Viewpoints
Eliminate the Barriers to Visibility and Watch Your Profits Soar
Kent Godwin
Originally Published In:
August 2007
Author: Kenton R. Godwin
Today in many companies, there is a set of barriers relating to the way that business information is stored, accessed and used, that singly or in combination are preventing them from reaching their full potential. After great investment in ERP packages, general ledger software, and industry specific solutions, business teams still struggle to gain the insight they need to manage effectively.
In our profitability consulting practice, we have found that issues relating to information resources are a main impediment to effectively evaluating and leading organizations, and prevent the implementation of strategic direction. We collectively refer to these issues as “Barriers to Visibility”, and are confident that analyzing the current state of your organization through this lens can help you to dramatically increase your company’s profitability.
Breaking down your firm’s barriers to visibility will help your business operate at peak performance, lower costs, deliver greater profit, and improve customer satisfaction. There are five key issues that comprise the barriers to visibility you need to investigate and address to turn business data into business intelligence as part of a profitability improvement process:
1. Is there a lack of data integration?
If you have systems that don’t really talk to each other now, with manual feeds and multiple separate reports it is likely that the consequences are inefficient work, staff heroics and time delays. For many businesses it is extremely difficult to assemble and integrate information across different silos of business data, creating blind spots and a loss of opportunity.
Analysis goes undone because of the difficulty of assembling and creating relationships with the information. For example, when operational cost and accounts receivable data are not connected to sales information, the opportunity to assess the real value of customers is lost.
2. Is our data only available in rigid hierarchies, reports and time frames?
When looking at your business information, if you are you running into occurrences where you “can’t get there from here”, or you can only look at your data from week to week instead of at intervals of your choosing such as promotional windows, then you are allowing your data structures to drive your business intelligence needs, rather than vice versa.
This barrier is one of access quality and leaves you and your team unable to create meaningful relationships and comparisons within your data.
Consider the value of being able to easily connect different aspects of your data or look at it in new and different combinations regardless of rigidity in hierarchies and reporting structures.
3. Is our information fresh?
Do you accumulate your data daily in transactional systems, but only have the ability to interact with it and analyze it on a weekly or monthly basis? Is your staff keeping track of history in spreadsheets because the data drops off as a result of the next month or year close? Not having fresh data prevents an organization from analyzing events as they happen and robs them of the competitive advantage of nimble responsiveness. With stale data, you are at best relegated to the role of “Monday Morning Quarterback”.
4. Is our Data only accessed by experts – and through queries or report requests?
If your IT or Finance staff are the only people in your organization that can get information from your systems, or if you have to submit a request for reports to IT or a vendor and wait days or weeks for the results, you have a significant barrier to visibility. Being locked into rigid views and relationships, and being dependent upon someone else to deliver critical information is one of the biggest barriers to effectiveness and profitable growth.
As a result, your most knowledgeable staff is burdened with producing reports, errors in interpretation abound, and there are time delays in seeing the information you need. In fact, the whole structure of accessing data through reports instead of a self –service interactive process reduces the visibility of both executive and operational managers, who are the ones that can most affect outcome.
5. Is your information only analyzed through non-interactive processes?
Is your data only analyzed through spreadsheets – after it is re-keyed or transferred from a report? The result is that any analysis that does occur is time consuming, less robust, and limited by time constraints, employee technical capability, and resource availability. Consequently, rather than a continuous process or a quick answer to an asked question, real analysis becomes a project that must be planned and executed over a period of time, and opportunity for profitability improvement may be lost.
If you answered affirmatively to any of the above questions, then your organization has the “Barriers to Visibility”. But, what do you do about the barriers you have identified? The best way to address the barriers is through the implementation of a Business Intelligence /Performance Management solution. Not all systems are created equal, however. In addition to looking at measures such as cost, time of implementation, and IT resources, you should also evaluate each potential solution against these five points. Create a grid to compare solutions against these criteria. This will help you determine the correct solution, the one that will provide a real return on investment. Consider: Does this solution model my organization and really integrate the silos? Does it allow me to flexibly look at my organization – any combination of who, what, where, when and how? Does this system let me use the daily data that we generate? Does it provide access throughout my organization, or do I need to create or maintain experts to really get the information I need? Finally, does this solution provide built in analytics – robust and customizable to my business, or would I still need to have project-based analysis performed in a spreadsheet? If a proposed Business Intelligence type solution does not address all five of these points satisfactorily, you would end up with a sub-optimal solution – and one that was a cost to your organization, not an investment to lead you to greater profitability. In addition to the evaluation of solutions using the Barriers to Visibility, you should also evaluate the provider of the solution. Are they business consultants to help you realize the full potential, or are they merely IT implementers? What is their capability to provide a solution vs. only software?
The Bonadio Group uses the “Barriers to Visibility” lens as one of the cornerstones of our profitability consulting delivery to help our clients identify and systematically address what may be holding them back from improved profitability. When these barriers are addressed and truly removed, the outcome is a more effective, nimble and satisfied organization. The elimination of these barriers results in a visibility that allows for profit improvement to take place – whether illuminating top line growth opportunity, or opportunities to more effectively match costs to their profit generation capacity. This generates a real and calculable return on investment. Removal of these “Barriers to Visibility” also facilitates the penetration of strategy throughout the organization. When all have access to complete and real time information an organization can effectively execute strategy – and gain the feedback it needs for it to build momentum and ensure execution.
When you apply this lens to your organization, what do you think you will see? We are confident when you examine your organization, and evaluate proposed new IT systems with this framework you will clear the “Barriers to Visibility” and gain new capacity for profit improvement, organizational capability and strategic penetration.
Disclaimer: The Bonadio Group provides the information in Viewpoints for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in Viewpoints are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
