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Decision Making

BETTER BUSINESS DECISION

By Bozidar Kralj, on February 15th, 2011

BETTER BUSINESS DECISION

It is intention of every manager to drive better and best actions from existing set of information. Problem is that current IT solutions are structured and designed to bring more beneficial data (mostly known as BUSINESS INTELLIGENCE SOLUTIONS). More information and data does not necessarily means better understanding of business. On a contrary too much information that are tightly connected together bringBetter business decisions more fussiness in business decisions instead of making them better. Unfortunately, current BI solutions create more clutter in decisions then before. 

From information to Better Business Decision Making

As already mentioned companies internal resources create many official reports like financial statements, Balance Scorecards, Benchmarks, Key Performance Indicators and many internal business reports (sales reports, marketing reports and etc.) and analysis. It is an avalanche or tsunami of information. “Today we know so much but understand so little” is best description of so many generated reports. To conclude for better business decision is not necessary any more to gather knew data but to better understand data and especially to interpret what is really behind figures. Data and information need to be better interpreted.

Creating better decisions with integrated data

Best way to get better decisions is to integrate all relevant and important data into one huge reporting and planning platform. Integration means to connect all data created from transaction systems into one SIMULATING PLATFORM. Simulation on one, corporate, level means to make changes on any financial or business indicator and to see its influence on other important indicators. To be more precise, it would mean, changes in one group of indicators that represent project or new service and their consequences must be measurable in financial statements, balance sheet or profit and loss. This is the only way how to make better business decisions. Not only better, it is the best way.

Better business decision can be made only if its simulated action and consequence is measurable in current and planned financial statements.

Key rules for better business decisions are:

1. Decisions must be measured. If decisions can not be measured in advance it is not possible to distinguish good from nearly good and bad business decisions.

2. It is important to measure consequences of decisions in financial statements. Especially in most important financial performance indicators like EVA, EBITDA, NOPAT and similar.

3. Financial impacts of decisions must be measurable in nearly real time. Calculation of decisions can not last in days, weeks or months but in minutes.

4. Decisions from all across company (from every organizational unit or process) must be measurable.

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February 15th, 2011 | Category: Decision Making, Decision Support Systems, Strategy and Leadership

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