What is BI and how can it improve performance?

In a recent Irish Times "Insolvency & Recovery" supplement (Friday March 27th 2009), Brendan Matthews, a business advisory partner with Mazar comments that "businesses need much better management information systems...a dashboard that offers a single and simple view of the various crucial metrics upon which business performance is measured...they need to take positive steps in terms of getting to know who their most profitable customers are and looking after them better".

In the same supplement, Simon Coyle of Mazars is quoted as saying "For example, you'd be astonished at the number of significantly-sized companies that we found that were producing monthly management accounts without associated balance sheets.... we find that the last set of management accounts may only have been produced six or nine months before. This is entirely the fault of management".

BDO corporate finance and recovery partner Jim Hamilton agreed with him – "One of the main causes of corporate failure is when management hasn't put in place the structures that will give them the reliable and accurate information on which to base informed decisions".

It is clear that an ability to produce reliable and accurate information is crucial for all companies if they are to be able to make informed decisions. Business Intelligence systems can be configured to produce all of this information and in a manner that makes it easy to identify areas for improvement.

Continuing with quotations from the Irish Times "Insolvency & Recovery" supplement, David O'Flanagan, transaction services partner with Deloitte states “The biggest thing companies need to do is to stand back and develop a credible plan to realign their businesses. They have to examine their options, look at the scenarios, their costs, their products and so on. Out of this should come a fundamental realignment plan which sets out a clear path for future actions”. Brendan Matthews of Mazars agrees – "Companies have to engage in realistic scenario planning. For example they have to look at what might happen if turnover drops to 2003 levels. And they can get a handle on this by actually looking back to 2003 and the cost base that existed at that time".

Business Intelligence systems are built to meet all of these requirements. Unlike Enterprise Resource Planning (ERP) systems which are built to manage transactional activities and workflow, BI systems are built and configured to help identify trends, to help forecast for different scenarios and to help examine data at a macro AND micro level. In an article in the Irish Independent's Digital Ireland supplement of 29/01/2009 Microsoft Ireland's server-business group manager Bill O'Brien states "Firstly, it's important that businesses are making the right decisions using the correct data. All too often, businesses struggle to assemble information to inform everyday decisions. BI means that you always have this information to hand. IT's always up to date and it's correct. If you've got that, you will make decisions faster than your competitors and capture new opportunities".

BI tools are being more and more as tools for performance management. Instead of just showing us what has happened, they can show us what happened, how it is different to what we wanted to happen and how much improvement we need to make in order to get back on track. Once appropriate actions have been decided upon, appropriate milestones can be configured in BI tools with expected measurements for the various Key Performance Indicators for those actions. BI tools can be configured to automatically notify managers if performance is not meeting the standards set. The measurements can be applied to team performance, individual performance, company performance, product range performance, machine performance or whatever performance that you want to improve upon.

Using Performance Management aspects of Business Intelligence tools ensures that people can be made accountable for their targets. It also ensures that these targets can be aligned with company targets. Business Performance is about focus – making sure that your workers know the tasks that will meet common goals.

More Reading:

• How Performance Management Delivers Accountability.
• The Payoff of Pervasive Performance Management