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vr_infomgt_obstacles_to_information_management_updatedWhen applying information technology to drive better business performance, companies and the systems integrators that assist them often underestimate the importance of organizing data management around processes. For example, companies that do not execute their quote-to-cash cycle as an end-to-end process often experience a related set of issues in their sales, marketing, operations, accounting and finance functions that stem from entering the same data into multiple systems. The inability to automate passing of data from one functional group to the next forces people to spend time re-entering data and leads to fragmented and disconnected data stores. The absence of a single authoritative data source also creates conflicts about whose numbers are “right.” Even when the actual figures recorded are identical, discrepancies can crop up because of issues in synchronization and data definition. Lacking an authoritative source, organizations may need to check for and resolve errors and inconsistencies between systems to ensure, for example, that what customers purchased was what they received and were billed for. The negative impact of this lack of automation is multiplied when transactions are complex or involve contracts for recurring services.

Our benchmark research shows that data fragmentation, consistency, availability, usability and timeliness are key issues for companies.  The information management issues in process design and execution are similar to those at work for analytics.   However, addressing them effectively requires a different approach than just creating a separate data store to be the “single version of the truth.” Careful consideration is required to determine the best method to manage data throughout a core business process, particularly when multiple applications are required to automate and support the execution of the process. Software application platforms offered by some vendors make it far easier to integrate niche software applications into processes in a way that may eliminate the need for an operational data store.

The information dimension is usually overlooked in designing business systems because data is viewed as a given, is not explicitly considered (“we’ll work out the details later”) or is considered only an afterthought. This may occur because the information dimension of systems engineering is treated as being of secondary importance to defining the best process and determining the required applications capabilities. But we think making data an afterthought is a mistake. Ventana Research uses a framework that explicitly calls out information (all forms of data) and technology (software, hardware and networks) as separate elements in addressing business issues, rather than lumping the two together as “technology.” Explicitly taking the data perspective into account provides a broad perspective that frames process and technology requirements. We assert that treating data as a core consideration can result in better process design and clarify the issues companies must consider to select the appropriate systems to support the people and process aspects of business operations.

Quote-to-cash is a useful example of where an end-to-end process requires more than just workflow to manage the handoffs as tasks are executed. In some simple cases, an ERP system can handle all of the details. In others, automating the process and data flows may require multiple systems (such as a CRM system for customer and account information, as well as systems for product configuration, contract management, billing and collection in addition to ERP. Some of the data assembled in a quote-to-cash transaction may have to be transferred to other operational systems to fulfill the transaction. To achieve best results, data must be staged and controlled from start to finish and there must be a single system of record. Deciding on what application (or applications) to use to manage the process and where to locate the system of record physically and logically depends on a company’s specific circumstances.

Engineering quote-to-cash end to end from both process and data flow perspectives can speed its completion (thereby improving customer responsiveness), remove unnecessary manual steps (generating efficiencies) and reduce or eliminate errors at every step (resulting in better customer service and lower costs).

Another example that benefits from a data-driven end-to-end process is requisition-to-pay. It may seem counterintuitive, but accelerating the payment of invoices can improve a company’s bottom line. With interest rates in much of the developed world at historic lows, the greatest return on available cash is taking advantage of early payment discounts. Yet few companies take advantage of these. One important reason why they don’t is deficiencies in the data and technology needed to make early payment practical. Starting the automated process at the point of initial requisition gives the treasury function better visibility into the amounts and timing of future outlays, making cash forecasting more certain. Greater certainty about the corporation’s cash position lowers the amount of cash it needs to hold to meet payment obligations while maintaining an adequate operating liquidity buffer to allow for forecasting errors and unanticipated needs. Companies that have limited visibility will be cautious about making payments and must maintain a larger, more conservative buffer stock of cash. Using automated systems to speed the processing of invoices by eliminating delays in handoffs is only one element needed to make early payment discount feasible. Timely access to accurate data to support processing invoices is necessary, as is data needed by an analytical application that supports the treasury function to handle the complexities of managing cash effectively.

The importance of timely access to reliable data is often overlooked, but it can be the key ingredient to improving the execution of core business and finance department functions. Engineering data and data management into the design of technology-driven processes must not be an afterthought; it must be integral to the decisions about what software is used and how processes are to be performed. Our research shows that data issues plague companies, and the larger the company, the bigger the problem may be. Effective data management is essential to improve corporate performance. We advise companies to review their current processes and take steps to modernize and automate any that are a drag on performance.

Regards,

Robert Kugel – SVP Research

Anaplan, a provider of cloud-based business planning software for sales, operations, and finance and administration departments, recently implemented its new Winter ’14 Release for customers.vr_ibp_spreadsheets_dominate This release builds on my colleagues analysis on their innovation in business modeling and planning in 2013. Anaplan’s primary objective is to give companies a workable alternative to spreadsheets for business planning. It is a field in which opportunity exists. Our benchmark research on this topic finds that a majority of companies continue to use spreadsheets for their planning activities. Almost all (83%) operations departments use spreadsheets for their plans, as do 60 percent of sales and marketing units. Yet the same research shows that satisfaction with spreadsheets as a planning tool is considerably lower than satisfaction with dedicated planning applications. But despite general agreement in companies that the planning process is broken and spreadsheets are a problem, companies seem reluctant to break the bad habit of using spreadsheets. This conclusion suggests that either switching to dedicated software hasn’t been easy enough or that the results of doing it have not been compelling enough to motivate change. Anaplan intends to address both of these issues.

Anaplan designed its software to support business planning integrated across an enterprise in a practical way that’s an attractive alternative to spreadsheets. Its HyperBlock architecture is a hybrid of relational, vertical and OLAP databases with in-memory data storage and calculation. To translate that technology-speak into a plain concept, it’s easier than ever for those trained in spreadsheet modeling to transport their skills to a dedicated planning application. Anaplan simplifies the process of creating a planning environment that can be used by sales and marketing, finance, operations – any part of a company. Individual business units can create their plans without IT involvement. Customer companies don’t have to move all plans at once to Anaplan, but when they do, integrating all of the plans into a unified company view is straightforward.

The bulk of the changes in the Winter Release are aimed at refining and improving the user experience and facilitating model creation and updates. One of the most obvious changes is in the individual user interface, which opens up with “model tiles” representing each of the plans each individual has in his or her portfolio. It’s fairly typical for individuals to participate in multiple planning activities. Our benchmark research on business planning finds that, on average, employees participate in five sets of plans. Each of these may have multiple versions, and some may have subsidiary plans to a main plan. Some plans may be current while others are no longer used and are archived. The new interface makes it easier to organize this collection, making the most important plans readily accessible. This enhancement and others that will follow reflect Anaplan’s intent to incorporate ergonomics in the design of its software.

Choosing a model opens a dashboard relevant to the specific role of the user and the plan he or she has selected. Organizations can configure the layout of the dashboard, which provides high-level summarized information and different ways of navigating into and around the details in the plan. Navigation is now role-based to enable users to zero in on only those models and dashboards relevant to their function or role. Anaplan can be configured to drill down to specific items or transactions if necessary. Doing this in a multidimensional model is not always straightforward. An Excel add-in is a must for any planning application because it provides a familiar user interface that enhances productivity while eliminating the disadvantages of desktop spreadsheet, since the individual is working with a formal application and an advanced database environment. Anaplan’s Winter Release simplifies installation of the add-in. All of these enhancements go beyond a simple “consumerization” of business software – layering a snappy gloss onto software that remain tedious to use – to provide a more satisfying working environment.

Another notable addition in the Winter Release is “intelligent mapping,” a useful way for one person to create templates of components used in a model (say, all of the costs of adding a store, doing a marketing campaign or performing heavy maintenance on capital equipment) that others can use. Since organizations tend to handle most processes in much the same way, the operational and financial aspects of those processes are likely to be modeled in almost exactly the same ways. Being able to quickly copy a useful exemplar and easily customize it to an individual’s specific needs saves time. Moreover, making it simple to achieve consistency can improve the effectiveness of planning. Using intelligent mapping needn’t be the product of a conscious effort to create a template, either. An equally likely use is when someone looks at a plan created by another business unit and sees some component in that plan that’s useful to his or her model. Intelligent mapping makes it easy to copy and modify it to suit the need.

Effective collaborative planning is a structured dialog. Structured because it involves hard numbers and a dialog because it involves a back-and-forth exchange between executives and managers to mediate between the results desired and what’s feasible. Toward that end, Anaplan has added a capability in its models it calls a “hold,” which fixes one or more values in the model while the rest are adjusted. This simplifies the process of setting month-by-month, line-by-line objectives because it enables executives to impose selective constraints (minimum or maximum values such as sales by a product line or advertising expense) while adjusting assumptions quickly to assess whether the resulting changes are realistic. Fixing and releasing holds iteratively simplifies and shortens the process of assessing specific details to achieve a plan that is workable and agreeable.

For analysts that create or support planning models, the Winter Release adds a floating formula editor. This is a small but important element because it improves the productivity of modelers – typically a constrained resource in most companies.

The new release further advances Anaplan’s strategic objective to provide corporations with a tool that reduces the amount of effort needed for collaborative planning in any part of the business and enhance the value of this planning by better aligning business unit objectives with market opportunities. Our planning research finds that companies have many plans but, other than the annual budget, very little of it connected and coordinated. Anaplan focuses on collaborative business planning as a way to differentiate its offering from budgeting tools – a mature market with entrenched competitors. Its objective is supported by the underlying architecture of the software, which is designed to lower the barriers to switching from spreadsheet planning and budgeting as well as generating greater business value from a company’s planning processes.

Having said all this, I have to add that making it easier not to use spreadsheets is necessary but insufficient to alter corporate behavior. Companies need a business incentive to change. Anaplan’s use of in-memory technology provides that incentive because it adds considerable value to the planning process. Since the software can process even complex models with large data sets in seconds, in-memory computing can change the nature of planning, budgeting, forecasting and reviews. For example, the technology enables organizations to run more simulations during a planning or review session to understand trade-offs and the consequences of specific events. It can change the focus of reviews from what just happened to what to do next.  Rather than relying on intuition or simplistic scenarios to make that decision, in-memory systems support structured, numbers-driven conversations to develop the details of a plan. This is the breakthrough to any planning or budgeting process that in-memory processing provides and a good reason for businesses to make the leap to more capable software.

Anaplan’s product doesn’t do everything. For example, companiesVR_leadershipwinner that want all of the rigor that goes with a formal sales and operations planning effort should focus on applications dedicated to this process. And Anaplan doesn’t have all of the features that dedicated project planning software can provide. That noted, I recommend that companies that are looking for a dedicated application for general business planning and financial budgeting consider Anaplan. This is especially true if their objective is to have a planning environment usable by all parts of the business that can serve as the integration point for all business planning. We have found their customers have made significant progress to improving the modeling and planning which is why it received the 2013 Ventana Research Leadership Award. If you have not taken a look at Anaplan it is well worth your time.

Regards,

Robert Kugel – SVP Research

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