Analytics not only proves or disproves hypothesis, but its truth-seeking tests can also reveal cause and effect relationships. Understanding causality serves for making better decisions. Ambiguity and uncertainty? The greater they exist, then the more challenging the problem for an analyst and researcher to undertake. They can be an analyst’s best friend.
Read moreTried and Died? One and Done? Don’t let this be your EPM epitaph
One of the frustrations I experience is when managers or analysts share with me that their organizations tried to implement progressive management methods, and they either failed or abandoned them. A prominent example is an unsuccessful attempt to implement activity-based costing to measure and manage costs and profit levels of products, services, channels and customers. Other examples include risk management, customer analytics, enterprise resource planning (ERP) systems, and the balanced scorecard.
Read moreDo you Really Need to Embrace Analytics?
If you have not witnessed the deluge of big data and business analytics media coverage to date, then welcome back from the coma you were apparently in for the last couple of years. For the rest of you, perhaps you have the same nagging question that I have: Are big data and business analytics such a big deal that if our organization is late to the party in deploying them, we will never catch up to our competitors?
I go back and forth on wondering if applying analytics now is an urgent imperative for an organization to survive or if it is a “nice to have” relative to more critical “must have” capabilities that an organization should ideally possess.
Activity-Based Costing (ABC) Expert Gary Cokins
Today, entrepreneurs anticipate their market changes, make decisions in that direction and analyze their results, within the corporate strategy guidelines.
In such an environment, driving a company business requires an effective toolkit which provides accurate information to facilitate analysis. This is because understanding what has to be changed is needed before launching any action plan. This is the reason why ABC (Activity-Based Costing) seemed to be a promising response to the enterprise performance management needs, in the early nineties.
How does this promise stand twenty five years later? Critics have reported customers who were dissatisfied with their results from ABC. They mainly claimed that the method itself is too complex, lacks from a really efficient toolkit, and results in never-ending implementation projects.
Read moreThe US Government’s Sequester – Anything versus Everything
I tend to be an apolitical person. I try to be internally apolitical within organizations I am employed by as well as related to government politics.
But now I have a dilemma. It is not with an employer. At the age of 64 I recently “semi-retired” from my employer, a large business intelligence software vendor, after being 16 fun years there. I now have time to write more and present seminars, talks, and webcasts. My dilemma is that I have been invited to present a keynote talk in Washington DC on March 28 to US Federal government civilian and military executives. What should I say to them?
Read moreDemystifying Business Intelligence, Business Analytics and Predictive Analytics
Organizations often complain that they are drowning in data but starving for information. What they are seeking is insight and foresight from the treasure chest of raw and transactional data they already have combined with other information widely available. Business intelligence (BI) software tools have been presumed as the solution; however there is confusion because there is an emerging term, business analytics (BA), that is also heralded as the solution. What is the difference? And where does predictive analytics fit in?
Read moreHow to Embrace and Understand Enterprise Performance Management
DocuStar is honored to welcome Gary Cokins to our Marketing Organizational Leadership series. Gary is the founder of Analytics-Based Performance Management LLC, an advisory firm located in Cary, North Carolina.
Gary is an internationally recognized expert, speaker and author in advanced cost management and enterprise performance and risk management systems. He began his career in industry with a Fortune 100 company in CFO and operations roles and then worked for 15 years in consulting with Deloitte, KPMG and EDS. From 1997 until recently, Gary was a principal consultant with SAS, a leading provider of enterprise performance management and business analytics and intelligence software. His two most recent books are Performance Management: Finding the Missing Pieces to Close the Intelligence Gap and Performance Management: Integrating Strategy Execution, Methodologies, Risk, and Analytics. His most recent book is Predictive Business Analytics.
In the first discussion of a three-part series, Gary takes a look at Enterprise Performance Management, what it actually means and why businesses should be adopting its various methodologies.
Read moreA Kite with a Broken String – The Balanced Scorecard
How do executives expect to realize their strategic objectives if all they look at is financial results like product profit margins, return on equity, earnings and interest before interest, taxes, depreciation, and amortization (EBITDA), cash flow, and other financial results? These are really not goals – they are results. They are consequences. Measurements are not about just monitoring the summary dials of a balanced scorecard. They are about moving the dials of the dashboard that actually move the scorecard dials.
Worse yet, when measures are displayed in isolation of each other rather than with a chain of cause-and-effect linkages, then one cannot analyze how much influencing measures affect influenced measures. This is more than just leading indicators and lagging indicators. Those are timing relationships. A balanced scorecard reports the causal linkages, and its key performance indicators (KPIs) should be derived from a strategy map. Any strategic measurement system that fails to start with a strategy map and/or reports measures in isolation is like a kite without a string. There is no steering or controlling.
Read morePredictive Business Analytics, a Book Preview
Analytics is becoming a competitive edge for organizations. Once a “nice-to-have,” applying analytics–and especially predictive business analytics–is becoming mission-critical.
Business analytics is a skill that is gaining mainstream value due to the increasingly thinner margin for decision error. There is a requirement to gain insights, foresight, and inferences from the treasure chest of raw transactional data (both internal and external) that many organizations now store (and will continue to store) in a digital format. Without interpretation, numerical data is simply just numbers.
Read moreThe Time to Create a Culture for Analytics Is Now
The old organizational model for decision making is broken. The jig is up. Making decisions relying on gut feeling, intuition, office politics, past experience and bias is giving way to using fact-based information and analytics. These allow for investigation, insights, foresight, and improvements.
Predictable skepticism of business analytics
Some readers may already be reacting to my observations and saying to themself, “I’ve heard this exaggerated story before.” Skepticism is a healthy virtue. Skepticism involves waiting for enough evidence before accepting or believing.
Read moreA Television Game Show for IT and Analysts
Television game and quiz shows, like Jeopardy, are now in abundance. I have an idea for a game show that probably would not achieve high viewer ratings, but it might be appealing to those interested in how truth is proven with analytics, research and fact-based data.
True or false? Good or bad?
My idea is for a game show where three competing teams of contestants are given a business problem involving choices. They are given one week to design and test their hypotheses through experiments and return to the show with their answers. A panel of CEOs would judge the winning team.
Read moreThe Soft Stuff is the Hard Stuff
Most of us are technical. We like to be fact-driven. We embrace technologies of all flavors including computer hardware, software, mobile devices, the Internet, and social media. We tolerate opinions of others different from ours, but we prefer tangible and hard evidence that supports any one’s position or argument. The problem is organizations are comprised of people and not just computers and equipment.
We like research studies and the use of analytics to gain insights and foresights as well as to solve problems and pursue opportunities. But darn it. People get in the way.
Read moreIs Analytics Shifting Power from Executives to Employees?
Why do executives sometimes fail to act on proposed ideas that could save a company substantial amounts of money? Is it due to their complacency or incompetence? I am unsure of the correct answer. I prefer to give executives the benefit of the doubt. Most of them were promoted to executive positions because they are smart as well as effective leaders. They have made good decisions in the past.
But is there a change in the wind? I sense that an explanation for less risk-taking by executives, such as they’re not acting on a good proposed idea, involves the emergence of business analytics and Big Data. It can be explained with a pyramid depicting how a shift in power and influence to employees is increasingly affecting various types of decisions.
Read morePAF for North Pole Operations
Perhaps you thought that Santa, Mrs. Claus, and all the Elves at North Pole Operations just magically get all the toys made and delivered on Christmas eve each year? Nothing could be further from the truth. North Pole Operations uses our framework – the Profitability Analytics Framework (PAF) by the Profitability Analytics Center of Excellence (PACE) - to plan and execute the big Christmas eve delivery every year.
No organization can escape the global pressures to better execute their executive team’s strategy and improve productivity - not even Santa Claus and his team. Here is how they do it.
Read moreWhy We Like to Play with Shiny Toys
I was recently a presenter in the financial planning and analysis (FP&A) track at an analytics conference where a speaker in one of the customer marketing tracks said something that stimulated my thinking. He said, “Just because something is shiny and new or is now the ‘in’ thing, it doesn’t mean it works for everyone.”
That got me to thinking about some of the new ideas and innovations that organizations are being exposed to and experimenting with. Are they fads and new fashions or something that will more permanently stick? Let’s discuss a few of them:
Dashboards– Visualization software is a new rage. Your mother said to you when you were a child, “Looks are not everything.” Well, she was wrong. Viewing table data visually, like in a bar histogram, enables people to quickly grasp information with perspective. But be cautious. Yes, it might be nice to import your table data from your spreadsheets and display them in a dashboard! Won’t that be fun? Well it may be fun, but what are the unintended consequences of reporting performance measures as a dial or barometer?
Read moreData Scientist Geeks are Chic
A managerial movement is now in motion and picking up steam. It is the application of business analytics for organizations to gain insights to determine good decisions and the best actions to take. This topic was once the domain of “quants” and statistical geeks developing models in their cubicles. Today applying analytical methods is on the verge of becoming mainstream.
One way to draw my conclusion about this emerging movement is that there is much chatter and debate about the topic. Articles in IT magazines and websites about analytics of all flavors, such as correlation and segmentation analysis, are increasingly prominent. Debate is always healthy. Some IT analysts view applying analytics as a fad or fashion or way overvalued. Others claim that an organization’s achievement of competencies with analytics will provide a competitive edge.
Predictive analytics is one type of analytical method that is getting much attention. This is because senior executives appear to be shifting away from a command-and-control style of management – reacting after the fact to results – to a much more anticipatory style of managing. With predictive analytics executives, managers and employee teams can see the future coming at them, such as the volume and mix of demands to be placed on them. As a result, they can adjust their resource capacity levels and types, such as number of employees needed or spending amounts.
Read moreCFO Leadership with Business Analytics – Nature or Nurture?
What distinguishes strong from weak leaders? This raises the question if leaders are born or can be grown. It is the classic “nature versus nurture” debate. What matters more? Genes or your environment? This question got me to thinking about whether business analysts within an organization can be more than a support to others. Can they be leaders similar to C-level executives? Some answers for me came from a provocative talk by Alan G. Dunn, President and founder of GDI Consulting and Training Company. I share some of Alan’s thoughts in this article.
Three primary success factors for effective leaders
Having knowledge means nothing without having the right types of people. One person can make a big difference. They can be someone who somehow gets it altogether and changes the fabric of an organization’s culture not through mandating change but by engaging and motivating others.
Read moreA Letter to Future Employees: Embrace Analytics
You have an opportunity to change the world; but I am worried about you. Understandably, you are probably not interested in a finger-wagging lecture from an old fuddy-duddy and grandfather like me. But, that is not my intent, so please hear me out.
Here’s my main concern: It’s possible that you are overly obsessed with social media. There is more to life than Facebook, video games, You Tube, Internet surfing and endless texting. Sure, each past generation has had its share of new gadgets and technologies to become immersed in – but none compare to what has become available to your generation.
Don’t get me wrong; the Internet and smart phones are great. But, they can also be time-consuming distractions that keep you from focusing on more important things – like career-building and learning activities that prepare you for the future.
Read moreBeethoven and Analytics – Based Enterprise Performance Management
I was educated as an industrial engineer, but I sometimes masquerade as an accountant. Engineers are not perceived as very worldly or sophisticated. They are often pictured with a shirt-pocket protector stuffed with pens. But some engineers, like me, do have appreciation for the performing arts. For example, I appreciate classical music. In particular, I admire and am in awe of the great classical music composers. How did Tchaikovsky and Mendelssohn transcribe such beautiful music as notes from their brain to a page of musical score for so many instruments? (Hint: I don’t think they had a smartphone or email to distract them.)
I believe that in the next few years the adoption rate for enterprise performance management (EPM) methods imbedded with business analytics will accelerate. Core EPM methods include strategy management (strategy maps, balanced scorecard, dashboards); profitability analysis (by products, channels, and customers); driver-based budgets and rolling financial forecasts), enterprise risk management (ERM); and continuous improvement (lean and six sigma quality management). They should ideally be seamlessly integrated.
Read moreAnalytical Geeks are Chic
A managerial movement is now in motion and picking up steam. It is the application of business analytics for organizations to gain insights to determine good decisions and the best actions to take. This topic was once the domain of “quants” and statistical geeks developing models in their cubicles. Today applying analytical methods is on the verge of becoming mainstream.
One way to draw my conclusion about this emerging movement is that there is much chatter and debate about the topic. Articles in Accounting, Finance, and IT magazines and websites about analytics of all flavors, such as correlation and segmentation analysis, are increasingly prominent. Debate is always healthy. Some view applying analytics as a fad or fashion or way overvalued. Others claim that an organization’s achievement of competencies with analytics will provide a competitive edge.
Predictive analytics is one type of analytical method that is getting much attention. This is because senior executives appear to be shifting away from a command-and-control style of management – reacting after the fact to results – to a much more anticipatory style of managing. With predictive analytics executives, managers and employee teams can see the future coming at them, such as the volume and mix of demands to be placed on them. As a result, they can adjust their resource capacity levels and types,
Read more