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November 14, 2008

Research: Unlocking business intelligence

A flurry of mergers between software companies in recent years has led to a strengthening of the structure of online data systems known as business intelligence. Peter Simon, author of a report on the phenomenon, tells Carolyn Canham about the opportunities these developments hold.

Peter Simon is an accountant who has never worked in accounts. Working in the strategy unit of the Bank of Ireland, he studied the Charted Institute of Management Accountants (CIMA) qualification “to give myself some credibility” and then used the qualification in corporate banking, credit management, marketing and general management.

This background makes Simon well placed to talk about the future of the finance function as being more about supporting decision making than number crunching.

He is now employed as a technical specialist at CIMA and, working with the institute’s Improving Decision Making in Organisations Forum, he has authored a report based on information from members of the forum entitled Improving decision making in organisations: Unlocking business intelligence.

The report looks at the phenomenon that is business intelligence (BI), a term often used to describe the technical architecture of systems that extract, assemble, store and access data to provide reports and analysis (see chart). It can also be used to describe the reporting and analysis applications or performance management tools at the top of this stack.

BI also relates to company-wide recognition that a company’s data is an important strategic asset that can yield valuable management information and implement change so that this information is used to improve decision making.

Simon says that previously BI information was found ‘piecemeal’ in organisations, but a series of acquisitions among software companies during an 18 month period between 2006 and 2007 has changed this (see box p14).

Unlocking potential

The CIMA report looks at how management accountants can help unlock the new potential in business intelligence, freeing them to transform finance and take on new roles.

CIMA has been promoting the idea of the finance function as a business partner for years and Simon says that while it may seem like an “old hat”, the reality is it has stalled. He says that according to consultants such as IBM, Accenture and Cap Gemini, business partnering happens in the FTSE 100 and in SMEs, but there is a gap in the middle. In the public sector the results are mixed.

“It has stalled where there is a lack of shared vision as to the role of the finance function because traditionally accountants are typecast as the bean counters, as the score keepers on the sideline rather than players on the team, and some of us conform to type,” he says.

“We are not being engaged in decision making with the front line, because we are not seen as having that skill set, or being part of the team and many accountants are trapped on the reporting treadmill.”

The BI developments, however, mean the financial reporting information management accountants are producing is “a bit yesterday for young people in business”, Simon adds.

“People expect that if they are looking for information, they can find it on Google within nano seconds, so it is a bit odd to be getting information about their own business three or five days after the month end,” he explains.

Opportunities

While business intelligence has the potential to make some traditional management accounting roles redundant, Simon sees the technology as an opportunity, not a threat.

“It’s not the death knell for accountants in business, it is a huge opportunity for them,” he explains.

The report argues that accountants have a significant role to play in making the business case for BI and helping with implementation.

“Quite often BI projects fail to deliver what they are expected to deliver because in fairness to the IT community, they can produce the right kit, with the right software, but they are not necessarily as close to the business as they need to be. There hasn’t been this owner buy-in to make these things happen,” Simon explains.

Moving past menial tasks

BI provides the potential for accountants to be freed up from more menial tasks, which links back to more opportunities for business partnering.

“Of course in terms of continuing professional development it will be a challenge for some people to become the business partner, but there is a lot of emphasis on that business partner and there are a range of roles on the team,” Simon explains.

“You are also going to need people who will roll up their sleeves and understand these new systems, who understand business processes and you need people who understand statutory reporting because that still has to be done.

“But it just seems that the area of greatest opportunity is to take your accounting skill set and add to it some commercial awareness and some business understanding and get out there and enjoy yourself with a wider career opportunity.”

The BI report is the second Simon has produced in conjunction with the CIMA forum. The first was entitled Improving Decision Making.

Simon suggests there is room for a third report, which would expand on the nature of the business partnering roles – what they do, what they look like, what is good practice and how they develop.

Feeding frenzy

A series of mergers in 2006-07 allowed for the integration of different systems created by different vendors over the years, creating a platform for business intelligence.

• SAP bought Pilot Software and OutlookSoft Corporation and then Business Objects, which had bought ALG Software, Crystal, Fuzzy!Informatik, Inxight and Cartesis.

• Oracle bought PeopleSoft (which had bought JD Edwards), Siebel Systems, Hyperion Corporation and Interlace Systems.

• Cognos bought Celequest and Applix before being bought by IBM.

• Microsoft acquired ProClarity Corporation, Navision Software A/S, Great Plains Software and Solomon.

Source: Improving decision making in organisations: Unlocking business intelligence

Business intelligence

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