STRATEGIC AND FINANCIAL PERFORMANCE USING BUSINESS INTELLIGENCE SOLUTIONS

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1 STRATEGIC AND FINANCIAL PERFORMANCE USING BUSINESS INTELLIGENCE SOLUTIONS Boldeanu Dana Maria Academia de Studii Economice Bucure ti, Facultatea Contabilitate i Informatic de Gestiune, Pia a Roman nr. 6, sector 1, Bucure ti, CP , [email protected], Telefon: In order to achieve better strategic goals, business intelligence has to provide employees with the right information at the right time. To make this happen, a business intelligence solution should be comprehensive, secure, integrated with all operational systems (in both ways, as capture of data and as feed-back is concerned) and always available. In concrete terms, business intelligence process manages to help decision makers by providing data models, statistical and forecasting for comprehensive data. Improved sales and financial performance is a major objective of a global sourcing strategy. The research is trying to present the way of transforming existing data, gathered from different data sources in powerful managerial information, integrating business intelligence solutions in Romanian s companies, with the help of some famous companies which create BI products. Keywords: Business Intelligence, business performance management, decision support systems. Introduction Today, the time available for making operative decisions in a business environment is decreasing: decisions must be made within days or even hours. Just two decades, similar decisions still took weeks or months (Tiemeyer, 1995). The process of decision making, regardless of the size of the company, is a rather complex one, implying data processing, information and knowledge. Usually, the data inputted in the IT systems of the company are very numerous, sometimes heterogeneous or provided from heterogeneous sources, are widespread into the system, and their transforming in information which can be analyzed for taking decisions is, in most cases, a lengthy and difficult process. The data warehouse (DW) and business intelligence (BI) systems, as well as the Decisions Support Systems (DSS) are designed to help the companies to answer in real time to complex questions. There are more different techniques in this respect, and the choice of the right instrument leads to finding the relevant answers for a certain company. The process is a dynamic one, and these answers are changing along with the business strategy of the respective company. Many organizations do not have well-developed global sourcing measurement strategies in place, and thereby lose out on attractive business opportunities. Realizing these opportunities requires a detailed understanding of global sourcing performance, which can be facilitated through Business Intelligence (BI) concepts applied in other areas of supply chain management. The present article is structured in two parts, which include: a presentation about the significance of business intelligence (BI), why is so important to have a business intelligence solution in your company, what can we do with a BI solution and which are the types of problems that BI can resolve; the second part describes some BI solutions used in these days in Romanian companies. 1. Business Intelligent overview and importance It is difficult to give an exact definition to a complex solution which can vary depending on the analyzed context. In an abstract way, it can be said that BI is the process of combining the information from several sources, and presenting the result in a form which can be used in taking the business decisions. This aspect is more obvious if we are going to analyze the iterative character of the business intelligence processes, where the steps of, planning and improvement need the harmonious join of the information from the data base offered by the business intelligence with the right managerial decisions taken on the basis of all this information. 1297

2 Understanding the business or the intelligence of the business, the translation mot-à-mot of the Business Intelligence expression is obtained precisely though the and refining of the data regarding the operations of a company. It is a process which results from the data collected at the company level from various internal activities (marketing, sales, production) and/or external (customer behavior or competition behavior as a reaction to the internal activities). This collection is iterative and cyclical and this is why the collected data should be organized to facilitate their transformation in information (reports, queries, analyses or presentations). The final purpose of these processes is a set of decisions which affect the functioning and the productivity of any business, and the solutions which sustain this process are extremely important and have decisive effects, but they cannot guarantee the effect if a lot of elements (organizational, technical, procedural) are not properly set up. BI applications include the activities of decision support, query and reporting, online analytical processing (OLAP), statistical, forecasting, and data mining (Sauder School of Business, 2000). A business intelligence solution brings information to the hand of the users that need it: analysts and experts (multidimensional, statistics), consumers (dynamic queries and simple ) and information users (reports). (Microsoft, 2004) According to a study published by Data Warehousing Institute in 2000, (Data Warehousing Institute, 2000), named: Harnessing Customer Information for Strategic Advantage: Technical Challenges and Business Solutions the technologies DATA WAREHOUSE and BUSINESS INTELLIGENCE allow the companies to collect, to integrate and to analyze the information related to customers so that this will enable the companies to understand the intentions and the behavior of the customers. Being aware of these information and knowledge flows, the companies can optimize the interaction with the customers at all levels, which will lead directly to the increase of revenues and profit. BI applications allow the ability for aggregate and summaries on specific and detailed categories at the same time. As part of the of different processes, these kinds of applications show exact information and expel moreover elements. Thus, the managerial team can monitor the business performance variables. As an example of the various categories of variables, which we can see in the table below, we can mention: the value or the volume of sales on a specific region (area), on product, on spell or the rate of products return for different reasons, the rate of discard from the guarantee period, the of the customers behavior in a specific situation or in a predefined context. Type of BI application Product Activities that can take place / Questions that can be answered Which is the product which has the highest profit margin or the highest contribution to the absolute value of the profit? Which are the products which bring the lowest profit margin (unprofitable products)? Marketing Sales Demographical using information about customers and sales data, price sensitivity (elasticity of demand), consuming preferences. For example: Which are the products preferred by consumers belonging to the market segment with a monthly income lower than a certain level? Using this information we can estimate the efficiency of the publicity campaigns and of the marketing activity. Identifying trends, season, and association of complementary products (buying a package of products). Which is the sales tendency (trend) in the stores from a specific demographical area? Which are the products with growing sales and which are the customers that buy products like these? 1298

3 Retail Financial Budget planning Balanced scorecard Project management Data regarding retail orders, supplies, stocks. Through these it will be possible to estimate stocks better, to schedule deliveries better, to make proposals for the price promotions for certain products and for the delivery calendar. The of the profitability on departments, category of products, geographical locations, seasonality. A particular case is represented by financial institutions (banks, assurance companies) where the financial plays a key part in carrying on the activity: defining bank s packages of products and services, scoring as a method of synthesizing of information about the financial situation of a certain customer, in an aggregate criteria of evaluation as rating or score type on the basis of which it is possible to obtain a credit facility The increase of the efficiency of a manufacture process by costs reduction, increasing the production, planning the next fiscal year (forecasting the balance sheet of incomes and expenses, cash-flow statement, etc) Defining performance indicators from a specific area, calculated from the existing information from the system. We can follow the entire performance of the company or the performance of some groups as against others from the same area. The of the resources way of allocation, of projects portfolio. Table 1 - Activities and questions in terms of BI application s types 2. Business Intelligence solutions Once we have distinguished the importance and benefits of BI, we can move on to present and point out the features and attributes of specific BI solutions. In this way, we can say that in Romania the continuous increasing of the competition between market sectors makes a must to adopt BI solutions adequate to the business specificity. The companies are interested in finding out which are the best products on the market, the most profitable customer and which are the new products they need to be more profitable. Alongside competitively, as a generic element, to adopting BI solutions contributes also the necessity to optimize processes and to take better decisions, the bigger volume of data accumulated in operational systems and the European and international standards addressed to different industries. We are going over some BI solutions presented also in Romania and trying to point out their strengths in the area: a) Microsoft is one of the companies which offer integrated, powerful and comprehensive solutions of business intelligence which allow performing data mining, reporting solutions with the support of Microsoft SQL Server Analysis and Microsoft SQL Server Reporting Services. Here we talk about Microsoft SQL Server 2005, fated by his technical resources to provide new and comprehensive possibilities of exploring data in order to offer companies an effectively competitive advantage, to help taking decisions that will make it in direct advantage. The solutions of business intelligence are conceived to include multiple data sources, from a large area of operations, easy to integrate with the support of Integration Services ready to explore and improve data, getting an integrating vision of all analyzed data and building extended business as OLAP (On Line Analytical Processing), data warehouse, data mining (finding patterns and applying them over the business operations, using a flexible and accessible platform), tools for data extract, transform, and load using multiple and different data sources (ETL tools), balanced scorecard, etc, with the support of Analysis Services. The SQL Server 2005 BI Workbench suite is made of five basic tools (Monaco, 2004): SQL Server Relational Database used to create relational database; Analysis Services used to create multidimensional model (measures, dimensions and schema); 1299

4 Data Transformation Services (DTS) used to extract, transform and load data from sources to the data warehouse or schema; Reporting Services used to build and manage enterprise reporting using the relational or multidimensional sources; Data Mining used to extract information based on predetermined algorithms. Analysis Services Architecture Operational Data Data Warehouse Star Schema OLAP Cube Browsers for OLAP Cubes MS SQL Server Oracle Text files Can include distinct fields and/or data marts ETL DT S Evaluation Software ProClarity, Excel Pivot Table, Web components from Office Figure 1 - Analysis Services Architecture: relationships between different technologies levels involved in Analysis Services (Source: processed after Monaco, 2004) b) Cognos 8 Business Intelligence is the only BI product to deliver the complete range of BI capabilities needed for corporate performance management: scorecarding, reporting,, dashboards, and business event management as well as data integration, on a single, serviceoriented architecture (SOA). Author, share, and use reports that draw on data across all enterprise sources for better business decisions. (Cognos Corporation) Complete BI capabilities in one product, BI platform contains: accessing quality data, system administration and management, architecture and software environment. Both for the business and for IT users the product includes a framework manager, an administration console and a good integration with Microsoft Excel (Cognos Corporation). Cognos 8 Business Intelligence has a lot of customers, over 23,000 and we can mention among other IBM, Tyson Foods, Inc., BearingPoint, etc. c) BISS Business Intelligence Software Solutions, part of RomSys group offers a complete suite of tools, named Business Objects Portal: Crystal reports, Web intelligence and OLAP intelligence. Among BI platform products we can distinguish: BusinessObjects Enterprise, BI platform, Crystal Report Explorer, BusinessObjects Auditor, etc. 1300

5 BI platform has a set of services for distributing and administrating business intelligence facilities. Users facilities include access to business intelligence portal, ways of interacting with the shown content and the administrating facilities must include security components, data access and audit. The products and services of BusinessObjects Enterprise Information Manager allow the integration and the improving of performances. Corporate performance management (CPM) is the area of business intelligence involved with monitoring and managing an organization's performance, according to key performance indicators (KPIs) such as revenue, return on investment (ROI), overhead, and operational costs. For online businesses, CPM includes additional factors such as page views, server load, network traffic and transactions per second. CPM is also known as business performance management (BPM) or enterprise performance management (EPM). Figure 2 - Performance management from Business Objects Platform (Source: Each of the IT solutions presented above has its advantages, records an impressive number of customers and is continuously developing from 1 day to another, through the addition of new packages of analyse and reporting which to guide the persons in charge in order to take the best decision at the proper moment. 3. Conclusions A Business Intelligence platform large enough to comprise and integrate all data, to analyze them and report them in customized way can help any company to move from the desire to obtain performance to action through better and faster decisions. More and more business solutions are emerging and their efficiency is increasing, as they try to answer to a larger number of questions about the performance of the companies. No matter what solution you may choose, the business intelligent system must help the top management to make better, more informed business decisions, to increase their competitive edge and to respond more quickly evolving customer needs. Many advantages can rise from a BI solution wise chosen, so that the management will be able to answer in real time to complex questions, to maximize profit and to take appropriate decisions based on all relevant information and will also allow it to monitor the impact of its decisions with timely correction and adjustments. References 1. The Data Warehousing Institute (2000) Releases Comprehensive Industry Study on Customer Relationship Management (CRM) - SEATTLE, Washington, available on-line at 2. Microsoft (2004) Solu ia Microsoft pentru Business Intelligence, available on-line at

6 3. Monaco, G. T. (2004) An Introduction to OLAP in SQL Server 2005, available on-line at 4. Murray, Janet Y., Kotabe, Masaaki and Wildt, Albert R. (1995) Strategic and financial performance implications of global sourcing strategy: a contingency, Journal of International Business Studies, Vol Sauder School of Business (2000) Glossary of Common IT Terms, available on-line at 6. Tiemeyer, E. and Zsifkovitis, H.E. (1995) Information als Führungsmittel: Executive Information Systems, Konzeption, Technologie, Produkte, Einführung, 1st edition, Munich, p Vasile, Gabriel (2007), Cre terea competi iei impune solu ii de Business Intelligence, Revista Market Watch, available on-line at Cognos Corporation