Who can really benefit from this?
Lately I’ve been reading a lot of information on various websites and blogs and listening to client comments and questions about analytics, or more precisely, how to better use the vast amounts of data available in most business environments to create meaningful reports and drive the decision making process that will transform observations derived from this data into action items, ultimately responding to what that data was trying to tell in the first place.
The most common question I hear is: Can a good set of analytic tools be implemented in smaller organizations, especially those with limited resources and more basic IT infrastructures?
10 to 20 years ago the answer to this question would have been simply no. Information technology was just too expensive and complex to deliver practical analytics tools to smaller organizations.
This has all changed, and very rapidly. All businesses today, even the smallest have computerized accounting software with all of the basic functions, including manufacturing operations, supply chain management, customer relations management (CRM), financial reporting, etc. being completely automated.
There are vast amounts of data stored in the software’s various databases. This data is selectively used to preform all required accounting and reporting functions. Shouldn’t this data also be available to analyze from other perspectives, outside of the required reporting functions?
Incorporating a good and practical planning software solution that closely ties into the actual accounting software (through a general ledger interface), coupled with a simple to use (i.e., will be really used by people after implementation) can provide a good answer to the question posed above.
Those who read this blog have seen my posts on small and medium size company software solutions titled Budget Maestro and Analytics Maestro from Centage Corporation. (www.centage.com) These are comprehensive planning, budgeting and business intelligence solutions that are closely integrated with the company’s general ledger to retrieve actual financial data and using the data from the planning/budgeting modules included with Budget Maestro, perform a real time analysis and display of the exact data in the exact visual and output format the user requires.
I’ve written before that visual representation of data can have a profoundly more dramatic effect on its users than plain data. When you see your data in a visual format that you have previously established, you can understand it better, usually immediately. When the same format is used over and over again to display the changing data over time, this function becomes even more powerful.
The organizations that use Budget Maestro with Analytics Maestro have been able to combine the many capabilities of the planning functions (among which are use of drivers and key performance indicators) with the visual display and reporting capabilities of Analytics Maestro.
Finally, even a smaller company can have financial planning and analysis tools that only Fortune 500 companies were able to afford not too long ago.
Now you can ask specific questions and get the answers almost immediately. These might be:
- What was my Gross Sales revenue per square foot of retail space in the last 6 months, by month, by region, or by store?
- What was our IT spending per employee per quarter for the last 12 quarters? If you want to see this data by department, this can be easily accommodated based on the organization structure set up in Budget Maestro and your actual accounting or ERP software.
- Show me a display of key financial ratios such as Current Ratio, Inventory Turns, etc., as a graph with monthly data points, and compared with the same ratios as derived from the planning software (Budget Maestro).
- How is my Balance Sheet going to look in the next 18 monthly periods, or 6 quarters? Analytics Maestro can immediately provide that report, using your pre-defined format, using the planning software data.
- How do my actual financial statements for the period just closed compare with my budget and forecast? With Analytics Maestro you can see these forecasted statements (Income Statement, Balance Sheet and even a Statement of Cash Flows almost instantly) compared with the actual statements.
These are just a few of an unlimited number of questions that can be asked and routinely answered by Budget Maestro with Analytics Maestro. This can provide valuable insight on the existing and future health of the organization. The visual display will help users understand the data, convey it to management and enable informed decisions and corrective measures to be immediately implemented.
This visual display, its charts, formatting, colors, etc. can be easily modified by users. Custom templates can be created and used to populate the dynamic data flowing from Budget Maestro for all specified budget data, as well as actual and historic accounting data.
Small and medium sized companies finally have the tools that only very large organizations only a few years ago were able to utilize. With the typically shorter decision making cycles in smaller companies, using these planning and analytics tools can provide a clear edge over the competition and the ability to steer the organization in the right direction with more confidence.