“To do more with less” a much clichéd phrase reserved for CIOs earlier, has become a mantra for all CXOs, in today’s difficult time. For CFOs who are required to support the strategic vision of CEO and board with correct allocation of funds and resource, it is most important to stay on top of the KPIs of the company and take corrective action, before it is too late. BI implementation and its effective usage are therefore as important as implementation of ERP a decade back.

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How CFOs Can Use Business Intelligence Tools
To Maximise Business Performance
“To do more with less” a much clichéd phrase reserved for CIOs earlier,
has become a mantra for all CXOs, in today’s difficult time. For CFOs
who are required to support the strategic vision of CEO and board with
correct allocation of funds and resource, it is most important to stay on
top of the KPIs of the company and take corrective action, before it is
too late. BI implementation and its effective usage are therefore as
important as implementation of ERP a decade back.

2. MyCFO India http://mycfo.in
Intelligent way of doing Business – BI
The old adage is that you cannot manage what you cannot measure.
Enterprise performance management using effective BI tool is thus a
must to have tool for CXOs as much as ERP was for the company a
decade back. In today’s difficult market its importance is even more.
However CIO alone may not be able to justify the business case for a BI
project without the active support of his CFO or CEO. I remember a
board member in one of my previous organisations asked me why I
needed BI. This is because the company implemented SAP R/3 two
years back and it is supposed to be the panacea for all problems. I faced
the same question from the CFO a month back, and I could explain to
him why it is required. The supportive CFO came to my rescue, at the
board and the decision for BI was approved.
Does everyone need a BI solution- perhaps no. If the volume is low or
product or service ranges are less, then good old spread sheet is good
enough. But if the company has volume and diverse systems, it’s
impossible to do measurements on a regular basis in consistent
manner without a proper tool, and hence BI solution is required.
Before implementing a BI solution, it is absolutely important to identify
the KPIs that are relevant for the company and the must to have
reports. Most BI solutions and implementation partners come with
default 15-20 reports which cover the routine, operational
requirements. But there will always be strategic requirements unique
to the company, and these should be thought beforehand. There are

3. MyCFO India http://mycfo.in
companies who run their entire budgeting process using BI, and
monitor budget vs actuals using BI. Thus each BI implementation will
always have its own unique requirements and challenges. It is always
good to take one department at a time and then scale to others over a
period of time, rather than taking a big bang approach covering all
departments. The BI project steering committee needs to have CFO, if
not the CEO, to make it a success. After implementation, BI should be
the only source for performance measurements across organisation
(including bonus of an employee) and only then the project will be
beneficial to the organisation.
Actionable Information vs Data
In any company, data generated from transactions can reside in
multiples systems, databases, and spread sheets. A large diversified
corporate may have ERP, CRM, and custom systems on different
platforms. Valuable information are residing on silos and to generate
actionable information out of data, giving a holistic view to the top
management, one needs Business Intelligence System. Data from
different transactional systems are replicated to a data warehouse,
often at day ends, using ETL (extract, transform , load) tools. BI systems
work on data warehouse, and are designed in a way so that once
operational, end users can easily slice and dice data and create new
reports without depending on IT. There are certain BI solutions, which
use in memory techniques, and do not require a data warehouse to
provide result.

4. MyCFO India http://mycfo.in
Some of the key parameters that CXOs would like to consider are:-
1. Product/ services analytics like, top selling products and services
across various dimensions such as geographical regions, seasons,
customer segments
2. Customer analytics, to understand customer behaviour in various
segments, by measuring sales and enquiries by customer
dimensions such as gender, age, location, economic status
Needless to say this is possible more accurately if the company
has a CRM and customer loyalty programmes
3. For retail business, analytics on merchandising is important, which
helps store manager to keep products with high sales correlation,
to be placed nearby
4. Supply chain measurements like rate of demand, average
inventory, inventory turnover, rate of return, perfect order rate,
back order rate , inventory to sales ratio, percentage of out of
stock items
5. Financial parameters such as cash flow, average receivable &
payable days, working capital per unit sales, fixed and variable
costs across product & service lines, product margins etc
6. Sales analytics on sales processes like opportunities (sales
pipeline), prospects, proposals , client win rate, sales by sales
person, team, region , time period etc
CFO being a custodian of company’s finances should have visibility to
the KPIs across departments and not just finance related. Dashboard
reports, exception reports, usage of traffic light colour codes etc can be
used so that it is easy for CFO to quickly take note of any area that

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needs immediate attention. This will help the management to stay on
top of key operational issues on a daily basis, before it is too late. e.g If
the percentage of stock outs increases, there is some problem with
production or distribution schedule and if the process is rectified
immediately, it will prevent sales loss going forward. Sometimes this
leads to dispute between departments, but a progressive CEO /CFO
will address them in the best interest of the company and BI is a tool
which empowers them to detect the vital parameters of the company,
like a doctor detects the one for a human body. The delivery channel of
reports will be increasingly on Apple, Windows and Android
smartphones and tablets as actionable information will be available to
CXO s on the move.
BI trends and way forwarg
Big Data is supposed to be the next big thing in the analytics world as
the importance of deriving information out of non-structured data is
increasingly becoming important for a company. One of the catalysts
for Big Data is explosion of data from social media like Facebook,
Twitter, and Linked in. Corporates with consumer facing products and
services will require measuring the sentiment of their brands in social
media as much as their average inventory cycle. Hence the traditional
KPIs will expand and new KPIs will require new methods to measure.
Explosion of data from various sources and devices, require new ways
of capturing data efficiently, which traditional databases (RDBMS)
cannot handle. Non SQL databases and technologies like Hadoop, with
massive parallel processing capability have already started making
inroads in the corporate world.

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There are various global and local BI solutions available in the market
today and the objective of this blog is not to compare any particular
solution with other. At the end of the day one should identify a
solution which is best suited for its existing IT landscape and budget.
But before selecting the package, a company should be ready with
what actionable information it requires from the project and make it
a part of the RFP, so that the project gives the best value for money.
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