1 A MICROSOFT WHITE PAPER Banking Industry Performance Management Using Business Intelligence to Increase Revenue and Profitability Software for the business.
2 Overview Today, banks operate in a complex, competitive and highly regulated environment, with low margins and high customer expectations. To manage this rapidly changing economic and regulatory landscape, banks need a reliable way to quickly translate strategic business decisions into concrete actions that lead to measurable results. Much of the data banks need to make strategic decisions that can improve their performance and increase their profitability is stored in silos managed by disparate and disconnected technology systems. But even banks that have sophisticated business intelligence and performance management solutions often don t use them effectively, or the technology is so costly and complex that only a few executives and managers are allowed to use it, with the help of the IT staff. As a result, many banks fail to get the information they need to make informed decisions and to plan for success. Microsoft Office PerformancePoint Server 2007 provides an integrated performance management solution that provides the right information, at the right time, in the right format, enabling all bank employees to monitor and analyze performance data and to contribute to the planning process. This paper describes how PerformancePoint Server 2007 can help banks make effective, companywide performance management a central component of their business strategy. Contents Today s Banking Industry Performance Management Landscape 4 What is Microsoft s Performance Management Solution? 6 Monitoring Performance 7 Analyzing Information 9 Planning, Budgeting and Forecasting 10 Conclusion Microsoft Corporation. All rights reserved.
3 A people-ready business runs on Microsoft software. Microsoft Office PerformancePoint Server 2007 enables banks to generate more revenue and increase profitability by providing the tools they need to improve their performance, by monitoring and analyzing data and then using that information for better planning, budgeting and forecasting. A business bets on its most important asset. Every one of them.
4 4 Banking Industry Performance Management Today s Banking Industry Performance Management Landscape Banks today understand that increasing their revenue and profitability means they first must improve their performance. Yet, many banks find it increasingly difficult to achieve that goal due to a lack of good business intelligence to help enable effective performance management. And good performance management is essential as banks strive to manage risk, improve branch operations, design and execute more effective marketing campaigns, attract and retain more customers, and increase customer profitability. At a time when every strategic decision has the potential to improve or erode a bank s bottom line, bank employees struggle to collect and synthesize enormous amounts of raw data from every part of the organization and transform it into the information executives and managers need to make those critical decisions. Because much of that data is stored in silos managed by disparate and disconnected technology solutions, however, the information is slow to reach the people who need it. And once the information arrives, it is often outdated or incomplete. Business intelligence technology has been on the market for more than a decade, and a number of recent surveys conducted by analyst firms show that business intelligence remains a top priority for CIOs. Yet, despite the general acceptance of business intelligence as an important tool for performance management, and the billions of dollars companies have invested in technology to help them provide a seamless flow of strategic information, business intelligence still does not play a large role in most business decisions. Most companies including most banks still only use business intelligence technology on a departmental basis or in other limited ways. Another problem is that, typically, only percent of information workers actually use the business intelligence technologies that are available to them, relying instead on their own collection of documents, spreadsheets, and other resources they assemble.
5 5 As multiple people compile information from different sources at different times to create their own spreadsheets and documents, data integrity and version control can become serious problems. With so much information being extracted and exchanged in different ways, it is hard to know whether a document is current or even accurate. And with Sarbanes-Oxley regulations now requiring bank officers to take legal responsibility for financial statements and other documents, data integrity is essential for compliance and good corporate governance. Further, by failing to make good use of business intelligence technology to monitor and analyze performance throughout the organization, many banks and other companies fail to get the information they need for informed strategic planning and effective management of their current and future performance. According to a Harvard Business Review article from April 2005, Organizations often fail to execute their strategy failure rates may range from 60 to 90 percent. And because performance management is a continuous process rather than a point-in-time problem to be solved, the challenge of gaining the strategic insights necessary to deliver increased performance year after year can easily grow over time. For example, research by Capgemini, a leading international consulting firm, found that the volume of data the companies it studied have to consider is increasing by 79 percent annually. Good performance management is essential as banks strive to manage risk, improve branch operations, design more effective marketing campaigns, attract and retain more customers, and increase customer profitability. The technology itself is partly to blame for these failures. Most performance management solutions are expensive, difficult to use, and require significant training and IT support. As a result, most organizations allow only a few executives and analysts to access these systems and the information they provide. Unfortunately, by keeping business intelligence and performance metrics beyond the reach of most personnel, many banks fail to engage their most valuable asset the creative energy of their employees. Is your infrastructure?
6 6 Banking Industry Performance Management PerformancePoint Server 2007 makes it easy and economically feasible for all executives, managers, and front-line employees to have the same access to valuable insight from a high-quality performance management application. What is Microsoft s Performance Management Solution? Microsoft takes a different approach to business intelligence and performance management. We understand that decision makers count on having unimpeded access to the right information, at the right time, in the right format. We also believe that effective performance management depends on a bank s ability to monitor performance and analyze data all across the organization, from top to bottom, and then make the resulting information and insights available to all bank employees in a format they understand and are comfortable using, so that everyone can contribute to the planning process. Using the Microsoft Business Intelligence platform, Microsoft Office PerformancePoint Server 2007 can help any organization build an enterprise-grade, scalable performance management application that provides a high degree of data confidence and control. PerformancePoint Server 2007 uses Microsoft Office as its primary interface, so bank employees can interact with familiar tools such as Excel to access up-to-date, high-quality information, collaborate with colleagues, and help to strengthen the business by contributing to strategic plans and performance management. PerformancePoint Server 2007 also uses the proven data engine of SQL Server 2005 for data integration; an industry leading online analytical processing (OLAP) engine with built-in data mining; and a highly flexible and scalable reporting platform to broadcast information to a wide audience. All of this is delivered via the Web in Microsoft Office SharePoint Server 2007, providing a central access point for business intelligence information.
7 7 Increased revenue and profitability means banks must first improve their performance. Using Excel Services, the server-based version of Office Excel 2007 in Office SharePoint Server 2007, bank employees can create, manage and share spreadsheets more efficiently and publish them to the server. Access to information is controlled through a Web browser in a centrally managed environment, which helps to ensure data integrity. It is easy for bank employees to modify and refresh reports from within the Web browser, helping to ensure that everyone is working with the most recent data and calculations. Because PerformancePoint Server 2007 resides within the Microsoft applications that banks already use every day, it is now easy and economically feasible for all executives, managers, and front-line employees to have the same access to valuable insight from a high-quality performance management application. Everyone can access the metrics, key performance indicators, dashboards, and reports to see how they are contributing to overall corporate strategy and improving bank performance. Monitoring Performance Monitoring and measuring results are key components of any successful business. Office PerformancePoint Server 2007 enables bank employees to define and use scorecards and key performance indicators (KPIs) to promote accountability and alignment throughout the organization. Rich visualization and up-to-date performance dashboards and scorecards help bank employees align their actions with the bank s strategic goals. All employees can gain insight into the bank s business and collaborate more efficiently using detailed, contextual business analysis. Bank employees access the information through Microsoft Office applications, which are familiar productivity and collaboration tools they already use every day. Templates and wizards make it easy for them to build, manage, and share scorecards that enable them to monitor business performance and track key initiatives. Providing complete and integrated performance management Many performance management applications require connectors, interfaces, and add-ins to link their various applications to the Microsoft Office environment. Office PerformancePoint Server 2007 comes fully integrated from reporting and analysis, to planning and budgeting, to dashboarding and forecasting. When the software works together, a business works together.
8 8 Banking Industry Performance Management PerformancePoint Server 2007 is designed to improve operational and financial performance across all departments and at all levels of an organization. A bank can use this single integrated application to monitor and analyze its successes and the barriers it faces, and to plan for the future. Using a model-driven approach, Office Performance- Point Server 2007 enables bank employees to create scorecards, dashboards, analytics, and plans that align with their own responsibilities and goals and with the overall goals and objectives of the bank. Providing maximum flexibility, the system accommodates unique departmental business models that synchronize with those above and below them in the organization, as well as across departments and up to the corporate level. So everyone has an up-to-date, consistent view of the data and the most current insight on the entire organization s performance. Empowering all employees with business intelligence While many performance management solutions focus on business intelligence analysts and experts, Office PerformancePoint Server 2007 is designed to reach everyone involved in the bank s business, and at all levels of the organization. PerformancePoint Server 2007 provides a familiar user experience through the easy-to-use Microsoft Office system, including Microsoft Office Excel, Office Outlook, and Office SharePoint Server. And with the scalability and high performance of Microsoft SQL Server 2005 and the Microsoft Business Intelligence platform, banks can afford to deliver the right information that helps the broadest number of people make better, faster, and more relevant decisions without continually burdening the IT department. Enhancing partnership between IT and business analysts The IT staff spends a lot of time providing bank employees with information. Because Office PerformancePoint Server 2007 gives employees easy-to-use functionality for setting up their own performance dashboards and scorecards, the IT staff is free to focus on more critical functions such as meeting security, compliance, and corporate governance requirements. While IT provides the infrastructure and security for crucial business applications, Office PerformancePoint Server 2007 business modeling tools enable business analysts to use their insight to manage roles, workflows, business rules, and information without having to continually rely on IT input. This increases the pace at which business models can be developed, deployed, and modified to meet changing business conditions. PerformancePoint Server 2007 also features a userfriendly design and application wizard that bank employees can use to build their own dashboards and scorecards and to create interactive analytics charts and graphs without the need for IT support.
9 Analyzing Information Office PerformancePoint Server 2007 provides analytical capabilities that empowers bank employees to capture and share analytical best practices using the intuitive and collaborative environment of Microsoft Office. Simple data navigation, powerful server-based calculations, and advanced visualization are core components that help employees understand complex information faster. Employees create analytics that can include graphs, key performance indicators (KPIs), and data grids, and use advanced visualization functionalities. These rich visualizations help them rapidly identify trends, opportunities, and even threats to the business hidden within large quantities of data. Simple-to-use tools designed to meet specific user needs including thin Web clients, performance dashboards, reports, and scorecards make it possible for people throughout the organization to analyze and gain insight. Delivering advanced analytic and visualization capabilities Analysis is a core component of the performance management cycle. An organization is at a competitive advantage if every decision maker can quickly and easily perform analyses that help them make better decisions and execute more effectively against corporate goals and objectives. Simple-to-use tools designed to meet specific user needs including thin Web clients, performance dashboards, reports, and scorecards make it possible for people throughout the organization to analyze and gain insight. Bank employees often depend on IT experts to provide them with the data they need to make strategic decisions. PerformancePoint Server 2007 Analytics features a userfriendly design, easy to-use wizards, and advanced data visualization tools that enable them to quickly and easily build and share analyses without relying on the IT staff for continual support. Helping employees make better decisions The advanced analytic capabilities in PerformancePoint Server 2007 range from multidimensional slice and dice to root-cause analysis and prediction capabilities. These techniques can be deployed across the organization in the familiar Microsoft Office environment, empowering all users to find the answers they need quickly. Because PerformancePoint Server 2007 is fast, has more security features, and is easy to use, all employees can gain powerful insights into the bank s performance. A business searches. A business finds.
10 10 Banking Industry Performance Management Planning, Budgeting and Forecasting Effective planning, forecasting, and budgeting are essential to every bank s business success. But too often banks view planning and budgeting as a oncea-year financial process. Bank employees often spend more time collecting and validating data than analyzing and planning. PerformancePoint Server 2007 makes planning, budgeting, and forecasting part of a dynamic, ongoing performance management process. Built on the stability, security, and scalability of the Microsoft SQL Server Business Intelligence platform, PerformancePoint Server 2007 enables bank employees to continuously contribute to business planning, budgeting, and forecasting in real time all through the familiar and easy-to-use Microsoft Office environment. The Business Modeler simplifies business modeling by guiding users through the modeling process so they can test multiple approaches and view a variety of possible outcomes. Aligning and integrating corporate planning PerformancePoint Server 2007 contains robust planning, budgeting, and forecasting capabilities that allow for accelerated cycles to help banks do a better job of aligning critical resources. Planning and budget analysts are able to centrally manage the planning process, easily building models that contain the key business rules, assumptions, calculations, and other business drivers that enable more people across the organization to participate in the planning process. These models form the basis for the budget, which is then accessed in Microsoft Office Excel, allowing bank employees to enter data based on their unique knowledge of the business. These models ensure consistently applied business rules and assumptions that align to overall corporate goals all in a flexible tool that everyone knows and understands how to use without big investments in training. Involving employees in the planning process PerformancePoint Server 2007 provides a complete perspective of bank performance across functions such as finance, operations, sales, and human resources. PerformancePoint Server 2007 uses SQL Server 2005 to integrate information across disparate systems and business functions, providing all bank employees with a more strategic and forward-looking view of the business. A unique capability of PerformancePoint Server 2007 is model-to-model mapping, which allows employees to map data from one model, business unit, or plan into the model of another. For example, the resources allocated to personnel in a business unit can be mapped into the business model for the finance department and into the human resource department s planning model. People can only see the information they have permission to view, but no matter where the data resides, everyone automatically has the timeliest information and can avoid errors that might be caused manually.
11 Business rules can also be embedded with the data model, which means that a business unit can t go outside a specific set of boundaries when trying to allocate resources. For example, a manager looking for a way to pay for new headcount is limited to approved sources for that money. PerformancePoint Server 2007 provides the critical and unique functionality that will help ensure all bank employees have the flexibility they need to run their part of the business while staying aligned with broader business goals. Reducing the budgeting cycle and broadening employee contributions One of the big complaints in many banks is the length of the budgeting process. From waiting weeks to get the initial cut of the numbers to the time spent waiting for approvals and input from other departments, the process is often an exercise in frustration. To address these issues, PerformancePoint Server 2007 provides powerful workflow and collaboration functionality that can streamline the planning, budgeting, and forecasting cycles. PerformancePoint Server 2007 enables bank employees to configure rules that help them assign tasks, manage budget creation, and monitor submissions and approvals. Banks can reduce their budgeting cycle from months to weeks. At the same time, employees get the insight they need to align company resources. PerformancePoint Server 2007 enables bank employees to continuously contribute to business planning, budgeting, and forecasting in real time all through the familiar and easy-to-use Microsoft Office environment. Conclusion Microsoft Office PerformancePoint Server 2007 enables banks to generate more revenue and increase profitability by providing the tools they need to improve their performance by monitoring and analyzing data and then using that information for better planning, budgeting and forecasting. PerformancePoint Server 2007 enables effective performance management by providing reliable, real-time business intelligence from across the organization at all levels. And by making the resulting information and insights available to bank employees in the familiar Microsoft Office format, PerformancePoint Server 2007 empowers bank employees to contribute more fully to planning and budgeting. This integrated approach enables banks to capitalize on their existing investments in Microsoft technology and also lowers costs by reducing training time and freeing the IT staff to focus on other priorities. Is your business?
12 FOR MORE INFORMATION To learn more about Microsoft Office PerformancePoint Server 2007, visit: For more information about Microsoft Business Intelligence, visit: Software for the business.