In today’s business world one constantly hears that to compete one needs to understand and use technology to one’s advantage. This is also true in the Financial Planning and Analysis (FP&A) world and we constantly hear about the various technologies and tools we should be using that will make forecasting easier, more accurate and beneficial for our employer. One such tool that many of us here about regularly is business intelligence. One might be wondering what exactly is business intelligence and why is important to me as an FP&A manager.
The term business intelligence has been used for many years. One of the earliest known uses can be found in the ‘Cyclopaedia of Commercial and Business Anecdotes’ first published in 1865. The term is used to describe how Sir Henry Furnese, a banker, gained a profit by receiving and acting upon information before his competitors.
I am a big fan of the above statement because it emphasizes that the idea behind having business intelligence is to gain a competitive advantage. At the end of the day, whatever technology one uses or thinks of implementing, it is important to always ask how will this help my organization gain better insight into my business and improve our competitive advantage.
This is especially true when a company decides to implement business intelligence tools because not only can it be costly but it can be very time consuming and if not done properly one can be left with a big expense and very little benefit.
A generally accepted definition of business intelligence is a “a set of techniques and tools for the acquisition and transformation of raw data into meaningful and useful information for business analysis purposes”. (Turner, Dawn M. “What is Venture Management?”. www.VentureSkies.com. VentureSkies. Retrieved24 February2016.) Based on this above definition a business intelligence tool could be as simple as building an Excel model to as complex as having adata warehouse storing all the various data sets throughout the company and using a powerful business intelligence tool to develop dashboards, and predictive analytical reports.
Throughout my career, I have seen business intelligence used in many ways from the simple spreadsheet to the large-scale implementation of popular business intelligence tools such as Tableau and MicroStrategy. These experiences have taught me that for a company, or the finance department within a company, to be successful in rolling out a business intelligence tool a lot of work is required upfront. In the first implementation of business intelligence I was involved in I saw the importance of understanding user needs and requirements upfront. My company implemented a business intelligence tool with the initial implementation being nothing more than taking our existing Excel reports and putting them in MicroStrategy. When we were done, no one wanted to use the reports because now they had to use a tool they were not familiar with to get the same report they used to get in Excel and could not easily manipulate. This example taught me early on that it is important to look at the problems the business is facing and how the proposed solution can address these problems.
