Business intelligence: use your head

Business intelligence: use your head

Insider Business Club: it's becoming the foundation for decision-making - but companies still say they need more business intelligence

With revenues set to top £ in the next few years, business intelligence
is one of the fastest growing software sectors selling its services to companies
around the world. But its definition and application can sometimes prove
elusive. Typically it refers to the process needed for collecting and analysing
the information required for making the best decisions. The software has been
around for years but only for the elite. Now consolidation in the industry has
helped drive the development of products for smaller enterprises. Our experts
explore the issues.

What ‘intelligence’ are organisations currently working

James Burckhardt: According to our research, most
organisations are dealing with diverse systems – multiple databases with
different types of data within them. And most organisations are dealing with
structured data – by that we mean documents, email, hard information if you
like. What organisations are not currently working with across the board is what
we might call unstructured information, systems that store and manage
voicemails, even instant messenger information. Interestingly a lot of
commercially valuable information can often be exchanged via these systems.

In terms of where there is scope for improvement, manageability is a key area
– improvements in areas like tiered access rights so that people can be given
up-to-date information and information that is relevant to their function and
responsibilities. Usability of current systems can also be improved,
particularly in investment in existing systems rather than putting investment
into new system deployments, which potentially have greater areas of risk and
greater risk of upheaval.

How many organisations are looking at this?

James Burckhardt: Just under 33% of the mid-sized and large
organisations we polled are undertaking a significant investment in information
management. There is significant expenditure already earmarked for investment in
information strategies. The key areas where the business is looking for return
from this investment is in terms of improving collaboration, particularly in the
public sector and organisations working over multiple locations. They are keen
to use business intelligence and deploy it across the organisation to improve
the access and usage of information.

Why does business intelligence matter?

Brian Gregory: You have to look at the history of where
business intelligence has come from. Really the first piece of business
intelligence software was a piece of paper and a pencil where someone was trying
to use calculations to help them understand what the basis of the decision was.
Then we moved through the calculating area to spreadsheets, which were great but
are not very repeatable. Then we had the advent of computer systems, which
helped deliver more effective and more repeatable and more auditable forms of
calculations and derived information from data.

Really business intelligence falls into two areas. One is to provide people
with a bit of extra knowledge so they can make a better decision based on that
knowledge. The second piece is around creating new data and trying to derive new
value and insights from the data you already have and from data that you are
going to create.

The easiest example of this is a budget. A budget creates a new piece of
data. You are going to try and gain some insight as to what your business might
be like in the next quarter, half year and year by looking at historic and your
own judgement, then trying to predict what the future might look like. The
output of that is a new piece of data. Then you have to be very careful and
businesses need to look very closely at what is it that they are trying to
achieve with this new data, or business intelligence, because it varies

And why should it matter to accountants?

Brian Gregory: The key challenge for finance people in parti
cular, because they are uniquely placed in most businesses, is to look at the
way business intelligence has evolved. We have gone from tools that have helped
you make better decisions, forecast our business and understand the sales trend.

Then they have evolved into departmental business systems – how is the HR
function operating correctly, what is the marketing function about. They have
then evolved a bit more into a business unit level strategy. Few organisations
have evolved into true enterprise level.

The challenge is what you need to understand about the business and you need
to focus on the individual that is going to make that decision. As a finance
person, do you have the complete view of how your business is performing?

Are these sort of budgeting, planning and forecasting tools only
really of interest to larger companies?

Brian Gregory: Absolutely not. Regardless of your business,
we all try and predict where we might be at the end of next week. I ran a very
small business for a while. I was probably down at the Neanderthal level of
business intelligence tools to begin with and gradually evolved up to the
spreadsheet. I never evolved to a budgeting or planning piece of software. There
is an absolute need for everyone to understand where their business is going.
Budgeting and forecasting are the first stepping stones in data creation. I
would step back and learn and ask, long before you get to predict the future, do
you understand what is happening with your business today?

James Burckhardt: There is a great opportunity for SMEs
because you can now buy software applications that are delivered via the
internet, rather than buying off-the-shelf or investing in bespoke systems. That
means smaller organisations can cost effectively and flexibly scale to the size
of their business. You can find a solution that doesn’t provide you with an
all-singing, all-dancing system you don’t need. It provides you with something
that is really adaptable.

This week’s experts:

Brian Gregory, senior director for financial applications,

James Burkhardt, head of research VNU Business Publications

Chaired by Damian Wild, group editor in chief of
Accountancy Age and Financial Director

Watch the events and sign up at

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