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SPECIAL REPORT – TECHNOLOGY

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BI – Is It Art?

In the previous article (ASA April 2009 – What is BI?) the core definition of BI was discussed. It describes what is BI and how it can help business to improve decision making.

A short description has also been given on how the BI project at SAICA has been implemented, and some of the benefits have been highlighted.

In this article, we will look at the question of whether BI is in fact a business tool or whether it is in fact merely an IT system.

IT offering or Business Tool?
In order to answer this question one has to consider what the ultimate goal with a BI system is. The benefits highlighted in the previous article talks about SAICA being able to understand their members better in order to improve the member service. It also highlighted how some companies used BI as the core business process.

From these and from research, it is clear that BI is in fact a business tool. Yet in most companies it is the IT or IM (Information Management) divisions that are seen to run with the BI project. This is then often also the reason why BI projects only render a portion of the benefits that they actually could.

A better business approach could be that Business Intelligence is only an IT offering in so much as it needs some input from IT. It is true that IT must provide the inputs into the BI implementation, as IT generally is the provider of the systems, yet the business remains the owner of the data and must ultimately decides how that data is used.

It is therefore pertinent that a business person owns both the project and the eventual system.

In the experience of SAICA, for example, the BI project occupied +/- 150 man hours from the IT team, while business staff actually contributed well over 300 man hours. And that is most probably the greatest reason for the success of the BI project at SAICA.

IT cannot deliver a BI solution
This seems to be a very harsh statement and surely many devoted IT gurus will attempt to argue it, however, the reality is simple: IT can only deliver a set of tools that business uses to deliver a successful BI solution.
It is often a grave concern to see how many IT people and how few business staff attend BI conferences and seminars. Although there has been a slight improvement in the past year or so yet, on average IT staff make out roughly 70% of attendees (survey results at SA BI Conference 2009).

The following diagram depicts a typical BI solution: see diagram 1.

Business provides the input into the BI system in terms of business drivers, business data and business rules. IT supplies the technology and the infrastructure on which the BI solution runs.

IT obviously has to play a major role in the initial stages of the BI project, but over time its role declines and eventually becomes only a supporting role.

Depicting the input of the various role players over time for a BI project is as shown here: see diagram 2.

A practical example
Probably the best way to describe the different roles involved in a BI project is to look at the way you would build a new house.
A person will one day sit and think that he/she needs a new house. The reasons might be many, fold, but let us just assume that his/her needs it because his current house is too small.

He/she considers the buy vs. build options and then decides to build. After all, as in business, we all like to create things to our style and liking.

So he or she goes out and finds a suitable piece of land, he/she contracts with an architect to design the house and, eventually, he/she contracts a builder.

After some time, the house is finished, he/she then gets an interior decorator to decorate the house to his/her requirements.

He/she then plans a wonderful house-warming party and the invitation reads: “Please come and celebrate with me the new house that I built”.

This person did not lay one brick, plaster a patch of cement or even paint one wall, yet he/she calls it the house the he built! And he is correct in saying so, as it was his need that started the process, it was his requirements that were designed and his specifications that were built. Therefore, he has all the right to call it ‘the house that he built’.

And that is exactly the same way it should be with a BI solution. It is the business’ need that starts the project, it is the business’ requirements that were designed into the BI solution, and it is the business specifications that ultimately determine how the BI solution will operate.

But is it art?
No BI solution has ever been successful unless it is owned and used by the business. Where IT owns it, the project might have been a success. It might have been delivered on time, within scope, at the right cost and to the required quality; yet, it may not be a success, as business is not benefiting from it.

To refer back to the example, if the man built this wonderful house, yet nobody ever moved in there, meaning nobody is actually using it, it will be regarded as a failure. On the reverse, if the builder took a month longer to build the house, yet the owner moved in and had many wonderful years in the house, it will be seen as a huge success.

BI is definitely art, aka, it is a solution for business, by the business.

Jaco Venter, NH Dip (Eng), MBA, is Business Information Manager, SAICA.

 

Advanced Enterprise Architecture for the Smart Organisation

The term ‘architecture’ has been used by business and enterprise planning managers within the technology industry for a number of years. The aim of the term was initially to describe various processes and provide an overview of the business to assist software and application developers, and has since evolved to refer to a complete description of all the elements and associations that today make up an organisation. As such, it is evident that enterprise architecture is key to organisational success and is therefore a term that organisations operating in the context of the South African business environment are becoming familiar with, especially as technology continues to evolve and infiltrate this landscape, shaping a way business operates.

It is said that the architecture of an enterprise exists, whether defined or not. However, implementing simple enterprise architecture into the business model is no longer sufficient to ensure that a business not only remains up-to-date with current technology trends and solutions, but remains competitive operating in such a trying environment. Surely it is better for any organisation to have an architecture that is strategically aligned within the whole organisation, than just to have an architecture that simply exists? The 21st-century enterprise needs to do more than merely reflect IT assets on the balance sheet, but rather it must be able to develop structures and frameworks, strategies and processes for leveraging these assets to create a distinct competitive advantage and achieve continued success.

As such, although customised enterprise architecture has been around and spoken about for years, it needs now, more than ever, to be embraced, as organisations aim to incorporate information, solutions and business processes that enable adaptability, agility, and facilitate core business strategies – all of which help to create a significant and dynamic advantage. Consequently, the architecture of a company not only has to be customised and fully integrated into the company, but needs to form an important part of the company’s overall set objectives.

Therefore, companies looking to implement an enterprise architecture that is customised to suit its needs and meet its goals can follow the below suggested guidelines, to effect a customised enterprise architecture:

• Corporate culture is a critical success factor for the development of an enterprise architecture customised for the organisation. Understanding the corporate culture of an organisation means grasping an understanding of what the organisation hopes to achieve. Through understanding this culture, an enterprise architecture can be created to ensure it is able to support the organisation in achieving its ultimate mission and its set goals.

• Establish the necessary architectural principles to guide, inform and support the way in which an organisation sets about fulfilling its mission through the use of IT. Not only will this allow the members of the organisation an opportunity to understand what can be achieved from the architecture, but also gives the developers an understanding of what is expected from the technology.

• Recognise that nobody knows what a system should be doing as well as the users of the system. Therefore, organisational participation from as early as possible is essential. Undertaking this process will allow the developer of the enterprise to prototype the system and learn where changes are required before final implementation takes place.

• Adopt an architecture compliance strategy which entails specific measures for the architecture to be compliant is important. The critical success factors of any project rely on the co-ordinated effort of communication between the developers and members of the organisation.

• Enterprise architecture should be attractive to the organisation’s customers, especially as it is customised. If customers perceive value added in that the enterprise architecture efforts will aid them in their jobs and specific roles within the company, they are much more likely to remain loyal to the organisation.

Upon the establishment of an enterprise architecture that is customised for the organisation, those involved in the process should proceed to maintain and extend the architecture. This is to ensure that the architecture is continually updated with any missing or necessary new elements. At the same time, the company should make use of the architecture to structure new projects, as the enterprise architecture is a tool that decision makers can use to determine and communicate any required change.

Enterprise architecture goes beyond technology; it is the outline for current and future processes, organisational agility and differentiation. As such, it is important to ensure the foundation is solid and customised in every aspect. It is also important to remember that, while we are in the middle of an economic recession, the economic climate will eventually turn and when it does, businesses should have the structures they need to go full steam ahead. Getting this process right, is surely the beginning of creating a smart organisation that is bound to succeed, no matter the operating environment or challenges – wouldn’t you agree?

Malcolm Rabson, MA, is Managing Director, Dariel Solutions.

 

Is IT Governance in Denial?

“Just look at our IT Governance performance barometer! Can’t get greener I would say! My fellow executives can’t ignore this and will have to admit that we know IT! No use in denying that fact… the proof is greener than ever!”

Two hours later the IT executive walks in fast pace through the IT department. Face steaming red, ordering the senior managers into the newly refurbished IT boardroom.

“I demand an explanation! How is it that our green is not as green as the business expects it to be? Are they completely ignoring the fact that we have just implemented the best IT Governance framework and technologies money can buy? You have exactly one week to turn this debacle around and deliver me the proof of us being right!” And out they go, in full defensive mode…

Ouch. There where the opportunity exists for IT to address the meaning of “Business and IT” they choose continuing to justify the “Business of IT”. That route most probably will lead them further away from the original reasons of IT’s existence and … greener than green is not possible.

We know we struggle with establishing Governance practices for the IT resources and we know we don’t achieve the outcomes we expect when governing those IT resource. We have many tools, codes, practices and frameworks to assist us in governance and yet if one looks at the information collected and evidence presented it is as if we are in denial. The denial of the fact that our IT role is to contribute IT resources to the business and as such construct the IT governance around indicators that truly reflect our contributing performance.

Some IT and even business executives might say “bullocks!” but please believe me, this lays closer to the truth than you might think. We have an obligation to share this with you to prevent similar situations as described above from happening.

Let’s explore the meaning of denial and place it in the context of IT, business and governance and allow you to be your own judge:

Denial
a defence mechanism postulated by Sigmund Freud, in which a person is faced with a fact that is too uncomfortable to accept and rejects it instead, insisting that it is not true despite overwhelming evidence of the opposite.

As a fact, we all know that almost every enterprise has a great reliance on information technology. As this critical asset becomes more important there is the growing need to properly manage it through effective governance, answering to the corporate governance, be it formal or informal in existence. Information technology should not be restricted to simply automating procedures or even managing information, no, information technology now strengthens an enterprise’s organisational capabilities for transformation i.e. strategic effectiveness, innovation, and smarter ways of conducting business. IT Governance should measure IT’s performance in conducting that role. One simply can not ignore one’s origin, especially not when it is still alive and on the same premises, depending on your contribution for it to be successful in conducting business. Then why is it that we see more and more IT departments implementing IT Governance not knowing what it is supposed to govern? The value of an enterprise resides in the business! It is not inherent in information technology alone. So why govern IT for the sake of IT?

IT Governance is more crucial than ever during an economic recession. Particularly under financial duress, IT organisations, and the enterprises they work for, must establish cohesive IT governance processes and procedures that clearly spell out how IT decisions are made and how IT can benefit the business as a whole. In essence, the value of IT investments, as well as any other investments, must be predominantly determined by the owner of the business outcomes sought. Pure technology decisions will be primarily made by leadership within information technology with consulting input from the business. Pure business decision making will be primarily made by business leadership with consulting input from the CIO. A “business case” should never be made for a database, application, technology service, or any other pure technology. The business case must always be based on the business outcomes sought.

If we can agree with these essentials then maybe we should start to understand why business is wondering if IT and its governance is in denial:

Denial of fact: Avoiding the evidential truth by only presenting IT truths and no business truths

Denial of responsibility: Avoiding business responsibility by blaming, shifting the focus or justifying IT decisions

Denial of impact: Avoiding thinking about or understanding the impact of what governance failures have on the business

Denial of cycle: Avoiding looking at IT decisions leading up to an event or not considering their pattern of decision making and how harmful behaviour is repeated

Denial of denial: This is the worst form of denial, not recognising that IT is in denial.

Jan van Ommen, is a Director: Governance – Risk & Compliance at Aptronics.

Fighting Naturally

Not all behaviours in our profession are innocent. Sadly, addicts of all kinds, corporate bullies, individuals with devious intentions and character disorders are very real – sometimes people are cooking the books.

Our country is full of stories involving fraud and deceptive behaviour in all industries, including our profession. But I would like to believe that in many cases very complex conflicts in the workplace relate to misunderstandings and not ethical issues, malice or deceit. Therefore, your conflict challenge as a new generation CA(SA) early in your career is to enter conflict situations with the assumption that you are dealing with rumour and misperceptions. Until proven otherwise, give people the benefit of the doubt and you will find that they often deserve it.

Honestly, not all of my conflicts have ended positively, because I probably did not give people the benefit of the doubt. I have had my share of confrontations that ended like Hurricane Katrina. But the ones that did go well (YES I CAN) were because I confronted them with the mind-set of caring about the other person and trying to help him or her. I did not draw the line and say: “This is my way or no way”. I did not give up and withdraw. I did not compete to win. Instead I acknowledged him or her and validated his or her feelings. And the result: building my relationships and my career.

The nncient Chinese give us the spot-on proverb: “There are two dogs inside of every man: the one that dominates is the one that is fed”. Anna Maravelas, explains that when people fight and behave defensively or aggressively she knows that the other dog – the dog of empathy and co-operation – is lying in the wings, waiting. And she knows that if she can put the distressed fighter at ease, reduce his or her fears and identify a way to feed the dog that wants to be appreciated and connected, it emerges with relief.

Conflict resolution and confrontation is not complicated. Intellectually it is simple. Emotionally it can be difficult (develop your EQ). It requires honesty, humility and dedication to relationships. Maxwell* gives an easy six step plan to tackle your next interaction.

Step 1: Confront a person only if you CARE for that person

Step 2: Meet/get together ASAP

Step 3: First seek understanding, not necessarily agreement

Step 4: Outline the issue

Step 5: Encourage a response

Step 6: Agree to an Action Plan

You might see your seniors avoiding tackling tense issues head on because in their mind they will make the situation worse. They have been in the job for a longer period than yourself, and their negative past experiences have convinced them that direct communication is too risky. Rather than risk an explosion, which you fear you cannot handle, you may resort to withdrawal and backstabbing – because if humans do not feel valued and heard, that is what humans do. But this approach will not resolve the conflict. You therefore need to learn the right approach. Let’s face it: few people have been taught healthy confrontational skills, especially in our profession.

Conflict is unavoidable because it is one of the things that we can count on in this life – like death and taxes. The sooner you create the ability to confront tough issues, show real care for the person, clear the air and feed the dog of appreciation, the sooner you will see that conflict is a natural part of life.

 

Fighting Fraud in an Economic Recession

The current economic downturn presents both challenges and opportunities. One of the biggest challenges for most organisations is to detect their existing frauds and to prevent future incidents. In an economic slump there is a double threat – old frauds are being exposed and new frauds surface. As Warren Buffet once said, “Only when the tide goes out do you discover who’s been swimming naked”.

A December 2008 survey of the Association and Society of Corporate Compliance and Ethics revealed a disturbing divergence of trends in compliance and ethics. While 85% of compliance and ethics officers surveyed believed that the current economic crisis increases the risk of a compliance or ethics failure, few thought budgets would rise to meet this challenge. And many expected a budget cut. There seems to be an immense imbalance between risks and controls. As an example, take a scerario where an organisation cuts costs by laying off a few employees. The remaining employees are expected to share the responsibilities of those layed-off. From a controls point of view, this presents a serious problem for an organisation, and is the foundation of many frauds experienced during a recession.

In a recent occupational fraud study conducted by the ACFE, it was found that layoff’s are leaving holes in organisations internal control systems. Nearly 60% of CFEs that work as in-house fraud examiners reported that their companies had experienced layoffs during the past year. Among those, approximately 35% of the respondents reported that their company had eliminated some controls. As a result, almost 90% of the respondents said that they expect fraud to continue to increase during the next twelve months.

The most common forms of occupational fraud and abuse are still in the following three main areas: Corruption, Asset misappropriation and Fraudulent statements. Within these three categories, we are seeing more and more reports of frauds perpetrated in the following eight areas:

• Sale commissions and bonuses
• Payroll
• Overtime
• Disbursements/Expense reports
• Inventory
• Accounts payable
• Corporate procurement cards
• EFT Fraud

While there is no denying that the trend is to cut down on budget spend, fraud investigations should not be the area where one can expect to make a “saving”. Now is the time for organisations to increase efforts better to prevent and detect fraud. If this is done correctly, organisations will begin to see a return on every penny spent to detect and prevent fraud.

The Association of Certified Fraud Examiners (ACFE) has recommended these nine building blocks as best practice in preventing fraud. See diagram below.

DiagOct2009

Those responsible for the prevention or detection of fraud should then take time to investigate the activities they can undertake under each building block to ensure that adequate measures are in place to fight fraud.

Antonio Pooe, MA, is the Director at Exactech and ACFE SA.