Bolstering the Finance Foundations for BPM – It’s About Data IntegrationTheresa Clark – VP, Finance Transformation
April 2005
Overview
• Defining BPM• Starting with Finance
– Why Finance?– Finance Data Integration Issues– The Current Architecture– The History of Finance Data
• How to Proceed – Moving Ahead– Suggested Architecture– The Effort Required– Compliance is Next– The Data Test
• Making BPM a Reality
The Definition of BPM – Starting on the Same Page
• BPM is a methodology not a technology
• Includes all processes, methods and supporting technologies
• The analytics are inclusive of all critical business information — operational and financial
• The processes are integrated and closed loop from planning through monitoring
The goal of business performance management is to optimize a company’s ability to execute against its strategies and measure the business.
Stating the Obvious — Data Integrity Is Key to Performance Measurement
Obviously, having the correct data for BPM is paramount
Unfortunately, this is much harder than it should be
“As with any style of business intelligence, poor data quality can lead to misguided decision making. CPM, with its critical role in compliance and support of strategic business processes, demands a strong focus on data quality.”
– Gartner, T. Friedman 2004
A Starting Point — BPM Starting with Finance Data
• There is a talk of ‘finance-centric’ focus of BPM. The need to ensure that there is a closed loop from the operational metrics to planning.
“To have a BPM suite, the solution should include financial BPM (e.g. financial reporting, consolidations, business planning) as its central application, with the ability to build out BPM components
for CRM, SRM and other applications.” – META Group,
January 2005
Why Finance?
Finance should be at the core of BPM on all fronts
• Finance data constantly undergoes audit scrutiny• Finance data is pervasive in key metrics • Finance personnel have the analytical skill sets and• Finance understands the business processes
BUT…
There are Integration Issues in the Finance Data
With a 1% of revenue budget and constantly increasing demands, the finance architecture has become somewhat of a morass:
• Legacy data too delicate and time consuming to integrate• ERP systems put in piece parts or “vanilla”• Data marts and special apps provided to solve individual
needs• Warehouses built and modeled over long periods of time and
difficult to maintain• Excel® is a central BI tool• BI of every flavor to suit multiple end user needs• IT departments requiring specialists to maintain each layer
BITools
ERPReporting
LegacyTools
Multiple Intelligence
ToolsLarge
Analyst Staff
!?!
The Resulting Current State Architecture
Multiple/Custom
ETLDisparate Reports
DependentEnd-users and
Decision Makers
OLTP Systems Data Management
Enterprise Analytics
Multiple Custom
Data Marts
MultipleSource
Systems
ERP
Operational
Other
Legacy
ThirdParty
FlatFiles
• Handsome reports• Data integration and
accuracy issues revealed • Planning is paramount
Looking Back Before Forging Ahead —20 Years of Finance Data in Short
1985 1995 2005
• Reports: Massive volumes of pieces of data
• Effort: Compiled by lots of people around the globe
• Systems: Legacy, Lotus®, flat file databases
• Reports: Data dumps from ERP and systems – ugly
• Effort: Lots of data in, Pivot table lives, Excel® Lots of tired people.
• Systems: ERPs going in, budgeting, consolidation
• Reports: Looking good• Effort: BI gurus producing
information and plenty of Excel® jockeys, Fewer people but tired ones
• Systems: ERPs in place , BI tools galore, data marts
• Siloed reports on specific information
• Costly information• Highly subject to errors
• Speedier data• Disappointment with
information• Seeking common terms
Data and facts – Yes please. May I have some?
Ugh. Data overload. Can you boil this down please?
Nice report. Where is it from? Is it correct? Prove it, please.
The Request
The Activity
The Result
The Environment
Quick Fast Turbo
How Do We Move Ahead?
• We learn from our history and experience– ERPs don’t have all the data and are a bit stubborn about
sharing their data– A warehouse is the way to make diverse data sources come
together– Less is more with tools– Excel® may actually get a Nobel Prize, but it does not solve all
analytics issues– Data integration matters
• We take this moment of opportunity where Finance is a focus and BPM is a must to shore up the underlying technology layers
Make Certain to Revisit the Data Foundations
Defined Hierarchies Allocations
Level of Granularity
Clear Securities
Well Defined
CoA
ERP Operational Other LegacyFlatFiles
Taxonomy
Clarity
The Better Place to Be
Standard Sourcing
Independent End-users and
Decision Makers
OLTP Systems Enterprise Analytics
MultipleSource
Systems
ERP
Operational
Other
Legacy
ThirdParty
FlatFiles
Company-wide Data Warehouse
Unified Finance-centric
Data
Dashboards, Metrics,
and Alerts
BI
Data Management
It May “Pinch A Bit”
• What needs to be adjusted will vary by enterprise– The age of the technologies, the timing of implementations, the
pace of acquisitions…
Tune
Overhaul
Review ERP capabilitiesTurn on functionsReset parameters
Implement workflowAutomate excelTune the warehouse
Restructure the CofAImplement a warehouseReimplement securities
Implement/Change ERPConvert legacy to newReplace built with new
Low High
The Level of Effort Will Vary By Enterprise
Effort Requirement
These are only some examples of possible changes
And Next Comes Compliance
• The focus on controls, data integrity and corporate governance is a matter of evolution not just a harsh government reaction in the US
• In a global economy, a set of rules of play at the internal controls level has always made sense. Shades of IFRS
• Attempted avoidance of an internal controls scrubbing appears a bit weak
• Many countries and industries have begun to require a focus on governance and controls as a matter of sound corporate citizenship – UK’s Combined Code, Basel II, Germany’s Cromme Code etc.
• Reported according to GAAP requirements
• Reported in correct category
• Reported in correct period
• Auditable
• Details tie to totals• Data is secure • Data access is restricted and
segregated• Calculations are accurate
and auditable• Data ties to source• Consolidation/compilation
accurate
• Accounting is appropriately applied
• Accounting is correct• Calculations are correct• Transaction was
approved• Transaction is legitimate• Transactions are secure• Access is appropriate
The Test of the Finance Data Looks Like This
Reported Financials
FinancialAnalytics
ERPB
LegacySystems
FlatFiles
ERPA
BIData
Making BPM A Reality – It’s in the Data
• Start Your BPM Initiative with Finance • Find the Means to Integrate Your Data
Now – Look at tools that can enable
analytics while you are transitioning data to the goal state
• Look at your Architecture in Light of BPM– You need a warehouse that can do
cross-functional analytics– You need ready access to your most
current data– You need to your data to be
auditable to the source
Measure
Learn
Adjust Monitor
Enterprise Wide BPM is Now Attainable