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Time for accountants to break up the BI party. By David Carter

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4th Jun 2007
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After attending his latest BI demonstration, David Carter has finally lost patience. This nonsense has got to stop. Business Intelligence is being run by IT technologists who have no idea what they’re doing. It’s time for the accountants to step in and take over

If you read the IT pages of AccountingWEB you will know that Business Intelligence (BI) is really big right now. The basic concept is to take the thousands or even millions of the transactions generated by an organisation, and summarise them into monthly totals of sales by product, sales by customer, purchases by supplier, business by employee, and so on. All these totals can then be displayed on a single screen, whether as numbers or as a graph or as a “dashboard”, and provide valuable information to management.

Microsoft offers BI to the masses
Until now BI has been the preserve of corporate users. Implementations tend to be complex and expensive, and require specialist suppliers such as Business Objects and Cognos.

But Microsoft intends to change all that and make BI available to everyone. The key component is the Analysis Services “OLAP engine” which creates the summary totals and now comes free of charge with Microsoft’s SQL Server database. And recently they have released a raft of new BI tools to take these raw totals and display them in a meaningful way.

And everybody is happy. Senior managers and marketing people are delighted with this new way of looking at their company and its customers. The IT people are happy to be producing something that their managers love, while improving their own CV’s into the bargain. And thanks to Microsoft these exciting new benefits are now filtering down to everybody.

I’m OLAP – trust me!
I’ve attended quite a few BI demonstrations over the past year or so, and this is indeed a wonderful technology. But now the whole business is starting to make me uneasy.

BI is all built around something called OLAP (“On-Line Analytical Processing”), and uses an ”OLAP engine” - a program which takes all those thousands of transactions and crunches them down into summary totals.

In the accountancy world, if someone gives me a Profit and Loss report, that’s a sort of OLAP report. It all fits nicely onto one page, and each account total summarises hundreds or thousands of transactions.

If I have any doubts about this report, I can check the numbers. I can go to the Trial Balance and see the account totals, then run a transaction report on each balance to see the individual GL transactions that make up the total. If it’s an on-screen report, often I can drill down on a total to display the transactions.

But the worlds of accountancy and BI seem to have different views here. In BI they don’t seem to feel that drill down on totals is important. Perhaps it’s because there would be so many transactions in the list, but most of the OLAP implementations I’m seeing don’t offer drill-down.

Microsoft Dynamics-NAV
Last week I was running a Lab Test on the reporting facilities of Microsoft’s own mid-range accounts/ERP package - Dynamics NAV (formerly Navision). Version 5 of NAV was released in March this year and is of particular interest since it indicates how Microsoft is making use of its own BI products – Analysis Services, SQL Server 2005, et al.

The Microsoft (MS) people showed me all the new BI tools. And they are terrific, there’s no doubt about it. MS has produced a marvellous environment for creating and distributing management information.

Then we moved onto sales analysis. We sat there looking at the screen and, hey presto!, all these marvellous numbers started appearing out of nowhere. But I was primed and had a couple of questions ready:

Question #1
DC “This figure of £500,000 for last month’s sales. Where does it come from? Is it total net sales from sales invoices, or total of the Sales account in the GL?”
MS “It’s total net sales from sales invoices”.
DC “So that means it could include delivery charges?”
MS “That’s right”.
DC “But doesn’t that mess up your margin figures?”
MS “Ah well, we don’t actually have margin figures. Other people have requested this; we’re asking the Danes to put margins into the next version” (Dynamics NAV is developed in Denmark).

Question #2
DC “Well, I’d like to see how much of these sales were actually delivery charges. Can I get a report of the transactions?”
MS “Not as standard, no.”
DC “So how do I find out what’s gone into the £500,000?”
MS “You could write a detail report using Reporting Services”
DC “Whoa! You’re saying that I’ve got to write the report?”

IT technologists don’t understand the numbers
Now the Microsoft people I was talking to were both good guys who were savvy enough to know the answer to my first question. And like any salesman, they can only sell what they’ve got in their kitbag.

No, my problem is with the Danes. They are presenting me with figures which I can’t check, and asking me to accept these figures as gospel truth, even though my whole business may depend on them.

And yet the figures are being produced by a bunch of IT developers who are so ignorant of sales reporting that they don’t understand that you don’t include Delivery Charges in Sales, and that Margin on Sales is even more important than Sales itself.

To quote J P McEnroe – "You cannot be serious!"

Now some of my best friends are IT developers, but when it comes to producing reports, IT developers are like that old definition of a computer – “an efficient idiot”. To them the numbers they are working with are just that - numbers. They have no idea what these numbers represent in the outside world and so they are unable to apply common sense to check their results.

The only people who can understand these numbers are the users. And often the only users who understand them are those senior representatives of the user community - the accountants. For example, we’ve said that margin (i.e. sales value less cost value) is vital, but what is the cost of an item? Is it standard cost or actual cost? And if it’s actual cost, do you mean latest cost, average cost, or weighted average cost? Only an accounting professional can handle these complexities.

Time to break up the BI party
BI up to now has been the preserve of IT departments and corporate top management, and the children have been having a wonderful time. But before this thing all spirals out of control it’s time for the grown-ups in the shape of the accountants to step in and start laying down a few ground rules. I would suggest two for a start:

“Rule 1: ANY total your BI system gives me, it must also be able to give me a list of the transactions that make up that total”.

“Rule 2: this transaction list must contain enough detail IN ITSELF to enable me to determine that these transactions are what I think they are.”

“Until I have this drill-down facility to check the figures you are giving me, I don’t propose to touch your BI system with a barge pole.“

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Replies (7)

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By paulcrinson
07th Jun 2007 14:17

BI is better than it was presented
I'm a bit surprised by the Microsoft answers. As with all reportng tools you only get out what you put in.

All of the data you wanted to see is available and is easily calculated if it is not. The analysis services and integration services combined can be used to filter out specific data and be made to calculate columns. And you can include as much or as little as you want in your data warehouse.

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By jumpalongjim
07th Jun 2007 14:45

Gulf between IT and accountants
"IT technologists don’t understand the numbers" is an interesting point. I recently exchanged some comments with Stephane-Robert Langer ( http://blog.srlanger.com/ ) where he observed that IT departments typically manage the storage and connectivity to large volumes of data without being accountable for the values. Conversely, accountants working with the same data are usually less concerned with the database but are accountable for the values and meanings contained.

This seemingly small difference in the perspective of two sets of professionals looking at the same set of data makes a world of difference in practice. I believe too many accountants shy away from technology, because it's the domain of IT, and fail to realise that only they can provide the meaning. The result is IT systems that fail to deliver what is truly required.

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By 3569787
03rd May 2016 16:43

BI is too important to be left to just the IT department
.

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By neilacc
11th Jun 2007 23:08

Lets not play party politics with BI
As a member of a firm of accountants who successfully use a BI solution I would make the following comments:

OLAP is only one element of a reporting strategy, but a very powerful one. Its strength is in presenting clear management information from a mass of underlying detail. Traditional transaction reporting systems fail to do this in an efficient and flexible way due to the resources required to process high volumes of source transactions. A complete reporting strategy does need to include elements that cater for detailed reporting where appropriate. It may be that David has misunderstood the scope OLAP is currently designed to address. The OLAP solution should not be criticised for what it doesn’t do, but admired for what it can.

David implies that this technology is new. We have been successfully using this technology for over 4 years. Microsoft should be congratulated for making this technology available to medium to small organisations at a price which represents extremely good value for money. However, it should be pointed out that the skill set required to deliver an effective OLAP solution is very different from that associated with a traditional transaction reporting system. This skill set should be identified along with the software product in order to ensure an effective solution. This is no different from looking for the correct skill set to deliver effective tax or accounting advice. We are fortunate to work with APS as our OLAP solution provider. APS have many years experience in both the OLAP and professional services domain and this has been vital to the success of this part of our reporting strategy.

For any successful reporting solution to be delivered (be it OLAP or traditional transactional), teamwork between the users and the developers is essential. It is as easy to deliver a poor transactional system as a poor OLAP one. What is vital is that both disciplines acknowledge each other’s potential contribution. IT developers are clearly not accountants and vice-versa. The best solution will come from the combination of the two skill sets. Our IT department has worked closely both with internal project teams and APS to arrive at a solution which works. It’s not about accountants knowing more than IT developers or the other way round, teamwork brings the best results in today’s business world.

In summary, the tone of David’s article runs the risk of influencing views in a way that may result in firms missing out on the significant benefits of a readily available technology. BI is not solely OLAP, it just tends to be sold that way. BI is about using a set of tools and solutions to satisfy ongoing reporting requirements which will enable a firm to run efficiently and make not only the IT developers and accountants happy, but ultimately better serve the customers. Surely that is in everyone's interest.

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By brianc
12th Jun 2007 03:47

Doing things right with the right things
Neil's response is spot on. Its been our experience that Accounting Firms, particularly the Top 100, have been looking towards OLAP to deal with their Business Intelligence / Reporting issues for some time.

Here is an another example of a leading UK practice, like Armstrong Watson, that implemented OLAP over 5 years ago.

http://www.microsoft.com/casestudies/casestudy.aspx?casestudyid=52206

Brian Coventry
APS

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By User deleted
15th Jun 2007 16:24

Doing BI with Excel 2.007 and Pivot Tables
I am consultant for small companies in Spain.

I have read a lot about OLAP, altough I haven´t use it yet. Small companies I work with don´t have SQL Server. They only use Excel, Access and traditional accounting software.

In the case of small company without sql server:
Don´t you think that BI can be easily implemented with Excel 2.007, pivot tables and macros? It sounds to simple, but people love simple solutions.
(it is very easy to import a text file with accounting records and then apply pivot tables).

I would like your point of view !

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By brianc
17th Jun 2007 20:19

BI for Excel 2007
Rolo

Happy to discuss how OLAP works with Excel 2007. We have been very impressed with the BI capability that Microsoft has built in to Excel.

+44 (0) 870 351 4878 or [email protected]

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