Business Needs Intelligence

By Richard Oppenheim, CPA, CITP

Ever since my parents escorted me to my first kindergarten class, I have pursued knowledge, wisdom and yes, more intelligence. This article will not be a debate on my smarts or lack thereof. Rather it is all about companies pursuit of knowledge, wisdom and intelligence about how the company has progressed to this point and how best to continue moving forward.

This knowledge is called business intelligence. There are so many forms of intelligence in our world. Some of these forms we actually pay attention to and care about. I will let you decide which ones interest you. Here are several well known descriptors of the different forms of intelligence.

Business Intelligence is very important for CPAs to understand. Therefore, it follows that exploring ways to use business intelligence for their own firm and for their clients is a good idea. A simple Google search will provide lots of information. For example, one constant for CPA firms is to keep existing clients as well as acquire new business. CPA firms, more than ever, should want more information about what their clients want — and what makes them happy. According to a recent IOMA survey, 80% of all unhappy clients will never do business with their former CPA firm again and only 4% will let that firm know about their displeasure. (See - http://www.ioma.com/issues/SPCRPT/1621029-1.html) This information should assist a CPA firm to analyze what makes their clients happy and/or unhappy to discover ways to increase client satisfaction and decrease client dissatisfaction.

CPAs are in the business of collecting data and converting that data into intelligent information. This is exactly what needs to be accomplished under the title of Business Intelligence.

The term Business Intelligence (BI) represents the universe of tools, systems, data gathering, analysis and assessments that form the foundations for managing a company’s current activities and future planning. Future planning is sometimes called strategic planning. There are a range of BI tools that can assist with the implementation and surrounding actions connected with getting more intelligent about a business.

No reasonable length article can cover everything. Moreover, most accounting firms have no interest today in the powerful BI tools from the high end providers like IBM, Cognos, SAP and Oracle. The first reason for rejection of these starts with a $. These products start at 6 figures and go up from there on an annual basis. Other products, like Microsoft FRx, Sage Business Insights, Sageworks Profit Cents, and Softrak Systems Adagio FX, are really financial statement design applications. They will work for general ledger analysis; however there is a lot of useful and necessary data outside the general ledger.

For BI, CPAs and their clients need to gather, store, access and analyze data. Once collected and analyzed, the data can travel to, around and through the company’s decision-making process. It is clear that CPA firms can use this type of internal analysis. Moreover, and more important, clients want this type of internal analysis.

The CPA can use BI systems to illuminate useful information like client data, client profiling, client support, market research, market segmentation, service profitability, statistical analysis, and employee analysis. The intersections of data can often only be viewed through a BI filter. Once the intersection provides some useable information, taking actions have a plan and a direction. The alternative is to manage by the shiny part of your pants. These random directions can work some of the time. It is better to have tools that work at least most of the time.

In January 2009, Gartner released results of their survey that stated BI software will top the list of technology spending priorities for companies. That priority is set even though IT budgets are expected to be essentially flat in 2009.  (http://www.gartner.com/DisplayDocument?id=1165616&ref=g_sitelink&ref=g_SiteLink)

Here is a short list of a few areas where BI tools can assist with analysis and decision making for the CPA firm or their clients. Please make up your own list for what would be helpful.

• Accounting information: volume review and assessment of specific areas, data that crosses departments and multiple lines of revenue generation
• Human Resources: personnel history, salary assessments, adherence to government regulations, training attendance, promotion criteria
• Sales/Marketing: analysis of customers, costs related to delivery of sales and service, tracking marketing campaigns, sales histories
• Business Operations: data analysis between periods and years, comparison to outside competitors by industry, by regions, by product category, manufacturing results, effectiveness and efficiencies of operations
• IT Effectiveness: assessing the use of equipment and resources, reviewing data backup procedures, determining connection speeds for query and response.
• And a lot more

For any BI tool to be effective, the process needs to be constructed and reconstructed to determine the best way to develop the necessary decision points. This process should be repetitive and continuous. In this way, there are a series of analytical steps to verify and reinforce the decision making by the company. When it comes to CPA/Client relationships, telling them how much revenue was generated last year or what Federal Tax needs to be paid is important. However, the more the CPA can help their client plan for what they want to do, understand how operations can be made more effective, and just how their managers and personnel are functioning within the structure of the company, the better the future relationship will be.

Let’s take a brief peak at one of the BI tools that can be implemented at a reasonable cost with sufficient features to provide a valuable ROI.

EI Dynamics software (http://www.eidynamics.com) is built for small and medium sized companies to automate business processes, monitor and analyze critical company data and ensure that information is delivered to the right people at the right time in the right format. The graphic from the company gives an overview of how different elements within the company are collected into a funnel that is designed to deliver information analysis in a variety of forms – immediate email alerts, hard copy reports, and internal or web-based stored information for managers and executives to view and assess.

On the graph you can see that there are several different vendor software applications and data base development platforms. Good BI tools can cross these different sources. The technology can provide the speed. The CPA should supply their smarts with the results.

One of the features is to have the system identify specific events that require review or some immediate action. The Dynamic Alerts module is setup by the user to monitor data across one or multiple systems and applications. With the user defined business rules in place, the data can be continually monitored 24/7. When a rule violation occurs, the user has defined specific notifications to be sent to any range of recipients from quality control clerks to high level executives to outside auditors. These alerts can be emails, text messages or any other form of communication.

Within the system, any form of report can be generated. For example this can be a weekly or monthly summary of alerts generated. The Dynamic Reports module can be set to automatically generate reports on a fixed date and time. These reports can be electronically delivered to a list of recipients. In addition one-off queries provide capability to collect and analyze any sets of data that the user requests. 

There are other modules that expand the applications capability to automatically locate data interactions that require people to review. One of the ways that the CPA can participate is to be a participant is to receive reports that are geared to such events as cash flow, accounting anomalies (low balance, high balance, out of range), transaction security breach, audit events, system failure, et al.

Other BI software companies include LogiXML, http://www.logixml.com/. Their BI tools support a web based interface that can access and extract data from multiple physical locations. Speaking of Cloud Computing, four companies, Jaspersoft, Talend, RightScale, and Vertica have assembled a joint solution stack that delivers complete Business Intelligence (BI) using a Cloud based application. Information about this can be found at http://www.rightscale.com/BI or at http://jaspersoft.com/cloud. The image is an example of a Jaspersoft dashboard.

This Cloud system application uses the Amazon EC2 platform. You will have to sign up for an Amazon EC2 account.

Business intelligence tools continue to lead revenue sales within the technology software market. According to Cambridge, Mass.-based research firm Gartner, the BI software market will reach nearly $13 billion in revenue by 2014, up from $8.5 billion in 2008. A significant portion of those dollars will come from first-time buyers of BI tools and software, the report stated. See the Gartner Table.

In a similar study, market researcher Forrester Research (FORR) expects the BI market will generate more than $12 billion in revenue in 2014, vs. $8.5 billion in 2008.
http://www.forrester.com/Research/Document/Excerpt/0,7211,43842,00.html

As you have now read this article, you are already showing increasing intelligence. Growing CPA firms will need to assess BI tools as an opportunity for improvement and expansion of client services. BI is one example of tools that are foundation applications. That is, like an audit or tax return, the best use of BI is when the company examines its operations and resources daily, monthly and annually. There is no end point where BI will no longer be needed. Clearly, not every situation or issue will directly benefit or be resolved through the use of BI tools. However, implementing Business Intelligence resources can provide a significant contribution to a whole of situations, issues and future planning.