By Michael Talbott, Global Product Director, BOARD International
Why are so many corporate decisions still made by “gut” feelings?
In the first quarter of the 21st century, there still exists a huge chasm between how decisions are made in most companies and the proven technologies and methodologies they could be using to achieve far more accurate and dependable results.
Perhaps this is partially due to traditional consensus building among experienced execs who at the same time don’t yet trust data from algorithmic driven systems.
Gartner recently spotlighted this chasm in their latest round of Data and Analytics summits when keynote analysts listed what companies need to make the best decisions possible. Beyond technologies alone, their list began with rethinking leadership and creating “a decision-making culture” within enterprises.
“We need to create a new culture that allows you to empirically tackle decision making, putting everyone on the same page, incorporating devil’s advocate positions by comparison,” said Gartner Research Vice President Kurt Schlegel at their US summit in Dallas.
Such a culture would overcome the scarcity of disciplined decision making in most companies where Gartner research shows most decisions are still made in closed conference rooms by “gut feelings,” or individual executive conclusions. While analytical data are often consulted in making decisions, most often they are only followed if they support those gut feelings about the matter, Schlegel told his Dallas audience. And while executives try to achieve consensus, their decisions are often hampered by longstanding social phenomena like group-think, anchoring, confirmation bias and loss aversion.
Today, as business managers increasingly look to BI and Analytics software to inform their best decisions, the same rules apply: they compare relative risks vs. benefits, costs vs. income, and so on. And the promise of analytics software is that we can make better decisions with far higher levels of accuracy than by relying only on gut feelings or consensus of advisors.
But not all BI and Analytics software are alike when it comes to assisting decision-making. In fact, most vendors emphasize how their analytics systems deliver insights. That, however, only provides a small part of the information executives and business managers need to support their decisions. What we see all too often are still a small group of execs relying on their collective gut to make final decisions. Moreover, automated insights alone will not foster the culture of decision-making that Gartner prescribes.
What’s needed is to use all the operational detail captured by a company’s BI sytem to create robust, forward-looking multidimensional models so decision makers can evaluate the outcomes of alternative decisions. This reality has never been more true than in today’s world of real time Big Data flows from arrays of structured and unstructured data sources that swamp traditional BI architectures.
Then business managers and executives alike need to develop trust in those models and analytics systems by comparing results with those from their traditional conference room decision-making processes. To the degree they come to trust predictive models and their results, they will achieve true decision-making cultures within their enterprises.
As the leading decision-making software provider in the world, BOARD International delivers the technical foundation for a decision-making culture within large enterprises with a robust platform that allows decision makers to quickly build their own forward-looking multidimensional models thru a unified modern BI architecture that will scale to support the most complex decisions.
- Published in BOARD
By Gary Simon , Chief Executive of FSN and Leader of the Modern Finance Forum
The latest FSN research The Future of Financial Reporting 2017 shows that boardroom confidence has been dented by doubts over data quality, the inability to make decisions on the spot and an incomplete picture of enterprise performance. Indeed, 40% of CFOs fret that their data is not always trustworthy and only 50% say ad-hoc questions about performance can be answered immediately in the board meeting.
The board pack is the product of a monthly process that starts with the financial close in reporting entities and ends up on the board room table. But it’s a linear process that can only travel at the speed of the slowest link in the chain. Furthermore, any errors that arise, are propagated perfectly along the reporting supply chain until they end up at the corporate centre where they are difficult to resolve. These two issues taken together illustrate why a piecemeal approach to process improvement is unlikely to improve matters in the boardroom.
At the heart of the problem is a lack of data governance. For example, FSN’s research highlights an unhealthy dependency on spreadsheets fuelled by inflexible ERP and CPM systems that are impermeable to change. Hard-pressed IT functions unable to modify reports in acceptable timescales, unwittingly encourage the introduction of even more spreadsheets to ‘paper over the cracks’ leading to a Spreadsheet-Spiral™ of ever-increasing proportions.
But the challenge of managing data is set to become even more testing. The days when the most valuable data came directly from the general ledger have gone. In a period of rapid change, it is new data sources (social media analytics, web statistics, customer behaviour, CRM, supply chain statistics and other operational data) on the fringes of the organisation that hold the key to competitive advantage. But finance functions that remain shackled to fractured legacy systems neither have the time nor the capability to exploit it.
For most the way forward it means a step-change to a unified decision-making platform in the cloud. Indeed, FSN reports that the cloud is an accelerant, allowing businesses to quickly standardise and automate their core financial processes while creating a more agile environment for the future. Three decades of tinkering at the edges of group reporting shows that it does not deliver sustainable improvement in board room reporting. On the other hand, the latest FSN research identifies how a more joined up approach in the cloud enables organisations to make enduring change for the better and sets the groundwork for a future of real-time, self-service reporting.
Click below to download the FSN’s research: ” The Future of Financial Reporting 2017 ” :
- Published in BOARD
By Michael Talbott, Global Product Director, BOARD International
While Analytics and Business Intelligence systems have been consistently listed at the top of CIOs’ prioritised spending lists in Gartner’s annual CIO surveys over the past eight years, it’s surprising how few enterprises are looking beyond merely gleaning insights from data rather than what they need to make effective decisions.
Gartner also reported that during the past decade, “organizations have spent over $60 billion on Business Intelligence software and service efforts to improve business performance, yet many have failed to achieve significant benefits, or at least have found it hard to quantify the benefits.” (from Gartner report “Use Analytic Business Processes to Drive Business Performance, May 25, 2016”) Clearly, giving business users access to information and “insights” isn’t enough. This further suggests that businesses would benefit by having better mechanisms to plug information derived from analytics systems right back into their businesses to make that information actionable and valuable.
While most enterprises have embraced transactional business processes to improve the efficiency of their operations, they have not applied similar processes to their analytics systems. As a result, many routine decisions, like a price offer to a specific customer, are made on-the-fly without the benefit of detailed analysis. However, the basic analytic framework within their companies could be enhanced to greatly assist such decisions.
Today, most business analytic processes are somewhat primitive. In many cases, they follow the course of: A) Observe data, B) Determine if anything unusual pops out that requires further action, C) Look around further for any additional “insights,” D) Deal with any unusual results in an ad-hoc manner, E) The end.
Or the processes are so confusing and inefficient as to no longer resemble repeatable processes. These follow the path of: A) Compile spreadsheets from 50 managers, B) Consolidate them manually since they’re fundamentally incompatible, C) Distribute the error-laden results back to the business, D) Repeat every quarter regardless of tangible results.
Sound familiar? Fortunately, there is a solution with the emergence of decision-making platforms, which provide a framework for users to follow prescribed decision-making processes. Beyond just assembling and analyzing data, these systems turn the results of those analyses into actionable business decisions. They do this through organized steps that are repeatable, efficient and auditable. Structured decision-making processes can be used to transform the operations of the entire enterprise, from finance to HR to manufacturing and strategic planning.
Analytic business processes deliver more than just the efficiencies of forcing users to follow prescribed sets of actions; they are a means to embed expert knowledge into an organization about HOW to be more effective. The analytic process contains the optimal decision-making steps to follow to achieve the best decision possible.
As an example, let’s consider the buying decisions of a typical fashion retailer, which relies on the ability of its buyers to spot and exploit the hottest trends. Typically, there are a few truly outstanding buyers who consistently pick the right merchandise while the rest of the buyers have mixed success. Careful observation shows that the best buyers are the most adept at leveraging the information and analytic tools at their disposal.
We also see that they perform the same series of analytic steps each week to help them pick new merchandise. In doing so, they have created their own analytic process. Now imagine the positive impact on the company when the other buyers on the team can use that same decision-making process, in an easy to follow series of steps? That’s the idea.
It’s important to note that the best analytic processes often come from decision makers themselves, not necessarily from a central authority. The processes often grow organically, based on trial and error and continuously improve over time. So it’s equally important that the technology supporting these processes is simple and flexible and allows those same decision makers to easily build and modify these processes.
These same concepts apply to many other types of business decisions. There will always be a certain percentage of decision-makers who embrace and apply information and analytic tools better than their peers. If the goal of your Business Intelligence software is simply to provide “insights,” it will remain useful to only the small population of users with the incentive, knowledge and aptitude to discover and capitalize on these insights.
In this manner, analytic processes allow organisations to harness the knowledge and insights from their best decision-makers and apply it to the rest of the organisation in a systematic manner. If you’re looking to see greater engagement and return from your Business Intelligence investments, implementing analytic processes is a great place to start.
- Published in BOARD
Digiterra recently attended BOARD’s global conference in Italy. Speakers from around the world shared their insights, experiences and successes with Board’s #1 decision-making platform.
During the exciting three-day event of keynotes, workshops and presentations, Digiterra had the opportunity to explore the power of decision-making in the digital era, discovering BOARD’s most-innovative solutions and gaining valuable insights and in depth knowledge from industry leaders and peers.
It was interesting to talk to BOARD customers who shared how BOARD’s Enterprise Performance Management solution has radically changed the way they see and manage their businesses. Contact us to find out more…
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