Business Intelligence / Corporate Performance Management
For the last few years, we have prepared an analysis of Business
Intelligence (BI) and Corporate Performance Management (CPM) systems
on behalf of CAmagazine. We issued surveys to all the BI and CPM
vendors we know, collated the results and wrote an accompanying
article.
Vendor comparison charts are available in Excel format
2008
2006
2005.
2008 Accompanying Article
Welcome to this year’s vendor survey on business intelligence
and corporate performance management. We decided to do a separate
survey for BI/CPM this year instead of including it in our larger
September survey on enterprise resource planning. We did the same
for customer relationship management in last month’s issue
and found the decision to be a good one in both cases. This year,
we have 10 responses from BI/CPM vendors, up from eight last year.
Some of the major players that were missing in the 2007 survey,
such as Cognos and Microsoft, are also included. See the online
version of this article for the survey chart.
In the September 2007 is-sue of CAmagazine, we pointed to a couple
of acquisitions earlier in the year (including Oracle’s purchase
of Hyperion) and wondered if and when the same would happen with
Cognos. The answer was clear in November 2007, with IBM’s acquisition
of the company. Other acquisitions in 2007 included Longview (by
Exact), Business Objects (by SAP) and Applix (by Cognos).
According to research and advisory firm Gartner, “Megavendors
are beginning to dominate the business intelligence market —
in less than one year, Microsoft, Oracle, SAP and IBM will have
gone from accounting for a quarter of the market to owning over
two-thirds of it.”
The acquisitions represent a growing trend toward providing end-to-end
solutions. Initially ERP was a back-office application (financials,
distribution, etc.). Then it came to include the front office (CRM,
eCommerce). Now it encompasses BI and corporate performance management.
ERP systems contain a ton of data that needs to be turned into information.
That is BI’s job. CPM includes BI as well as budgeting, forecasting
and consolidation.
There are other reasons for the acquisitions. Consultants can tailor
BI to the needs of individual organizations (which helps explain
IBM’s purchase of Cognos). As well, BI has been implemented
mostly by large organizations. Today it is targeted to small and
midsized organizations and the market potential is considered huge.
As well, the costs of BI are falling, making it more affordable
to smaller organizations.
The business case for BI is often improved decision-making but
since that is an intangible benefit, it is often considered insufficient
to justify the investment. An important tangible benefit would be
the reduced time spent by senior executives in reviewing financial
and operational information.
One technology considered to be a key component in BI is online
analytical processing. This technology allows an executive to analyze
financial and operational information quickly and easily. In the
past, that executive would have had to make multiple requests for
traditional reports, wait for them to come through, then spend more
time doing the analysis. BI can also significantly reduce or eliminate
the need for spreadsheets, which can be error prone and inefficient.
They can also cause discrepancies between reports. The BI mantra,
therefore, is “one version of the truth.”
As with all our surveys, we were unable to validate the information
supplied to us by the vendors. Mistakes can be inadvertent (confusing
the number of customers with the number of users, for example) or
intentional. We don’t think there will be that many intentional
mistakes, partly because the vendors will lose credibility if they
are caught.
We hope you find our survey useful. If you have suggestions for
improvement, please let us know.
2006 Accompanying Article
Surveys have a way of changing slightly from year
to year, and so it is with our annual survey of business intelligence systems.
After three years running, it has now morphed into a corporate performance management
survey. CPM. comprises BI as well as many other components. (See the chart for
this year’s results, which include Cognos, DynacTools, Hyperion, Khalix,
Microsoft Office Business Scorecard Manager, OutlookSoft, Panorama, PROPHIX, SAS,
TARGIT and Vanguard.) But what is CPM? Initially coined by Gartner, a research
and advisory firm, the term describes all of the processes, methodologies, metrics
and systems needed to measure and manage the performance of an organization. Unfortunately,
it is also called business performance management and enterprise performance management,
which causes some confusion. CPM typically includes strategic planning, scorecarding,
budgeting and forecasting, consolidation and business intelligence. For
example, imagine you have to drive a car with no instrument panel, or with a speedometer
that shows your speed from five minutes ago. You would risk getting a ticket or
even having an accident. Or you might be late because you would be overly cautious.
Now imagine you’re the CEO of a company without an instrument panel. It’s
hard to operate without a dashboard view of up-to-date key performance indicators.
You also need a map -- especially if you’re trying to get somewhere you have
never been. To the CEO, the map is similar to a company’s strategy map –
another component of CPM. Now imagine you have passengers in the car, all
with different objectives. The child in the back wants to stop frequently and
the grandmother wants to take the scenic route. Sure, you can ignore the conflicts.
But that is not so easy to do in an organization where each department has its
own objectives. Ensuring alignment to corporate objectives using scorecards is
another key element of CPM. Last but not least, you need to comply with
certain laws on the road. Otherwise you could go to jail or be fined. And so it
is with organizations that have to comply with legislation such as Sarbanes-Oxley
or Bill 198. CPM provides tools and controls for compliance, just as enterprise
resource planning systems helped organizations with Y2K. Now for consolidation
and financial reporting, it’s no longer acceptable to use spreadsheets that
are error prone and don’t have an audit trail or approval process. CPM includes
powerful consolidation processors, financial reporting and work flow for approvals,
thus eliminating the need for spreadsheets. Meg Dussault, director of market
strategy for Cognos CPM, says the software helps improve performance by leveraging
technology. CPM should answer three questions: 1) What should we be doing? 2)
How are we doing? and 3) Why is there a variance? To answer these questions, you
need more than just CPM technology. You also need to develop a strategy and decide
on the key performance indicators (KPIs) or the scorecard to measure performance.
Cognos has found that a number of vendors offer similar CPM functionality.
To stand out from other CPM vendors, Cognos offers packaged vertical applications,
performance blueprints and CPM expertise from “thought leaders.” Vertical
applications include prebuilt reports and KPIs customized by industry. Performance
blueprints are predefined data, process and policy models that help with the implementation
of CPM. The objective of KPIs/scorecarding is to monitor performance related
to strategy. The key question it answers is how well you are doing in relation
to the things that are most important. In the early 1990s, Drs Robert Kaplan and
David Norton developed the concept of the “balanced scorecard.” Recognizing
some of the weaknesses and vagueness of previous management approaches, the balanced
scorecard provides a clear prescription as to what companies should measure to
“balance” the financial perspective.
Kaplan and Norton describe their
invention as follows: "The balanced scorecard retains traditional financial
measures. But financial measures tell the story of past events, an adequate story
for industrial-age companies for which investments in long-term capabilities and
customer relationships were not critical for success. These financial measures
are inadequate, however, for guiding and evaluating the journey that information-age
companies must make to create future value through investment in customers, suppliers,
employees, processes, technology and innovation." The balanced scorecard
suggests we view the organization from four perspectives, and develop metrics,
collect data and analyse it in relation to each of these perspectives: - Learning
and growth
- Business processes
- Customers
- Finance
Financial
measurements are inherently lagging indicators, which tell you about historical
results – sales, gross profit, customer satisfaction and so on. The other
measurements can also lag, but the most important are leading indicators, which
foreshadow things that could happen. For example, rising error rates in shipping
or longer time to ship often precede declining customer satisfaction. Metrics
should be SMART: specific, measurable, actionable, relevant and timely. If the
numbers aren’t specific, the results can be interpreted in many ways. You
should not choose metrics that can’t be measured accurately or take a huge
effort to obtain. Actionable means the metric is easily understood and ties back
to a specific item that is being measured. Relevant metrics are linked to strategy.
Companies that need to wait a month or more for their metrics are in deep trouble.
Real-time should be the goal, but accuracy objectives will cause a delay to make
sure the numbers are right. You should be shooting for days, not weeks, and CPM
will help achieve that goal. As mentioned, business intelligence is a key
component of CPM. Our definition of business intelligence is turning data into
information that is useful for making decisions. It could be a simple report on
your desk every Monday morning or a more sophisticated analysis using online analytical
processing (OLAP). ERP systems are known to generate lots of data, but
not a lot of information (data rich and information poor). Business intelligence
is the solution to this problem. Some of the ERP vendors are introducing their
own business intelligence systems, but companies like Cognos provide business
intelligence solutions that can be used with many of the leading ERP systems.
This would make sense especially for organizations that have multiple ERP systems
and want to analyse all the data at the same time. As well, ERP does not contain
all the information that is needed for business intelligence. For example, it
does not include the results of a customer survey, the time it takes to ship an
order or the total costs of servicing a customer. Increasingly, CPM and
ERP vendors are offering a dashboard approach to providing the most important
information/business intelligence. A dashboard could look like the instrument
panel on your car and alert you to problems. Ideally the dashboard is tailored
to a specific person or role so that only the most critical information is provided.
It is better if you can also drill down for more details. CPM should bring
improvements in speed, accuracy and auditability, as well as providing one version
of the truth. Companies that took six weeks to close their books might now take
six days. CPM prevents accidental or other errors from distorting the system.
There is no internal control without an audit trail. CPM provides an audit trail
not just in transactions but also in the approval process. For example, managers
must approve the financial results of their department or company before the numbers
are passed along to the next level in a consolidation. One version of the truth
is the result of eliminating the spreadsheets in favour of a centralized, controlled
CPM database. In the attached vendor survey you will see a lot of questions
related to consolidation. That’s because consolidation can be a huge problem
for larger companies with multiple levels in their consolidation process. Often
the accountants struggle for weeks to consolidate multiple levels in their organization
using Excel. Adjusting entries are booked in Excel and need to be replicated multiple
times for each level. Then something changes in one of the subsidiary companies,
and more changes are required at each level in the process. Inter-company eliminations
cause delays while the accountants reconcile the differences between the companies.
The spreadsheets are fragile and only one person in the company is entrusted with
them. But even that person breaks into a sweat when there is a reorganization
and the consolidation spreadsheets need to be redone. There are lots of links
between all the spreadsheets and one change could cause cascading errors in unsuspected
places. Then when it’s all done, the CEO asks for a breakdown of one of the
numbers. It seems like a reasonable request, but the accountants are unable to
comply. Consolidation is where CPM can make a big difference, not only
when it comes to compliance with Sarbanes-Oxley but also to speeding up the consolidation
process. Some CPM systems offer a huge opportunity for business process improvement
by moving some of the responsibility for consolidation out to the subsidiaries.
The latter will be able to access the consolidation system with just a browser
on their workstation. Sarbanes-Oxley has pushed some companies into CPM.
The smart ones will take the opportunity not just to address compliance issues
but to improve efficiency, strategy, corporate alignment and, ultimately, decision
making. As mentioned, last year’s survey was confined to business
intelligence. This year we expanded it to include consolidation. Next year we
will add other CPM functionality. Stay tuned. 2005 Accompanying
Article
Most organizations don’t get the information they want
from their existing systems. Some get their IT department to write a report, which
usually takes too long. Others create spreadsheets that let users do exactly what
they want. But errors can slip into spreadsheets through rekeying or calculation
mistakes. To make matters worse, spreadsheets are not usually shared across an
organization and they are not updated as things change. So decisions are made
with old data. That’s where BI tools come in. They are supposed to
take the mechanics out of the process. Analysts don’t need to fiddle with
the spreadsheet or wait for the IT department. With BI, analysts can slice and
dice data any way they want. Since the BI information is all stored on a central
server rather than on one user’s desktop, BI tools should also provide just
one version of the truth. The BI world is full of technical terms, such
as extract, transform & load (ETL), data warehouse, cubes and online analytical
processing (OLAP). This may explain why the technology has not done well in organizations
without an IT department. But what does it all mean? First, data must be extracted,
usually from multiple sources, and transformed (cleaned up) for consistency and
accuracy. Then it is loaded into a data warehouse that stores the data in a logical
way. ETL can account for 50% of the total cost of a BI implementation. The data
is then placed in “cubes” that are designed to optimize retrieval of
information using online analytical processing (OLAP). It is possible to create
these cubes with tools from BI vendors or from databases such as Microsoft SQL
Server. With an OLAP cube, you can interactively slice and dice the data across
multiple dimensions and drill down for more detail either in a spreadsheet or
graphic view of the data. One way to think about business intelligence
is to consider reporting needs by level within an organization. 
Operations
need the traditional/preformatted reports. Middle management wants to slice and
dice across multiple dimensions using OLAP. Middle management will also want the
flexibility to look at information in new or creative ways to analyse a particular
problem, and need ad hoc querying, i.e., the ability to get information out of
the system without relying on a programmer. At the top of the reporting pyramid
is senior management, who may just want a dashboard that summarizes the critical
information on one page. Depending on the organization, many may want to drill
down for more detail. Same goes for middle management. It’s also true
that operations may want some of the reporting tools at higher levels, but there
are licence and training/support costs associated with providing these tools especially
if it’s OLAP. As well, perhaps operations should be more focused on the day-to-day
operations, rather than potentially spinning their wheels analyzing information. Vendor
survey
The accompanying survey [click
here] includes responses from many of the leading BI systems – including
Microsoft, Cognos, Hyperion, Panorama, Clarity, SunSystems, Applix and Actuate.
We asked a variety of questions about their cost, user base, target market and
technology, as well as more than 80 questions related to BI functionality.
This
year’s survey includes several new features, including a section where vendors
list the top five reasons to purchase their software, and another section on target
market by industry. In the charts, you’ll see a lot of the products do the
basics. What makes them different? Cost and average number of users, among other
things. BI vendors also vary in their offerings. Some provide budgeting, forecasting
and consolidation in what is referred to as business (or corporate or enterprise)
performance management. The need to comply with Sarbanes-Oxley has turned business
performance management (BPM) into the technology du jour. You also need
to take a good look at the technology section. You can’t go wrong if you
just need support for Microsoft SQL Server, but you may find some of the products
don’t support other databases. The same applies to the operating system/network:
Microsoft is a sure bet but the others may be a problem. The survey includes
seven responses from Microsoft for their various ERP solutions. According to Nancy
Teixeira, ERP product manager, Microsoft Canada, BI can be achieved through ERP.
In fact, there are distinct advantages to working with a one-stop shop that offers
BI and ERP from the same vendor. Advantages include having one repository for
data, enabling companies to move away from information silos spread across multiple
systems. Microsoft has been creative in responding to the survey using
various reporting tools, which differ across systems. Microsoft’s financial
report writer, FRx, is partly used for both Great Plains and Solomon. As well,
hot off the press this year, is what Teixera calls the business Intelligence layer
for Great Plains. Great Plains now includes analysis cubes for Excel, that were
acquired from Professional Advantage, a Microsoft Business Solutions partner.
The system delivers BI across an organization by using OLAP cubes for more in-depth
analysis. With Navision and Axapta, Microsoft has taken another approach in offering
what is called business analytics -- a BI tool developed by TARGIT, another Microsoft
Business Solutions partner. Other BI tools include Microsoft SQL Server Reporting
Services, which was launched in 2004 and competes with products such as Crystal
Reports. Microsoft also brings a platform for BI that includes extract,
transform and load (SQL Server Data Transformation Services), a data warehouse
(Microsoft SQL Server), OLAP (SQL Server Analysis Services) and reporting (SQL
Server Reporting Services). What makes all this so compelling is that it all comes
with Microsoft SQL Server. Microsoft is also gearing up for the release of SQL
Server 2005, which is targeted for the second half of 2005. The new version includes
many new BI enhancements, including an end-user ad hoc reporting environment. Challenges
At
Gartner Inc.'s Business Intelligence Summit in London recently, analysts warned
that although BI offers great business opportunities, most enterprises still don’t
use it strategically. Gartner's leading BI analysts highlighted a number of major
flaws inherent in the technology:
Flaw 1: If we build it, they will come.
Too many IT departments build a data warehouse based on the assumption that once
it is built, users will automatically see the benefit.
Flaw 2: Reliance
on spreadsheets. Too many people hide behind spreadsheets because they are used
to them and because they know how to manipulate the numbers to satisfy the politics
of their organizations. Flaw 3: Data quality. More than 50% of data warehouse
projects will have limited acceptance or fail completely because data quality
has been ignored. Many organizations don’t even see they have an issue with
data quality, focusing rather on identifying, extracting and loading data. According
to Alex Resnick, president of the Catalytics Group, part of the problem with BI
today is that analysis is not linked back to strategy . Alex sees business users
struggling to get data from core transactional systems and using spreadsheets
to meet their needs. Data is extracted in a variety of ways, often merely by keying
the data from printed reports, and seldom fully reconciled back to the core systems
after being manipulated to provide the desired analytical views. Although Alex
works with one of the BI solutions called Panorama, he does not think spreadsheets
need to be eliminated. Resnick suggests using a database such as Access
or Microsoft SQL Server to store the data. This eliminates the need to save multiple
copies of a spreadsheet to reflect snapshot data at different points in time,
and overcomes the challenges associated with changes to historical data that then
cause the snapshot-type spreadsheets to be incorrect. Good spreadsheet design
should also include the use of pivot tables rather than duplication of data through
the use of tabs or additional spreadsheets. Alex speaks about hitting the wall
of spreadsheet functionality when the spreadsheets are too complex, there’s
too much data, or you need to restrict access to certain dimensions. This is when
you need to select an appropriate BI tool. Bottom line BI
continues to offer accountants a big opportunity to help their organizations and
clients better analyse their operations. It’s time to get on the BI bandwagon
– preferably in the driver’s seat. It’s not just about number crunching.
You can help reduce the risk of BI errors. You can ensure the systems are effective
and efficient, and not too dependent on one person. Most important, you can make
sure BI is answering the right questions. Click here
for 2004's article and survey. | 
