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In the previous post we discussed the margins as health indicators for your business. They're the simpler and most basic of all the indicators that you can get from the three sheets prepared by your accountant: the income statement, the balance sheet and the cash flow.
Now we focus on some other financial indicators that can tell you something insightful about how is your company doing. ...

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The term Shadow System recalls to my mind James Bond movies' SPECTRE organization. The truth is much more trivial. Shadow systems are those fantastic gothic cathedrals built with Excel which keep so many businesses running. The IT would happily use a flamethrower on them but they would make the worst mistake possible. Uncovering a shadow system and bringing it to light is an incredible luck, both for IT and the company. I tell you why....

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Every company has an accountant. They are often seen as gray men, with round glasses, with little social skills. Many think that their existence is justified by bookkeeping, which, in turn, is a law enforced requirement, right?

Wrong....

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I keep going back to the basics because I was asked (thanks Mary!) to explain in the same way the difference among dimensions, measures an attributes. Actually this was not from a BI professional but from the comptroller of a medium sized company which is setting up its first organized BI system. She's been told about but she's not sure of having a clear picture. So I'm trying to help. ...

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I had the occasion to discuss the topic recently and I realized that there's no "consensual truth" about it. They are basic Business Intelligence concepts but I realized They are still debated. Nobody ever cares about the obvious so basic concepts like these give the rise to complex discussions.
What I find amazing is the amount of "it is kinda like…" "it's more focused on… " "it depends…" definitions I've heard. Maybe I'm too naive, but the idea is clear and simple, in my opinion. ...

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I just realized that there's more to say about the "magazination" of the web consuming. This form of content organization might be mirrored by BI presentation layers. I usually do not focus too much on presentation; it is overhyped by too many tools because it cheaply attracts users attention. While some forms of analytics are empowered by good visualization, some others simply generate a perceptive overload. The "magazine" form, though, is different...

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There is hype everywhere for what is perceived as an entirely new device class because of the Apple iPad launch. They did exist before (Microsoft has had tablet editions of its operating systems for years) with a limited audience, but now they have the attention of the general public. So many consumer tech players have started creating their own version that it appears that those devices are here to stay, at least for a while. So, what's in for BI? ...

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The new season is gearing up after the summer break and, while 1.2.1 is undergoing an extensive test, I go back to the fundamentals.
As you know, I'm not prone to deep, philosophical, discussions and I tend to be practical. You also know that I always thought that Business Intelligence is not an IT topic but, primarily a business topic. I've said it before: a BI project is not a technical project; it is a business project with a strong technical side. ...

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It's almost time to unveil Viney@rd version 1.2.1. It includes a couple of new features which were true open points for those who work with Excel. Our target is to make their life easier an easier and this is the compass we follow for improving Viney@rd. ...

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You know me. I usually do not lean toward deep philosophical thoughts; I'm rather the average Joe type. This time, on the contrary, I'm going to start from two Jeffrey Pfeffer's deep and insightful articles from the Harvard Business Review to derive what your grandpa likely told you many years ago. My contribution will be dropping in a smart idea or two. ...

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This is a very very primitive idea for the new site. Please, feel free to express your opinion! I'd love if the site were the outcome of shared ideas!

We have seen all the main issues regarding the high section of the P&L statement. We have learned that each and every line should be analyzed according to responsibility criteria. We have also seen how measures should mimic the sales events.
Now it's time to go below the net sales value and see what to do with costs. ...

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Today I leave aside Excel, BI and other technicalities; I feel like talking about interactions on the internet.
Did you ever notice how, on the web, everyone is so kind? Comment on a blog you'll be acknowledged. Retweet a link and many will politely say thank you. ...

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I recently learnt that the famous Excel Blogger Chandoo has a new initiative. He set up an Excel School.
http://chandoo.org/wp/excel-school/
This guy is an Excel MVP but his style is what makes the difference. He's light, simple clear and to the point.
If I needed some Excel training, chandoo.org is a place I'd consider.

I'm not affiliated with Chandoo.org, this is simply my opinion, based on what I read on the site.

At the top of P&L tower sales. This is the starting point for each and every analysis. Then you subtract the costs and get the margin, right? Wrong. What about the other sales events?
Better, what is a sales event? There are four main sales events, the orders, the returns , the complimentary offers and the giveaways....

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This is a leap forward along the Business Analysis storyline, but I recently wrote about it elsewhere and I realized that this simple model can be of great help for startups. I'm going to talk about your company balances, but not in the terms you're thinking. ...

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I'm sure that you often had to do with sales data marts. I'm sure you designed, implemented and reported against it many times. Actually, sales and margins are often the first business areas to be covered by a BI implementation. Sometimes accounting leads the pack, but usually sales are the first subject on the list.
Implementing sales is somewhat easier than other datamarts because the granularity is almost invariably defined by the sales events. That is, each line in your fact table will likely be an order/invoice line. ...

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It' s incredible the amount of feedback a video can have.

I've always been reluctant to resort to videos because they always imply oversimplification.
More, they are complex to build, especially if you do not have the money for a decent video editing sw, a professional speaker and you are not a native English speaker. ...

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I love Excel, I think it's pretty obvious. I'm not alone, millions and millions of people around the world use it too and, more or less, love it. The vast majority of these people use it to work on, manipulate and display data of all kind.

What's strange about Excel is that the very reasons because it is loved by people are the same reasons why it is execrated by IT professionals....

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This is the fourth post dedicated to business analysis for BI consultants. The series start here.

In the previous post we saw that the Income Statement may have multiple forms (and even multiple names, because it is sometimes called Profit & Loss statement, P&L). An Income statement suited for management purposes shows costs related to the company operations, usually splitting them among direct and indirect costs. So far, we have designed a companywide Income Statement while management often needs data at a lower level. So you'll be asked to build a sliceable income statement. I'm sure many are familiar with the idea; from a technical perspective is "just another dimension", but what are the business perspectives tied to those dimensions?

Considering the company as a whole, two kind of dimensions come into play: business line and business unit. The business line mirrors a specific internal organization upon different business. Consider a company which manufactures bulldozers. It runs two entirely different businesses: the dozers business (with salesmen, expositions, advertising, large customers and small owners etc.) and the spare parts business (with country repairers, inventory turns, urgent calls etc.). No use to say, these are very different organizations with different people with different operations and mindset. Nonetheless, the two lines use some common services, like accounting, human resources etc.

The business unit is the radicalization of this concept or the result of an aggregation of more than one company. Business units are practically companies of their own. In fact, a business unit is often defined such by having its own P&L statement whose format can be different from other business units. What's important to understand, in our perspective, is that two business lines or two business units may greatly differ for the others dimensions. Just think to the bulldozers example, they indeed have a different sales force and an entire machine is likely classified rather differently than a spare part.

There's a third concept that many "Db Wizards" do not even suspect it's there. We talk about business and sales, hearth movers sales, spare parts sales an old machinery sold as second-hand toolsets. What distinguish the first two items from the latter? They are all sales, aren't they? Yes, they're sales but getting rid of old machinery is not part of the company everyday operations. A managerial P&L tracks only the ordinary activity, the company income statement tracks everything. One of the requisites for the company to thrive is to have a positive bottom line for the ordinary activity.

So far we haven't reached even the first line of the P&L statement, usually sales. In the next post we'll discuss how to slice and dice sales.

I break the Business analysis for BI consultants series for a post that has been inspired by a discussion on the well known Joel on Software forum. This post is a slightly developed version of my reply to the thread titled: Why you should unlearn your MBA ...

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Here you can find a nice example of P&L statement for a software company, Qlik Tech, which is going IPO.

http://www.kellblog.com/wp-content/uploads/2010/04/qliktech-financials4.png

...

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Let's get a short break from blogging to list a few books I've found useful. If you want to run ahead of the lessons, well, use these texts!

This is a good, hands-on, primer for understanding the basics of business analysis.

This is quite costly but has formed generations of students. A must read.

Probably you think that accounting is a boring and dry subject, don't you?

I'll be back soon with the next post. Good reading!!

In the previous post we saw the classic, but I'd rather say the "accountant's" form of the Income Statement. Income Statements do not come always in this forms, there are many other forms, each one focuses on different company facts....

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One of the most common user request is "How much am I earning?" This question is second only to "How much am I selling?". Often projects start just to have an efficient reply to these two questions.
Notice that the two questions are only superficially similar but an ocean lays in the middle . Let's start....

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We've been talking too much about technologies, myself included.

There's a focus in BI community on the emerging trends of cloud computing, in memory processing, columnar stores etc. but the link with business requirements is weak. ...

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Last week I had a discussion on UK Business Forums about Viney@rd. You can find it here .

Garyk gave me the opportunity to explain why some things are like they are in Viney@rd. This is an interesting discussion and I post it here, slightly edited ...

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As I promised quite a long time ago, I make a list of the Business Intelligence sites I regularly read.
I'm not always on the topics being discussed, but I learnt a lot for sure from them. I'll never thank enough those people who share their knowledge online. This is by no mean a complete or a popularity based list, and is grounded only in my personal taste. ...

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Whenever I use the term "Natural key" in a tweet or on Facebook, someone always DM me to remind me how natural keys are worthless. I should use the brave and muscular surrogate keys for each and every task. Maybe is a frame of mind, but whenever there are strong technical debates I feel naturally inclined to the minority.
In this case my point is that natural keys are perfectly adequate for many Business Intelligence tasks, and should be replaced by surrogate keys only when necessary. ...

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