BI Helps Measure BPM
Widespread confusion still persists over the difference between business performance management (BPM) and business intelligence (BI). The difference is best described this way: if BPM is the goal, then BI is the way to reach that goal. Combined, they assess performance management, which helps organizations align strategies by tracking and analyzing key performance indicators (KPI). BPM is the dashboard of the enterprise; it helps decision makers by providing accurate, detailed, and timely information on the status of the enterprise. BI, on the other hand, turns data into information, and BPM uses that information for accurate decision-making. BI technologies and analytics have enabled performance management to mature significantly in recent years. As a result, organizations are currently using performance management components such as financial consolidation and management reporting, planning, budgeting, dashboards, and scorecards to map their strategies.
Financial management systems are a core part of any performance management strategy. According to some analyst reports, between 60 to 70 percent of performance metrics are based on financial measures. Due to this heavy demand, a new application area is growing: financial performance management. Financial performance management integrates data from disparate financial areas, such as human resources, budgeting, and forecasting systems, to conduct analyses and develop reports.
The integration of enterprise-wide BI tools with financial management is increasingly becoming important for producing accurate budget and financial reporting, which is crucial for c-level managers like CEOs, and CFOs. BI focuses on the nature and trends of business and business transactions, rather than on business operations or processes. For example, BI also focuses on finance, rather than business operations, much the same way it functions in the financial services industries such as banking, securities, and international finance. Thus, integration between BI and financial management is important for better performance management. Major software vendors like Cognos, Hyperion, and Systems Union have been expanding into this new arena of financial performance management.
Systems Union's Consolidated or Best-of-breed BI Solutions
Europe-based Systems Union Inc. is a global company, headquartered in Hampshire, England, with a portfolio of financial management, performance management, and BI applications. The company has two operating divisions: financial management and BI. The financial management division includes the subsidiaries Pegasus Software, RED Technology, and Sun Systems. In 2003, the company started its BI operation by acquiring MIS, headquartered in Germany. It expanded its BI division in 2004 by acquiring Lasata, based in Australia. Currently Systems Union has offices in 19 countries and operates with 500 resellers from 73 countries.
Through its recent acquisitions, it has been developing a global focus to capture more mid-market business and is selling its full range of products to clients, irrespective of whether they currently uses Pegasus or Sun Systems solutions. It is pursuing an aggressive strategy, both tactically and practically, to establish a "global", end-to-end platform of solutions for every facet of corporate financial operations. Rather than creating a single, monolithic brand, it appears to be swallowing up companies completely, adopting an integrative approach to consolidate a suite of best-of-breed point solutions. To maximize the opportunities from its integrated solutions suite, Systems Union's organizational focus is on geographic regions rather than product families or legal structure.
Systems Union solution integrates with financials and other existing applications like enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM), BI etc. Also, its consolidated suites offer a full range of BI tools globally. It has a platform of solutions for many facets of corporate integrated financial solutions. Systems Union's MIS, for example, integrates full financial solutions, and covers solutions for legal and management consolidation, risk management, balanced scorecard, strategic planning, and subsidiary management.
The Importance of Application Integration and Consolidation
As technology advances, systems need to integrate to create better performances. Recently, some vendors are heading towards consolidating their systems to better meet user needs through joint collaboration. The importance of business applications integration becomes clear by answering questions like,
- Does your accounting clerk input the same HR information that sales has?
- Does your finance staff have to re-key information from printed spreadsheets?
- Are there discrepancies in the financial data from different departments?
Unfortunately, if these situations occur in an organization, its applications are not integrated into a cohesive system. Since the center of all business functionality is finance, financial management is central to performance management strategy, and accurate financial reporting is important for complete, consolidated view of financial performance.
But, different systems and technologies have grown over time, and the market has become further complicated through recent merger and acquisition trends, global expansion, and the development of e-business, and now there are numerous tools on the market. Consequently, because of the lack of BI standards, it is difficult to combine and centralize real-time information located in various sources across the enterprise. Such discrepancies further exasperate inconsistent data and analysis. Given the far sweeping consequences of inaccurate finance reporting, as seen by recent corporate scandals, government is stepping in with financial reporting regulations and compliance. For example, the US Sarbanes-Oxley Act (SOX) puts companies under more pressure than ever to guarantee the accuracy of financial information.
The most important part of SOX to BI and BPM are sections 302, 404, and 409, which deal with reporting procedures and internal control. Many companies comply with SOX by using spreadsheets, which can be a feasible, temporary solution, but compliance is a continuous process, and one which companies have to face every year. Spreadsheets lack the sophistication, for example, in terms of data sharing and report generation.
Some, but not all BI vendors are automating processes to be SOX compliant, and by automating and integrating most of the financial, auditing jobs reduces costs and makes compliance more accurate. However, not all are embracing BI standardization and consolidation. Small vendors in particular are reluctant because standardization means cutting down from many tools to one, or at least a few, under a single platform. Systems Union's global reach attempts to solve the regulatory and compliance problem by dividing the world into regional groups. However, big BI vendors like Business Objects, Hyperion, and Cognos are in competition to become a standard BI vendor, which will push smaller and consolidated vendors like Systems Union to face tough challenges.
One Single BI Solution or Consolidated BI Solutions
Ultimately, you cannot manage what you can't see or measure. Since many large organizations have more than one BI application, management does not receive a single, big picture of the company's business. Based on this argument, one single BI solution is better than fragmented or consolidated BI solutions. Some argue that a consolidated BI solution under a single ownership is better, because it helps avoiding duplication and overlap, which is the approach Systems Union is taking. However, there are advantages and disadvantages between these systems. Fragmented BI is cheaper in short term but expensive in long term, whereas consolidated BI is cheaper in long term. Though, fragmented departmental BI solutions give fragmented views of the corporation and have lower maintenance and training costs, because they are already installed and operating. While consolidated BI solutions give a single view, they are initially expensive. Nonetheless, they will save money in staffing and training in the long term. A consolidated solution also requires one group licence for the software, which is cheaper than having many licenses for different solutions.
The truth is, no system is perfect, and no single vendor has all the functionality required to fulfill all the needs of a client. If you mix and match different tools or modules from different vendors, the system might do a job better. But, in reality it is not possible to force vendors to build one system with modules for various solutions. Systems Union is trying to leverage the benefits of different tools from different vendors, while bringing the consistency that comes from one service provider. It has consolidated groups of BI solutions under one umbrella, keeping the entity of the product brand and functionalities the same. It is not alone in its strategy. Companies like Hyperion Software, Business Objects, and Cognos are trying their hand at offering consolidated solutions. Hyperion acquired Brio and several small private companies such as Appsource; Business Objects acquired Crystal Decisions; and Cognos acquired Adaytum, among others. Again, these big players will also present challenges to Systems Union, while they may offer a more competitive landscape, giving users more options.
Customers of a company that has been acquired face uncertainty. However, because Systems Union is creating a consolidated group of service providers, there won't be a grab at customers to force them to convert to a new system. Customers will have their licensed solutions extended and integrated with a broader range of functionalities. Despite the competition it faces from larger vendors, System Union appears to be "a strong bet" for customers looking of solutions. Based on its continuing and robust growth, it will likely have longevity in the market—which is a good sign if you're organizing your business processes around a software platform. Systems Union's biggest market is in North America, but its presence in Europe and Asia is very strong and growing fast. It also appears that new customers will be able to assemble a series of easily integrated point solutions, with an open architecture that spans domestic and international markets.
Systems Union is ideal for small and medium organizations. It is also suitable for large organizations, though the company appears to be losing market share to competitors like Hyperion, Cognos, and Microstrategy in this area. Users can mix and match the tools from Systems Union's group of products according to business needs. For many companies, budgeting is time-consuming and the primary goal of performance management is improved budgeting. Systems Union's budgeting system is fully integrated with performance management, which helps deliver planning and forecasting capability in shorter time. Though it is reasonably flexible and customizable for reporting jobs for a number of industries, Systems Union's offering is particularly suitable for the insurance and hospitality industries. For example, Systems Union offers Sun System's Hospitality Performance Management (HPM) solution. Sun Systems is a subsidiary of Systems Union, and provides an integrated, front- and back-office analytics solution for the sector. By taking Systems Union's component integration approach, organizations can leverage off their current IT infrastructure investment and attain the answers to "how and why" with a robust and scalable solution without the typical large capital expense and intrusive or disruptive implementation implications.