A great scientist and popularizer, Stephen W. Hawking, stated in one of his books that each formula included in his books caused sales to be cut in half. The same is true when explaining a new technology or a new methodology. Most managers, when they are shown the thousand and one benefits of a new management philosophy (Lean Manufacturing, JIT, CRM, ERP, BI, etc.) tend to keep their attention during the first 5 or 6 seconds, to later enter a state of deep catalepsy. I understand them. The reason is that there are too many technologies, standards, options, and languages to name the same thing.
Certainly, there are endless alternatives to choose how to manage information in a company, but, in the end, the important thing is what decisions we make using the information we have. In short, BI focuses on providing information for decision making, while CPM highlights the consequences of such decisions.
1. The problem of ERP's or Management Systems
2. What is Business Intelligence
3. What is Corporate Performance Management
4. What users need BI & CPM
5. Is BI & CPM a tool for large companies?
6. Do you want to know more?
The problem of ERP's or Management Systems
The great reception that ERP systems have had in recent years has helped companies acquire a certain volume without giving up control. However, the feeling of many managers is that these programs are not adequate to have the information necessary to make decisions. We can extract lists and even graphics, but get to the information we need, but it is extremely complicated and tedious. And if you don't believe me, ask the IT manager for an Income Statement by Business Unit, by Client and by Product. Or worse still, ask the CFO how he manages to get it every month and how long it takes him to do it.
Likewise, the complexity of the business implies that many companies have acquired different solutions to solve specific problems of the sector such as a Presence Control to control the hours worked in the workshop, CAD / CAM systems to develop and scan products, tools of control like budgets and variable compensation systems developed in MS Excel and God knows what else.
The problem is that these islands of information and the enormous dispersion of data make it increasingly difficult to put them in order and, therefore, it is increasingly difficult to satisfy the manager's information needs.
Ultimately, ERP is not a tool for general managerial and directive use.
BI or Business Intelligence
BI systems come to solve many of the weak points of ERP's:
1. Collect information from different sources. It does not matter where you place the information and the format in which you store it. BI captures and stores information from any data source.
2. Put order in the Data. Organizes all the data collected, unifies criteria as each application manages its own masters (for example, customers and suppliers), ranks the different concepts (for example: Range of Products -> Product Families -> Product) and allows calculating such aggregated indicators as needed (from Billing to Net Profit).
3. All this, to visualize the results in a series of Control Charts that allow enormous interactivity. The information is interactive, we can filter by clicking on the boxes and dive through the different indicators through the different hierarchies (Eg. I want a billing / gross margin matrix by Country -> Zone -> Province -> Client. I also want it by Sales Channel and by Product).
CPM or Corporate Performace Management
CPM goes one step further, allowing the creation of Advanced Management Models. While BI allows us to observe what is happening in the company at all organizational levels based on historical information, CPM allows us to link the strategic lines of a company to the execution plans, making it reach the operational systems. In short, translate the strategy into operational terms.
Every manager knows that improving results not only implies selling more, but also controlling costs, applying production improvement plans, developing quality plans and improving in those aspects that are important to the client (price, quality, service and aftercare. sale). It is therefore of vital importance to convey this information at all levels.
No matter how good a strategy is, you have to follow - and I would add pursuing - the results. To do this, CPM provides a series of fundamental functionalities:
1. It allows setting objectives and following an orderly approval procedure (work-flow).
2. Facilitates communication of the strategy and underlying objectives at all organizational levels.
3. ensures the correct monitoring of the degree of fulfillment of the objectives of each organizational level.
4. facilitates the understanding of why certain things are happening and projects the scenarios in which we can find ourselves to glimpse threats and opportunities.
5. and channels the information to each person in charge so that they have the necessary information to sustain their decisions, simulate their impact and monitor their actions.
For more information about CPM, read the article "What does Business Intelligence and Corporate Performance Management solve?"
The theory is simple, this article will explain what Corporate Performance Management is from the perspective of different management areas.
What users need BI and CPM?
Typically, the user of these types of applications is usually the CEO and CFO. However, many managers from other areas such as Production, Purchasing, Quality and Sales cannot be oblivious to the potential of this methodology. What's more, to maximize benefits, we understand that everyone who makes decisions in the company should have access - at least limited - to the data they require to make the right decisions based on the necessary information.
Is BI and CPM a technology for large companies?
BI and CPM is not a technology that you cannot afford. It is not a technology for large companies, it is for large entrepreneurs who want to control their company, know where they make money and where they are losing it, transfer the appropriate way of working (best practices) to the different departments and ensure that they work under a scheme efficient and effective work focused on the essence of the business (core business).
