How Data Impacts Performance - The Broken Tap Chronicle, Part 2
In Part I of The Broken Tap Chronicle, using the analogy of a home water system we explained the importance of having a solidly built network of technology and processes to improve data confidence. We suggested that when it came to fixing things around the house, homeowners were often too busy to promptly attend to specialist projects such as a broken tap and it would be easier to simply ‘call a plumber’.
Similarly, making use of trusted third party service providers can help free up valuable time in any business. This helps provide a powerful focus by facilitating the CFO and finance team's ability to better support the operational team, which ultimately drives performance. And while the importance of having strong systems and processes in place is an easy concept to understand, the question is, how exactly does it all fit together and how can we improve the quality of data to positively influence bottom line performance?
The recording data entry to initiate a transaction on an ERP system is usually the starting point for the current and historical flow of information in any business. Information is stored and aggregated to facilitate reporting in meaningful ways and therefore being able to measure and monitor ERP data sets becomes critical in any attempt to use information to drive the business forward.
While the percentage can vary depending on the source, according to Gartner up to 75% of ERP implementations fail.
Statistics suggest most organisations struggle with their ERP. To overcome this, the starting point in any business would be with the selection, set-up and implementation of an appropriate ERP system and the ability to improve the system along the way to ensure your ERP works as it should.
Aligning your business with an ERP specialist, rich in implementation methodology, can help remedy a poor implementation.
B. Budgeting and Forecasting
Whereas ERP data relates to the past, budgeting and forecasting data tends to focus on the future and understanding uncertainty.
For some organisations, planning is a key enabler of performance and is often used to catapult the business from A to B.
In establishing a budget, management will be keen to understand the key drivers of performance and make sure they have the ability to monitor and measure performance by establishing benchmark targets.
As illustrated on Figure 1, information should flow through an organisation in a seamless way. In order to maximise performance, businesses require a robust infrastructure and intelligent systems and modelling.
C. Business Intelligence
Making intelligent use of data presented in a visual way to make better decisions is the primary purpose of business intelligence.
Think of an intelligent dashboard in a pilot’s cockpit, all the information the pilots need in order to navigate the aircraft safely and on time. The dashboard makes use of data and presents critical information in a meaningful and easy-to-understand way.
Similarly, organisations build business models to help understand the drivers of value in the business and to help prepare a plan for generating revenues and profits. They make use of dashboards to provide unique views of the underlying data.
Building a business intelligence platform requires a specialised
skill set. Small design mistakes can have a major impact on decision making and making use of expert skills can help ensure data and modelling integrity.
D. Business Process Design
Optimising the flow of information in any organisation requires knowledge of the various
processes around which the business is built, and a bit of creativity. In a practical sense, schematic representation of these processes can really help one visualise the ‘flow’ of interactions and hence, information.
This would be a good place to start if you are looking to make process improvements in your business. However, for many, finding the time to document these processes and procedures - or attend to leakages in the flow of information - may be quite challenging for a host of reasons. The chief protagonist being the daily grind of the day-to-day activities and a lack of specialist in-house skills. In the case of a pilot navigating his aircraft, the importance of having accurate data as well as confidence in the data is quite obvious. Make a mistake and the consequences may well be fatal. Relating this back to your business, how confident are you about the accuracy of your data and do you have the necessary resources to attend to these issues with the urgency it deserves?
To read the thought provoking Part I of this article, please click on the link below
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