DECISION PROBLEM – Recognizing Main Drivers

Strategic Business Decisions for better business performance on market are based on set of quality information. It is top priority to set systems that will provide data but with complex systems like corporations it’s not a simple task and throughout the years it’s getting harder and harder due to exponent growth of new and interrelated data. Decisions based on best corporative intelligence are always welcomed and are challenge for management and employees. To support decision tensions IT solution industry created Corporate Performance Management as platform to support stated initiatives. 

CPM – IT solution is considered as top complex decision making supportive platform provided by many vendors including leading and eminent IT providers. CPM platforms include portals / vortals, ERP, ABC profitability system, US GAAP and IAS supportive system, financial statements, KPI dashboards laying on KPI management systems and providing data for Balance scorecard system …. Off course data integration and scalable data storage with analytic intelligence are essential for quality Business intelligence based decisions. To include data from production systems, integrated ERP system is a must, and operational data warehouse is of great surplus. Data integration consolidated for CPM platforms creates most valuable data, reports and systems to management and analytic specialists giving qualitative decision information on all levels. Overall Business Intelligence system should come out of one platform in order to handle current and future requirements of organization and tremendous growth of demands toward IT. This was recognized as best solution so far.

CURRENT DECISION PROBLEMS

If integration is absolutely needed to create quality strategic decisions base of data (group of data, KPI’s, reports and etc.), wouldn’t data coming into decision maker hands consist same kind of integration. Current CPM’s do not provide integrated monitoring over more and more complex systems. Meaning in practice that top management is bombarded with endless excellent information and their variations that are not connected in one platform despite the fact that they were generated in one integrated platform (in best case). It is easy not to foresee market opportunity. All information are beneficial but even grouped in many reports they do not provide simple and unified overview over company, cannot see wood in forest. Data have tendency to grow exponentially even in well organized dashboards or KPI managers. But where is here interconnection between data? As already mentioned current solutions offer extremely complicated way of data in-between relation. For organization this could be exhausting and very hard to maintain.

There are also many excel models that have certain simplicity and solution but cannot be installed on  databases and in BI’s so easy.  There are no simple solutions that could quantify financial impact of certain non-financial change or action in a part of company. To be more precise change of Non-financial KPI demands complete DIRECT integration into BI solutions. This demands resources.

There is also another paradigm in two worlds that think that could understand easily another part. Business world and finance world. This are separate worlds, and cannot find so easily people from business that could totally understand impact of their actions in  financial statements (Cash Flow, Balance Sheets, P&Ls, EVA, Operating Working Capital, Net Debt and etc.). This is utopist expectation. On the other hand people from finance do understand certain parts especially statements in which they are specialists. But not Financial picture in total. CFO’s do understand in global financial picture but not how certain parts might influence in global. In global no-one can control total picture of Financial and Non-financial Worlds. There is always a thought that they actually control but in fact system is too complex to be totally controlled. Try to calculate product profitability in industries like telecommunications. One circle of calculations might last even one year.

Main Decision Problem Drivers

• Not knowing own data. Not knowing definitions, not knowing processes, do not have feeling for market, not knowing customer needs… This is everyday knowledge of decision maker – not knowing much.
• Poor relation between information sets. Business analysts create new and aggregated information sets. This knowledge is not connected.
• Unknown environment. Parts of current information in new structure. That is information distortion.
  Only environment where decision should be made or where should it have reference point is management reporting.
• No real time calculation. Due to lack of knowledge and information integration preparation of data for management decisions might last in months. There is no chance to fine tune decision with change, trial and measure method.
• Poor or no connection with financial statements. Decisions made in the air without DIRECT relation with financial statements are very doubtful.
• Not working on integrated decision platform, simulating complete company knowledge.