Self-serve analytics is now available to everyone—why you need it
In July, 1985, a revolutionary software product was introduced by Aldus Corporation for the Apple Macintosh personal computer. The software was PageMaker, and it was the first desktop publishing software product. A year later the same product was made available for the IBM PC, and a new industry was born.
Desktop publishing made it possible for every personal computer user to do their own page layout, without the use of outside graphic designers and complex, expensive mechanical page layout processes (remember where the term “cut and paste” came from?). Marketing departments, especially in smaller companies, were able to do practically everything in house, relying less on outside consultants and advertising agencies. The best part was you could quickly make changes, save different versions and get results almost instantly.
While marketing and other aspects were transformed almost overnight (the introduction of the Internet and the World Wide Web were major factors too), finance departments continued to use older, more traditional tools. Major technological breakthroughs, such as the introduction of the personal computer to smaller organizations and the development of spreadsheets and relational databases, immensely contributed to increased productivity, efficiency and more accurate and complete data processing and financial reporting. There was, however, still much to be desired.
Now that we’ve seen the differences between analytics and reporting, I’ll focus on why it’s so important that certain finance and accounting staff be engaged routinely performing analytics functions and why they should be able to do it themselves.
A few important reasons and uses for analytics are:
- Actuals vs. budget and forecasts
- Period over period variance analysis
- Marketing research using actual data
- Key performance indicators obtained from actual data
- Financial ratios and other indicators generated to gauge the financial strength of the company, past, present and future
Routine financial data analysis should not be dependent on IT or business analysts
In larger companies, many of which are still considered SMBs (Small and Medium- Size Business), most users in the finance department, those in accounting responsible for finance functions and operations managers greatly depend on large amounts of data residing in their ERP or accounting system databases. Generally, reports produced by the software implemented in these companies are very generic and limited. Users always need specific data in a certain order and level of detail, unique format, etc. Normally, these users cannot generate the reports or data views themselves. They’re completely dependent on IT to get the data they need.
Larger companies employ business analysts versed in data mining and custom report generation. This is usually an IT function but frequently falls under finance operations. Regardless of who does the work, there’s a process to request reports and get report approval. Only then are the reports created and finally delivered to the users who requested them.
What if users don’t like what they see on their reports? This happens frequently, and the requisition process must be repeated. Remember that users can’t simply tweak their reports, so they’re dependent on IT or business analysts for even the slightest changes. The delay in getting the reports with the needed data can be significant. Now imagine how the decision-making process can suffers due to these delays.
Critical business decisions are either not made on time or not made at all due to a lack of clear data or long delays in obtaining it
Unfortunately, this happens a lot in many otherwise good companies. Many don’t even realize that certain events or management decisions cause undesirable outcomes, outcomes that could reasonably be avoided had the right data been there in time for management to understand and act on.
Unless you have an incredibly efficient, well-staffed business analysis group, your best option is to empower certain finance staff and perhaps also operations managers to perform their own analysis, at their own desks, when needed and with zero dependence on IT or business analysts. This is the only reasonable option for SMBs.
The solution is clearly what I call “Desktop Analytics.” I see this as an emerging new analytics software category like the “Desktop Publishing” explosion three decades ago. It’s badly needed and will be a welcome addition to finance professionals’ toolset once they discover it.