Jacqui Kipfer of Bespoke Software suggests that masters of the data-verse are able to enjoy a competitive edge
Have you ever been in the position where you need to quickly get your hands on your business data so you can have an effective, informed conversation with a captive member or client, or weigh in on a new business initiative or perhaps just explain a financial result to an executive or board member, but you are faced with the daunting task of gathering, collating and presenting the data before you can even actually use it?
Maybe the data you need lives in several different systems and you need to bring it together matching up corporate, geographic or regulatory regions, insured’s names, currencies and time periods. Perhaps some of the information you need resides in a spreadsheet controlled by one individual within your company, such as budgets and forecasts, that is not readily available when you need it, or you are unsure of the freshness of the data. Maybe you need to see history for premium and claims and not just the current inception to date position. Perhaps you need to aggregate or slice and dice the data by classifications that are not available in your general ledger or your operational source system. Maybe you would like to compare captive members’ financial numbers to each other, or to an industry benchmark. Maybe you have a captive insurance company created to insure all of the subsidiaries of your corporation and you want to be able to see the spread of your risk by exposure type, industry and geographic region in order to meet some of your business objectives.
How do you go about sourcing this data? How quickly can you compile it? How easy is it to repeat this process or monitor changes in trends over time?
Do some of these challenges sound familiar? These are a few of the classic frustrations endured when a company is struggling to truly leverage its business data. The company’s data assets
are in effect lazy because they are not being used to their full advantage, and it may be costing more than just these easily recognised operational frustrations.
Bespoke Software has been helping insurance, reinsurance and finance companies gather, shape and surface their business data for faster, effective and insightful decision making for more than 15 years. During this time, we’ve noticed that while companies acknowledge their data is a substantial corporate asset and they spend a lot of time and money capturing it, many suffer some pretty significant impediments when trying to make use of it. We have seen many companies with lazy data assets and we’ve seen some impressive events occur when those data assets are woken up through employing business intelligence tools and techniques.
We understand the struggle that many business users face when trying to justify further spend on data, especially if similar projects have been tried and have failed to deliver in the past. With this in mind, we’d like expose some of the hidden costs of lazy data assets that we commonly see, with a view to equipping you with a sound foundation for building a solid business case for waking up your lazy data assets through business intelligence.
Business intelligence is an umbrella term that covers all of the tools and techniques that a company may employ to gather, collate, transform and surface business data in a way that provides insights into operations and allows for faster, more effective operational, managerial and strategic decision making.
A typical business intelligence solution will contain automated processes to gather data, often from many disjointed systems, transform the data and apply a common set of business rules, and then store the data in a common business repository, such as a data warehouse. From the data warehouse, the data is then arranged, often in data cubes, so that it can be easily navigated and consumed by any user that needs it. The ways in which the data is then consumed can be through a range of tools, such as reports, dashboards, spreadsheets, self-serve business intelligence tools, forecasting tools, or even interfaces to other systems such as the general ledger.
In a robust business intelligence solution, there will be reconciliation, monitoring, auditing and compliance processes built in, allowing users to have confidence in the data that they consume, as well as meeting the ever-present regulatory and compliance requirements.
Time better spent
In our experience, accountants and other finance staff can spend upwards of 50 percent of their time each month gathering and collating data in spreadsheets. This effort is in part to produce the monthly reporting required by their position but they are also often the people other staff come to when they require answers to specific operational and financial business questions. In the worst case scenarios, some finance staff are not able to produce their month- or quarter-end reports in a timely manner, primarily because it simply takes too long to gather, classify, collate and report on the data.
Effectively, finance staff become data wranglers rather than being able to use their skills and time actually analysing and advising on the financial results, cash flows and investment strategies. This is a significant hidden cost that can be very effectively reduced by implementing automated processes for capturing, transforming, classifying and loading data into a corporate repository and then employing business intelligence tools such as cubes, reports or dashboards to surface the information to whomever needs to consume it.
The risk and cost of getting it wrong
When manual processes are involved in data collection and collation, there is plenty of scope to introduce errors. This risk is magnified as companies apply business rules to calculate various financial balances, but the rules are not applied consistently through various reports and spreadsheets that are surfacing the data.
A good example is around foreign exchange and calculating its impact on earnings and cash flow in the form of unrealised and realised gains and losses on earnings. One variant of the calculation may be performed in the transactional system, but it may not be able to apply the specific accounting principles required. So a further calculation is done in a spreadsheet and perhaps also in a report. Exchange rates must also be stored somewhere and applied on the same basis, such as monthly, weekly or daily. The business rule and related data now resides in several different places and may not produce the same result, leading to extra effort to reconcile as well as the risk of simply stating incorrect financial balances that others are relying on.
Cost of failing business processes
Another hidden cost that we see is becoming more prevalent for captives and captive managers today is the inability to complete a business process in time for it to be useful. Businesses are constantly changing to keep up as new forces come into play and markets change. Business processes such as forecasting, benchmarking or simply stating the financial position more frequently must be completed in a timely manner in order to be effective. When companies are not able to collect, collate and present data in time to support these processes, the processes simply fail, costing the business the ability to make timely, informed, fact-based decisions.
Competitive edge
When businesses are not able to effectively leverage their business data, it may be costing them their competitive edge. They may be missing out on opportunities to adjust product offerings based on performance, to understand client or member churn, or to improve their risk profile. A number of captives and captive managers differentiate themselves from the competition by being able to provide better information to their members and clients, either through fact-based decision making, benchmarking, or just easier access to data via web-based or mobile applications.
Companies that recognise the hidden costs of lazy data assets and seek to really leverage their data assets through business intelligence enjoy operating efficiencies, a reduction in their operational risks and, importantly, are able to maintain or improve their competitive edge.
