Switch: How to Change Things When Change Is Hard by Chip & Dan Heath
Lastly, don't let the perfect be the enemy of the good. There's no simple way to go about doing this right. Every company is different with its own politics and culture. The key is to get started with some small wins and build from there. I'd suggest you start in an area of the business that could benefit from a forecast more than others. What department needs the most help? Partner with IT and/or Finance depending on where you sit in the organization and make it happen. Get a quick win and expand. Baby steps.
Tim O'Bryan
Email: tim.
Leveraging IBM OpenPages & Cognos Clarity for Risk Management, Disclosure Management and XBRL
Tim O'Bryan 270001NMX7 email@example.com | | Tags:  businessanalytics openpages clarity ibmcognos | 0 Comments | 1,359 Visits
Leveraging IBM OpenPages & Cognos Clarity for Risk Management, Disclosure Management and XBRL
In yesterday's Financial Performance Insider Webcast, a monthly webcast series brought to you by Business Analytics software at IBM, we delivered business content to our global customer community highlighting important business practice updates about today's ever-evolving regulatory, compliance, financial reporting and risk management landscape and how finance, IT and risk management teams can better prepare and arm themselves for effective stewardship of these market realities. In addition, we touched on how enterprises can leverage IBM solutions, in this case, IBM OpenPages and IBM Cognos Clarity FSR, as part of the Business Analytics software solution suite to enable these practices most effectively. As mentioned, these IBM solutions can help automate and manage these related processes driving value through improved efficiencies and greater transparency to ensure proper regulatory compliance is in tact and enterprise risk is effectively managed and monitored. This ability to deliver integrated solutions across these critical practice areas all in the face of changing business strategies and the evolving external demands on the enterprise is critical to IBM delivering business value in its solutions for its customer community. Peppered throughout the webcast customer success stories were discussed proving the real-world value these solutions deliver for organizations worldwide. In addition, empirical research about the state of enterprise risk management, disclosure management and XBRL were discussed to provide greater context for how critical these processes are and are only going to get more and more complex over time thereby reinforcing the urgency to start building a more robust infrastructure around these vital business processes.
In the webcast, we featured the 3 IBM Product Marketing leaders including IBM's Doug Barton, WW Product Marketing Lead for Financial & Risk Analytics, Dan O'Brien, Product Marketing Director for IBM Clarity Systems, and John Kelly, Product Marketing Director for IBM OpenPages.
There were many valuable nuggets of information to extract from each of their presentations too numerous to mention but to summarize their presentations down to a few topic areas would be that they each highlights that there are certainly traditional challenges facing finance and risk departments in today's business environment only now with emerging complexities becoming more and more demanding on these departments as we look down the road at what's coming. These summarized areas discussed were:
Many of those present on the webcast work in publicly traded organizations and have seen shorten filing deadlines and an ever expanding workload…and yet the "last mile of financial reporting" has largely lacked true, analytic and collaborative technology support.
That was clear. Yet there is hope. Doug mentioned the results from the CFO Executive Board survey at the end of 2010, discussing the changes in finance budgets to reflect these new concerns for finance and risk management teams.
There are certainly many challenges facing finance, IT, and risk management professionals today to address myriad practices on their agendas today. As Doug, Dan and John reinforced throughout the webinar, Business Analytics software at IBM has a solution portfolio through solutions like IBM Clarity FSR and IBM Openpages that can harness, automate and enable effective management of these practices.
What ROI have other IBM Cognos customers gained from using our solutions?
There are many, many IBM customers leveraging IBM OpenPages and IBM Clarity FSR solutions to enable their disclosure management, XBRL and risk management practices, some of which are discussed during this webcast.
A few customer success stories discussed were:
In addition, the presenters drilled deeper into our solutions that address these key processes:
Questions asked during this webinar:
IBM Cognos Clarity (Dan O'Brien)
Hope you enjoyed. Please let me know if there's additional information you need or questions.
Tim O'Bryan/IBM
Email: tim.
The Bay Bridge, Bowie, Dylan, Churchill and Business Analytics
Tim O'Bryan 270001NMX7 firstname.lastname@example.com | | Tags:  bichampions businessanalytics | 6 Comments | 2,020 Visits
Ever been the San Francisco? Great place, huh. Well, even if you haven't I'm sure you'd recognize an image of the Golden Gate Bridge without fail. Among many other unique characteristics it's got that unmistakeable burnt orange exterior and seems to perfectly blend in with the environment around which it stands. Stunning. Built AND assembled in America soup-to-nuts. A feat of engineering representing man's force of will in de facto equilibrium with nature. The same can be said about the Golden Gate Bridge's lesser known sister bridge, the Bay Bridge. But, the Made In America stamp on the Bay Bridge is soon going to change. As reported by David Barboza in yesterday's New York Times, the massive outsourcing project that's in place today to build the "eastern span" of the San Francisco Bay Bridge - Yuerba Buena Island to Oakland - is being done not in America or Canada or close by Mexico (Hello NAFTA!) but in...(wait for it)...China. Shocked? Doubtful.
This 21st century go-to-production model is certainly not a new wave in business strategy but it's certainly a trend emerging more and more as the rule more than the exception. Think Apple and its product development and manufacturing strategy for starters. Many others are right there too but this is the first multi-billion dollar municipal project farmed out to a foreign country thousands of miles away in Shanghai, China. As Bob Dylan said, "The Times They Are A Changin" ...and are gonna keep on...
I am not looking to discuss the virtues of outsourcing nor am I wanting to discuss the potential risks resulting from a heavily-weighted strategy leveraging a long line of supply chain partners in a corporate build strategy. What I'm more interested in is that there are changes in the way we run our businesses to adapt to this new outsourcing, global supply chain-dependent strategy that we need to consider. The changes are that the United States and many, many other countries around the globe are becoming more and more knowledge-based in their corporate philosophy and less and less manu
Given these shifting sands, what we can do is think about whether or not we now have the proper instruments in place to measure and monitor how these businesses are operating and performing. Currently, our external reporting requirements here in America are based upon early-twentieth century created Generally Accepted Accounting Principles, or GAAP, which are designed to reveal important information about companies (think railroads, automobile makers, and manufacturing enterprises of all kinds) that then dominated the U.S. economy. These companies were from the old school industrialized economy model where their value was inherently based upon the assets on their balance sheet. (Think purchasing plant, machinery, equipment, rolling stock, and other units of production from suppliers.) WYSIWYG. 'What you see is what you get' transparency where the costs of these assets were recorded on balance sheets and depreciated over time as they were used to generate revenues. Balance sheet values thus roughly reflected the cost of replacing the company as a whole, and the company's earnings reflected the costs of producing the goods and services that were responsible for its revenues. Pretty simple, huh? Nice. Well, that reporting model works nicely when you're in a simple manufacturing-based economy but what about now when we've changed the game and added complexities like outsourcing, deeply entrenched supply chains, and global operations all doing mostly knowledge-based work where the real building is done in far flung locations by 3rd parties?
This is the Knowledge Economy. A change as profound as the Industrial Revolution in eighteenth-century Britain. We're at a new juncture and yet we don't have the right instruments in place to manage, report, and analyze our businesses differently given this monumental change in global business strategy? Do we really look at the business with an up to date view or are we just doing what we're told. Frankly, I think the entire finance department should rethink the reports they're generating in partnership with their IT counterparts and ask what the viability of these reports really is. Love this one, "We do things this way because it's what we've always done." Imagine if that's how the Beatles or Elvis or even the Rolling Stones thought. Heck, forget them. Imagine if that's how David Bowie thought. He's masterminded the art of adaptation over the years. Cha
As Winston Churchill said, "Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning." This is your strategy. This strategy is never unbending or unwavering. A good strategy is adaptable with risk assessments forall sorts of business impacting events. As a result, the workforce needs to be setup to adapt as the strategy changes. This Strategy Execution Framework can help get people doing the right things as quickly and purposefully.
For more information on strategy execution frameworks, please visit this URL with some superior resources for you to access.
IBM Cognos Strategy Execution Resources, including product demonstrations
Strategy Execution using Scorecards: What's In It For Me???
Tim O'Bryan 270001NMX7 firstname.lastname@example.com | | Tags:  strategyexecution businessanalytics | 0 Comments | 612 Visits
Exercise daily. Star in your own sitcom. Visit the Great Pyramids. Run a marathon. Go hand-gliding. Drive the Pacific Coast Highway. Climb K2. Attend the Winter Olym
Goals. They can be our rudder out in the high seas of life that give us purpose and direction.
For the ones that don't ever get accomplished the reasons vary but for a lot of us the reason for the missed goal is as simple as, "life just gets in the way". We get distracted with other tasks that seemed more pressing - and even more interesting.
One of the perennial goal making exercises we all go through is the New Year's resolution...Do you even recall what your New Year's resolution was this year??? Notice I said was and not is. That was intentional. :) So many things come up over time that these things just get buried until we finally forget them completely. Harmless usually. They're usually fun things we'd like to start or stop doing.
All well and good if these are personal goals but what about your work-related goals? Suddenly, it is much more important that they get accomplished. That's for certain. Even more importantly, how are these work-related goals measured so you and others can track your progress? (Are they even meas
In a time where companies and 'the Street' are so margin conscious in expecting more to be accomplished with less resources, purposeful action by the workforce has never been more important. Ensuring a productive workforce operating efficiently is critical to survive and succeed in today's marketplace.
I've seen many organizations successfully and unsuccessfully deploy this Strategy Execution business practice. When done right, a Strategy Execution Framework can do many performance enhancing things to improve a company's bottom line. This Framework has a foundation built around using a collaboratively defined set of KPIs for each individual employee. In this framework, these KPIs as displayed in a scorecard tool are collectively 'networked' and aligned to the rest of the workforce's scorecards which can all be aggregated together showing a direct causal tie to the company's top-line goals.
Said differently, whatever the top-line strategy is, the contributing components, i.e. sales, marketing, services, finance, product development, etc. including the individuals within those contributing components, have a common framework in place to ensure the organization is marching along to the beat of the same drummer and not playing their own songs as they see fit. Without this framework the company loses valuable horsepower through reduced productivity because the workforce isn't aligned and fully accountable for meeting enterprise strategy-supporting targets. As a result, you'll have employees doing what they think are the right things without any accountability and inherent strategy alignment. Worse, what happens as the enterprise strategy changes? How quickly is your organization able to realign itself to course-correct the direction of the ship so it's headed towards the new target??? What are the consequences if your competitors are adjusting more quickly to these changes?
Well, hopefully the reasons for getting started on this initiative are clear. Still, it's surprising that there are not many companies responding to the need for greater accountability, sharper alignment, and more nimble adaptability of its most important resource, its workforce.
So, what are some tips for getting started with this initiative? Well, there are some clear must-haves when starting a project like this including getting C-level executive spon
Perhaps if we all implemented more personal scorecards for accomplishing our New Year's resolutions we might have a higher success rate at that too but that's for another time.
Hope you enjoyed.