The theory already knows. Otherwise, I recommend a first reading of the article "Business Intelligence (BI) and Corporate Performance Management (CPM)." that shows a theoretical vision of the BI and CPM methodologies.
General Management
Many CEOs complain bitterly that the P&L account provides them with insufficient information to discover areas for improvement within the different areas of the company or within the business structure itself.
Even at the risk of falling short of the many doubts that afflict a CEO other than those set out here, we wanted to show a synthesis -at least of the most common- resolved through BI & CPM:
1. Where do my profits or losses occur? In which products, in which markets / clients or channels?
2. Who are my best clients? For profitability, loyalty, margins and acquisition of new products.
3. I have incorporated many products, which should I discontinue? What Product Life Cycle management should I develop to minimize Treasury needs and maximize profits?
4. Is the cost of the company structure correct? And my results?
5. I have losses where there were profits before, what is it due to?
In short, where should I influence to improve my results?
Financial Management
The current economic situation is testing many financiers. Many companies are managing the quarter or even the month, with the workload that this implies (redoing the sales plan and recalculating the different budget items is totally unaffordable). What is certain is that the year represents a too long time range, while the shorter periods are better adapted to the current dynamics of modest but palpable objectives and, therefore, achievable in the short term.
It is therefore necessary for the Chief Financial Officer to resolve the following issues:
1. I have to know what effect it would have to stop working with a client, how will it affect the result? How will it affect productive needs? How will it affect financing needs?
2. I need to simplify the budgeting process to spend more time analyzing than compiling information.
3. I want to carry out an economic control of the company's projects: profitability studies, budget control and analysis of deviations, periodic management control reports, accounting controls, etc.
4. I need to be able to launch financial future projections based on manual or automatic average calculations and simulate scenarios to know how the economic situation will be when modifying certain variables.
5. I have to consolidate data from multiple companies, subsidiaries, branches, or profit centers.
6. I have to calculate different combinations of calculations of indicators or ratios (Cash Flows, NOF's, Graph Z for TAM Sales, breakdown of Profitability,…)
7. I need to improve risk control, involve salespeople and generate alerts for quick intervention. I need to be able to change this system easily if I detect in time that it is not working as expected.
8. How can I bring cost accounting and income statement closer to operational management so that we can all row in the same direction?
Commercial address
The demands to reduce costs, minimize stocks and adjust working capital operating needs are aspects of capital importance for the survival of companies. The Sales Plan is a critical business process in turbulent times.
Can you imagine doing this review reference by reference and every month? This problem can be solved using CPM.
The Commercial Director, following the strategic criteria of the company, asks us the following questions:
1. What is the billing per Client, per geographical area, per area delegate, etc.? And the margins? I also need to screen profitable clients from those who are not.
2. What and how many clients do I have prospecting? How many prospects have you visited? How many have become clients? What is our level of efficiency in converting new prospects to clients?
3. What customers have not bought from me in the last 60 days? And a specific range?
4. Apply Cross Selling strategies: What customers who have bought printers from me are not buying ink from me?
5. Production needs us to review the Sales Plans, quarterly and reference by reference!
6. How far am I from the annual goal? And of the monthly objective taking into account seasonality?
7. What is the situation of my unpaid? What is the history of a client in terms of collections? What payment conditions do I have with clients?
8. Can I see all this information on a map? By zone? By delegate? By customer segmentation? By Canal?
Operations Management
The Operations Directorate tends to suffer from the disaggregated information necessary to plan the short-medium term, and when stocks start to grow, the reaction tends to arrive too late, causing significant tensions in the Treasury.
In addition, the volumes of information that are usually handled prevent an efficient performance of the tasks of control and analysis of anomalies. Finding out the causes of increases in consumption is not always a simple task and involves important research.
In summary, from the Operations Department, the following questions are raised:
1. How do I compare the different providers for the same product / service? What is the optimum?
2. How can I organize operations based on a cost minimization criterion? What control measures do I have? What is the minimum viable cost goal?
3. Can I reduce my logistics costs? Which logistics operator is the cheapest for my geographic mix and current product mix?
4. What are the causes that originate the increases or decreases in costs?
5. I need to continually review the Production Plan to avoid excess stocks. What stock coverage do I have by reference quantified in months based on quarterly estimates and based on historical data?
6. What has been the evolution of my inventories? By range, by state (raw material, semi-finished, work in progress and finished) or by reference. Can I reduce these stock levels?
7. I need to continuously re-schedule production to minimize stocks and maximize service due to our lack of liquidity. How can I optimize this management? How do I estimate safety stocks?
Serve all these unanswered questions as an example, not trying to bring together all the questions that can be asked in an organization, but the most common that we have come across. All of them have an answer through the application of methodologies supported by BI & CPM. This is what we call Intelligence Management, that is, the combination of advanced management methodologies and information management technologies for decision-making, implemented by qualified personnel with managerial experience.
It is clear that without a technology that can manage all this information, any of these solutions would be unmanageable. Equally true is that these solutions absolutely require the experience of consultants with a managerial background who know the management implications of each of the decisions made in an organization.
