Archive for the ‘Systems’ Category

Does Your Firm Suffer from Information Disadvantage?

In many of our client assignments, we’ve been challenged to solve significant information gaps. Managers understood that they were significantly behind their competitors in leveraging information, but they didn’t really know where to start in evaluating their deficiencies.

We came up with a scorecard methodology to evaluate 5 key areas that make up an information platform. We approached the evaluations party on how well the information platform was built, but also partly on whether what was being built and used was aligned strategically with the goals of the organization. The 5 key areas are:

Info Disadvantage - Chart

1) Information Capture: how information gets captured or procured. Is the firm capturing the right internal information from their systems or personnel, and are they procuring the right third party data?

2) Data structuring and integration: how well the data is organized, structured, and integrated with other information within the firm. Are the data from different sources brought together to complement each other and matched so that similar information is well mapped and accessed together (for example information about a certain client)?

3) Data availability: making the data made available for review and analysis. Are tools built or made available for analysts and data scientists to explore the data?

4) Information context: enriching data and creating metadata to give more meaningful cuts and views of information that is more relevant to managers. This is related to the data structuring  point above, but differs in that much of this context is business-specific and in many cases need to be defined by the business, specifically product and sales managers. Are there consistent and global definitions in order to make sense of the information, for example consistent definition of products and regions?

5) Information delivery: creating tools for managers and salespeople to access, receive, and interact with their information so they can use it to enhance their business. Are these tools easy to use, intuitive, fast, and up-to-date.


What’s interesting is to note how many of the client’s past projects have identified and attempted to expensively address deficiencies in one or two of the five key areas but have often rendered sub-optimal results because problems in other areas were not addressed. In a lot of instances, for example, large investments have been made in information delivery, creating front-end tools to dress up information, but lesser investment in cleaning up the structure of the underlying data or not procuring 3rd party data that could add significant value to existing data.

Firms need to strive to realistically evaluate their platforms in all five fundamental areas and make sure that they understand, and invest strategically, in each of those areas. The knee-jerk response by managers is to argue that it would be prohibitively expensive to address the build-out of the entire platform. Our response is that you don’t have to build out all the areas in full and and they don’t have to be done at the same time. If you target certain specific deliverables that involve development across all five areas, you approach this problem more cohesively and inter-dependencies become much clearer. Also this will most likely be a multi-year project, so it should be planned and invested as such. The project also should be designed to include an element of flexibility to allow for evolution of requirements as the business changes over time.

With this broader approach, an organization can ensure that projects they embark with will be more successful and valuable to the organization.

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CRM System: Buy or Build

LobbyEvery client-centric organization needs to adopt a CRM system of some kind. Many managers realize the clear value of a CRM system will have increasing productivity, institutionalizing client relationships, and providing better management intelligence about their customers and sales teams. The challenge then becomes deciding what kind of system they want to to have, leading then to an overwhelming series of options that are available to them.

Technology groups embedded within organizations large enough to have them, will be inclined to want to build their own system rather than rely on an off-the-shelf solution. They are ‘developers’ by trade. Most organizations though will opt to adopt a vendor product. The minute that managers begin the investigation process on vendors, they get quickly overwhelmed with options, benefits, and features. Often they feel that to get what they really need, they should just hire an unassociated group of developers to build them their optimal system.[more…]

Managers end up unsure as to what the ultimate solution should be. A CRM system decision is one that managers must live with for a long time. They want to make sure they are making the right call. I’ll outline some key considerations when making the decision of buy or build their system

1) How unique and complex is the organization’s business model, and ultimately their information model?

2) What is the organization’s capacity to support and enhance an internally grown system?

3) Of the available vendors, are their any that specialize in workflows and requirements of an organization’s specific industry or sub-industry?

4) How financially stable are the vendors that provide solutions to the organization’s industry?

5) Are there consultants or subject matter experts available internally or externally that can function as trustworthy and unbiased advisors who can help navigate the options?

Pros and Cons

Custom built solutions allow for the greatest flexibility for specific requirements, especially if there are particular nuances related to an organization’s unique business model or market differentiation. Custom solutions also have more agility to integrate with already existing systems and data. They provide the potential for the biggest competitive advantage. None of your competitors will have this tool. The biggest downside, of course, is cost. Firms will need to commit capital for the build-out, plus a ongoing costs for enhancements and support.

Vendor solutions will in most cases provide the majority of requirements if industry-specific solutions providers exist, and for most financial sub-sectors they certainly do. Most are out-of-the-box so require very little configuration. The challenges come when a firm has specific things they want to do, but are constrained by the technical limitations or development schedule of the vendors. It’s hard to get a clear understanding what the true advantages and disadvantages are with just direct engagement with the vendors. Their demos give very little insight on what their deficiencies are, or which vendors are better than others.

There is no one simple answer to whether it’s better to build or to buy. Each organization is going to have their own unique CRM and information requirements. If there isn’t in-house expertise, we highly recommend finding someone who can help navigate the waters.

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Costs of Inadequate MIS

2013-08-24 17.13.49It’s surprisingly common for firms to attempt to drive cost savings by defraying investment in management information systems (MIS). In short-term budget planning it makes sense, especially in recent year with increased scrutiny on expenses and rerouting of IT expenditure toward regulatory requirements. But this can’t be part of a longer term strategy. There are significant costs, some hidden and some explicit, that accumulate every year that investment in MIS is deferred. These costs should be factored into any technology investment decisions.

The lack of visibility and transparency that comes from lack of correct management information systems creates three different types of costs: explicit, hidden, and opportunity costs. I’ll talk about each one and provide some key examples.

Explicit Costs

You can quantify how much you are spending to plug your MIS hole. If taken in perpetuity, these costs will greatly outweigh any projected investment in new MIS.

– Increases in staff to cobble together and produce information and reports. Firms with inadequate systems will have armies of analysts often doing low-value work, often taking hours and manual manipulation. It’s a useful, and often shocking exercise to determine a “cost per report” metric.

– Higher risks of transaction errors driven from either inaccurate data that drove a bad decision or critical pieces of information missing not available (or hard to attain) at the point of transaction.

– Regulatory costs in the form of fines and contingencies due to non-compliance or breaches. Without systems to provide transparency in rules and limits at the point of a transaction or automatically flag breaches or potential breaches, firms can face massive penalties.

– Increasing costs of infrastructure decay. This is probably the cost that’s most ignored and misunderstood. Managers assume that no investment means no cost, which is wrong. It’s like owning an old, beat-up car – the cost to keep it running can be extraordinary. The main drivers of this cost are:

  • Increased staff and programmers to create band-aids/patches to fix tactical issues
  • Increased infrastructure costs maintain an antiquated platform with “band-aid sprawl”
  • Increased future cost to replace a complex patched infrastructure

Hidden Costs

Hidden costs will of course not show up on an income statement, but they are real and insidious. They can have a lasting negative impact on the performance, client relationships, and on the firm’s culture.

– Loss of staff productivity. It’s not the job of front-office professionals to hunt down data and they are often really bad at it. Any time they waste tracking down information is less time they are talking to clients, creating products, and enhancing their work. Also, there’s a huge risk that they use wrong information or inaccurately interpret it leading to confusion and wrong decisions.

– The frustration level from staff in firms with bad MIS can be high. People who feel they are not being as productive as they could be are usually not satisfied with their jobs. It makes it enticing to go to a competitor. Senior managers lose a lot of credibility from their staff, making it extremely difficult for them to execute on their strategies.

– Loss of credibility with clients, which is the death knell for a client-centric organization. Clients will see that not only is the firm not managing their own house well, they also won’t be able to fully understand their needs. Clients want to be engaged with the “right” conversation that helps them solve their problems and make money. The “right” conversation emanates from the right set of information.

Opportunity Costs

In our current information driven economy, having the right piece of information or insight at exactly the right time can be a huge competitive differentiator. Firms lacking in the right information systems and processes will constantly miss opportunities, principally:

– Opportunities driven from day-to-day information flow that can be missed, such as market, competitive, client or product data. Lack of timeliness to action will allow competitors to scoop up the opportunity.

– Cross-selling opportunities, which are completely dependent on good information flow, especially information flow across business units within a firm. These opportunities can represent the biggest upside to any organization.

Strategic Stagnation

The best way to think about inadequate MIS is as if an organization is gummed up by molasses. Information is not allowed to freely and quickly travel to where it is most needed. You end up with what I call “strategic stagnation” where, in spite of the most well-intentioned and detailed strategic plans, an organization without the proper information tools will not be able to efficiently execute and will stagnate.

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Development of Sales Systems (Capability #4)

The last of the capabilities is the anchor that realizes the value of a clear client strategy: development of an integrated sales system built as a hub-and-spoke ecosystem where all critical elements of client information are brought together in a single Sales Portal. Without the right sales systems in place, the implementation of a client strategy becomes extremely burdensome, labor intensive, sub-optimal, and easy to abandon.

Sales SystemsClient information should include CRM activity tracking, client meeting and call notes, client revenues, transactions, client documents, and any third-party data that can enrich a salesperson’s understanding of the account (for broker-dealers, for example, survey data, market share data, fund performance, and securities holdings data would be invaluable).[more…]

Now, it’s probably not practical to say that every single data system that houses client information can be brought together into a single platform. This would be a herculean task for any IT department with an existing complex array of systems, but by thinking about and reinforcing the idea that any work on sales systems should have the ultimate goal of providing better intelligence to salespeople and sales managers in a consolidated fashion.

Client Management should have significant input in, if not outright business ownership of sales system initiatives. This would guarantee that the systems are created with a client perspective. It would also help in informing the IT team what information exists and what would be important to prioritize. Because of the closeness of the Client Management team with the sales groups, they would be instrumental in designing the systems in order to best incorporate into the sales team’s workflow. A big reason for the failure of many sales system initiatives is because many development teams make the assumption that salespeople will change their daily workflow in order to adopt a new technology. Regardless of how useful the new tools are, if they force salespeople reorganize day or forces them to perform new tasks that don’t immediately provide them with a benefit, they will just not adopt them.

Three keys to successful sales system implementation are:

1) Integrate new technologies into existing workflows and systems so that interaction with new tools is seamless (for example integration of CRM functions into email application and mobile devices)

2) Attempt to bring as much disparate client information as possible into a single portal that requires just a few clicks to get from one type of information to another

3) Provide as much of a feedback loop, as immediate as possible, for any information that salespeople are asked to contribute into the system. They should be able, for instance, to run calendars or reports of activities logged into the system.

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Top 5 Technology Priorities for Capital Markets Sales in 2013

Fave_modHere are our top 5 technology priorities we see Capital Markets organizations focusing on this year:

1)  Increased leverage of existing data

Broker-dealers capture an incredible amount of data, partly for compliance purposes, but also from systems that have come on line in the past 5 years aimed at capturing both client and sales interactions. Firms are sitting on immense repositories of trading and client information but have not had the systems or resources to mine that data to create a competitive advantage. New technologies have dramatically driven the cost down of storing, retrieving, aggregating, and analyzing the data. We’ll see firms combining phone, messaging, and email data with transaction and market data to develop new insights about customer and market trends.[more…]


2)  Mobile integration

As more people become dependent on their mobile devices to manage their personal lives, they are going to look to manage their work life in the same way. This means a higher degree of mobile integration of their work applications. There are many difficult and unresolved technical and compliance questions, but we feel that firms that have invested in mobile and BYOD (Bring Your Own Device) infrastructure over the past two years will see significant realization of productivity this year.


3)  Migration to the Cloud

Security has long been an issue with financial firms (especially in securities firms) when talking about hosting sensitive internal data on the Cloud. We believe that new security advancements in Cloud computing will allay most of those fears and will compel many firms to revisit this option since it provides advantages in cost, stability, and accessibility.  As mentioned in the last point, mobile will become a big priority for productivity, but would be severely constrained if data has to sit in slow and inaccessible local servers.


4)  Incorporation of social media

Social data, meaning data from social internet sites such as Twitter and LinkedIn, will be made more readily available, if not to all sales and trading staff, then at least to a critical beta group. LinkedIn data is being made available for integration with in-house CRM systems so that internal contact data can also feature LinkedIn profile and company information. Most CRM systems worth their salt have recently built LinkedIn data integration capabilities. Many firms still haven’t seen the value of Twitter, with most firms blocking the application entirely. But a few upstart Twitter analytics firms, with access to Twitter’s data fire-hose and some serious data analytics engines, are providing extremely useful insights on market and client trends. The most notable is Dataminr, which focuses primarily on financial markets.


5)  Mining of unstructured data

We now have technology that can systematically ferret out and analyze information from unstructured data sources, such as text in emails, client call reports, research reports, and even phone conversations. We admit that this will be more of a 2014 focus for most firms, but many will start to look into it this year since it can provide a significant new stream of data to analyze.

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Big Data: What’s the Hadoopla all about?

Big DataThe latest buzzword dominating business headlines today is “Big Data”. What was once known in past incarnations as Data Processing, shifted to become Data Mining, then transforming into Business Intelligence, and now has finally adopted the name “Big Data”. It’s still unclear to many business managers what Big Data is. A lot of technology managers have a hard time explaining it. All this makes it hard to make the value it promises tangible enough to invest in. The core of the problem is that “Big Data” isn’t just one thing. It’s an umbrella category for a series of technologies and methodologies that have made dramatic strides in innovation and business application, with a core goal of leveraging data to create dramatic and sustainable competitive advantages.[more…]

I’ll set a baseline definition for each of the four main categories implied by the term “Big Data”: data sourcing; data storage and staging; analytics and insight creation; new business models. This should give a non-technology manager a basic understanding that could get them through a cocktail party.

Data Sourcing

This is simply identifying, or in some cases creating, sources of information that can provide, alone or integrated with other data, new insights for a business. New technologies have emerged that make it much easier to source information that wasn’t easy to capture before, like customer interactions. Other technologies have created new fountains of data that businesses can tap into to gain additional insights, such as Twitter and GPS location information. The gap between what the optimal or “dream” data universe has to look like to create a sustainable competitive advantage versus what is currently available to a business is quickly closing. Managers should think big about what information would be game-changers and challenge their technology groups to find it and capture it. In previous posts I’ve recommend a book by Douglas Hubbard called How to Measure Anything which provides a fantastic framework.

Data Storage & Staging

A radical drop in the cost of storage has made the warehousing of large amounts of data a manageable economic proposition for most firms. We now talk about capturing and storing terabytes and petabytes of information. More importantly, new technologies, like the much hyped Hadoop framework, can pull data from clusters of data servers in an extremely efficient manner which solves two major headaches: 1) stored data can be quickly extracted for analysis, in some cases near real-time, and 2) fragmented data from multiple silos can be combined and analyzed together.  Firms like Cloudera and MapR provide cloud software and services that can help in developing the right structure. 

This new kind of infrastructure allows data to reside in large distributed networks that provide speed, perpetual access, and data redundancy, and has been labeled Cloud computing. Cloud services are offered by a growing group of firms that provide simple and scalable services. Two of the best known are Amazon and Rackspace.

Analytics & Insight Creation

What analytics you want to create largely depends on what data you have and what form it takes. An important feature of “Big Data” analytics is its flexibility with both structured and unstructured data. Traditional structured data is organized within set fields and in relational databases, while unstructured and semi-structured data require additional enrichment and organization to allow them to be useful for analysis and insight generation. An experienced analyst, for example, can create algorithms that ferret out useful items found in written text documents, then match them to other relevant data.

There are a variety of analytical tools in the market, most of them very rich with features. The level of sophistication of the tools, and subsequent modeling, used in any analysis depends on the complexity and volume of the data, as well as the kind of insights that are being sought. A common mistake is to procure overly complicated tools and build overly complicated models that don’t improve business outcomes. Managers need to define very clearly up front what kinds of results they want to get.

SAS and R are the standard-bearers for statistical analysis, and the go-to tools when you are looking to find correlations and testing causation in your data. The biggest bang, though, comes from an ability to create visualizations of your analysis, making it easier to digest, remember, communicate, and inspire action. A variety of vendors, such as Spotfire, Tableau, and QlikView, provide visually-driven Business Intelligence software that can be used to create intuitive analysis and dashboards used by managers or salespeople for decision making.

New Business Models

Putting a “Big Data” infrastructure in place at a firm won’t automatically ensure a return on investment. Businesses need to change in order to incorporate Big Data insights into their DNA. In some instances, completely new businesses models have emerged, like in the cases of Amazon and Netflix. In existing businesses though, a new data discipline needs to be put in place. It starts with management articulating clear goals and measures of success, followed by planning and execution of a Big Data plan that is in-line with company culture and talent, and lastly developing incentives and training that promote data reliance.


Despite the hype, Big Data really isn’t anything new. There’s been a renewed interest in the four principal areas that comprise it due to new innovations and impressive results of businesses that have fully adopted it. There is a tremendous opportunity to realize value using these tools, so it’s important to have a strong working knowledge of what they are and have it in the back of your mind as you think about your business strategy.

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Disparity in Technology Investment between Sales and Trading

HighTechnology budgets at Institutional Broker-Dealers have in general been disproportionately focused on the trading side of the business, leaving the sales side with limited technology innovation. This is not to say that much of the technology built doesn’t benefit salespeople. Much of it facilitate the sales workflow, especially when dealing with order tracking, capital, and market data. What has been missing is a meaningful investment in tools that do three things: 1) provide more (and more relevant) client information to salespeople in a consolidated and timely manner; 2) analytic solutions that serve up algorithmically driven insights that can help salespeople better engage clients and provide differentiated service; 3) new ways for salespeople to interact with information and systems, like alerts and mobile solutions.

Consolidated Client Information

Client information at most banks is comprised usually of core client data (addresses, key contacts), internal control data, trade and production data, plus any client interaction data (meetings, calls) that the firm happens to captures. For the later, some firms are disciplined at capturing every interaction, but most only capture parts. There is, however, a great amount of information that can be very useful for salespeople in their dealings with clients. Many salespeople actually spend a significant amount of their time digging through varied internal systems, Bloomberg, Reuters, and the web to find pieces of relevant data that they can use, much of which could be served up in a more consolidated and automated fashion, commingled with basic client information. When looking at a client in their client system or CRM, they could also have client fund holdings and performance data, trends in names or sectors clients are interested in, research readership, and social media data (such as Twitter feeds). For organizations offering multiple asset classes, providing a salesperson relevant activity data from other asset classes can be invaluable, such as providing Equity salespeople data on a client’s corporate bond trading activity.

Analytic Solutions

Sales & Trading organizations have been investing hundreds of millions of dollars in algorithmic analytic and trading technologies. Some of that discipline (and investment capital) should be leveraged to provide more timely and automated insights to salespeople. Specific types of movements in securities or sectors that might interest specific clients, movements in other areas that might be correlated to client interests, and general behavior of different client segments of which a particular salesperson’s clients might fall into. This would give salespeople lot of processed information that provides differentiated insights to offer clients or help better manage a book of clients.

New Ways to Interact with Client Information

A good institutional salesperson in any asset class is skilled at collecting and synthesizing information quickly, either to provide relevant information to their clients or to help them strategically manage their client coverage. Creating efficient ways of getting pertinent information quickly is the key to success. Development of intelligent alerts is one way to serve up relevant activity, analysis and trends. They can simply be an alert that someone else in another product group called on that same client. The more robust the analytical solutions (from point 2) that are in place, the smarter and more relevant the alerts could be, such as a spike in trading for given client segments after a particular event or research published. With current mobile technology, these types of alerts and analysis can be delivered and actioned upon very quickly.

There is a big opportunity for Sales & Trading organizations to greatly differentiate themselves if the right level of investment is made on the Sales side of the organization. This is going to become more critical as innovation in trading technology becomes less and less differentiated across competitors and new regulations constrains the way trading revenue is achieved.

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Five Critical Success Factors for Managers Considering a CRM System

Implementations of CRM, or Customer Relationship Management, systems are notorious for failing to achieve their promise. If you’re considering either implementing your CRM system or upgrading your existing CRM system, here are some guidelines to follow to make sure that you have the most successful implementation.

– Front-line participation: There should be significant participation from front-line business managers from the very start of the project. The most successful CRM implementation that I’ve seen actually had full project leadership coming from front office management, with IT working as subject matter experts and project managers. This isn’t saying that IT managers wouldn’t have the right project leadership skills. CRM systems are probably some of the most idiosyncratic and nuanced technologies that require constant input from a very reluctant user base: salespeople. To get the right requirements that will ensure adoption, there has to be a perception that ownership is within the business, not in IT.[more…]

Culture of information sharing: The right culture of information sharing needs to be in place (within compliance guidelines of course). This is much easier said than done, and for many organizations not very practical. But in organizations where management realizes that bringing together disparate pieces of client information held by salespeople can reveal new opportunities, an effort to change the culture is the best strategy. I’ll detail examples of this in a future post.

Usability: “Usability” is a term used by IT professionals that is often not tangible to non-tech types. In my view, there are two aspects of usability which apply to CRM. The first is intuitiveness, which should be measured by the amount of training needed to get to full use. Less training equals more intuitiveness. The second is workflow integration, which means how well the tools can be integrated into the existing workflow of the user, e.g., adding content to a client record (meeting notes, emails, documents) by simple clicks in email. This area requires the most creativity and expertise to get right. As web and mobile applications become more sophisticated, the expectations of users also increase at a rapid pace.

Data accuracy/integrity: All data-driven systems are only as good as the data within them. CRM data can get corrupted remarkably fast because the source of its key data are from the users, not from a central source. This is a key difference versus other kinds of systems. A lot of thought, and a great deal of expertise, need to be put to bear around this question to achieve a success.

Information integration: I’ve found that CRM information, as useful as it can be to understand a client, when integrated with other systems and data produces incredible insights. Integrating, for instance stock interest information garnered by the sales team with stock and fund performance information can create an interesting product profile that can be actionable. Thinking about how you will maximize the use of your CRM information at the planning stages of implementation creates intense value down the road. Three big questions emerge that change how the system is built and used:

  1. What creative ways can we organize and analyze the data to provide new insights? Your organization probably already captures enough client information to create a competitive advantage, but is not leveraging today.
  2. What sources of information can we find that, when combined with CRM information, provide unique insights?
  3. What other information should client-facing personnel ask for from clients to match with other data sources?
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Measuring Profitability: Initial Questions

Over the past 10 years, the trend of measuring profitability of clients and products within financial companies has gained momentum, with a steep up-tick since the 2008 financial crisis. Managers have become interested, in some cases obsessively so, in understanding what nuclear parts (clients, products, initiatives) of their businesses are contributing to the bottom line and which are taking away from it. It’s become apparent that managing by looking only at business unit or desk level does not provide the right strategic insight necessary to compete effectively. Profitability analysis, when executed correctly, can significantly impact product pricing, resource optimization, process streamlining, and client relationship management.  We’ll talk further about uses and specific methodologies in later posts, but I want to address three main questions that I get asked when clients start looking at implementing a profitability discipline within their firm.[more…]

How complicate and detailed should the analysis be?

It goes without saying that the complexity of the analysis is largely driven by the complexity of the firm or business unit being analyzed. The key thing is to make sure that the analysis drives toward some kind of action, so it’s important to define the key questions you are trying to answer with the results. For example, the level of detail to determine whether a client is getting over-serviced is different from the detail necessary to perform a process reengineering project.

A lot of people, when in the throes of analysis, get bogged down on precision and complexity, which in many cases adds no additional directional insights.  In many cases many interesting insights can be gained from very simple analysis.  I recommend taking a look at a book by Douglas Hubbard called ‘How to Measure Anything’ which gives some useful cases studies.

Should I hire an expert or consulting firm?

I’ve often said that profitability/costing analysis is a specific skillset that is different from other finance or accounting functions. Absolutely it requires a command of the financial accounts, but it also requires a clear understanding of the underlying drivers that impact how the expenses are “consumed” by clients, products, or projects. This requires an understanding (and an ability to model) business process flows. Probably most importantly, it requires an ability to create useful insights from the model results once it has been complete. A consultant or expert in this area are usually very good at ferreting out and mapping underlying business processes and have experience turning the large mound of results data into actionable strategies. They don’t have to completely own the entire profitability initiative, but they can provide invaluable perspective on methodology at the beginning of the project and have an arsenal of profit-enhancing solutions once the profitability results have been created.

Should I bring in an ABC/ABM tool, or can I build it on Excel?

This is a tough question because most managers are extremely hesitant to invest too much at the beginning of a profitability initiative, which is completely understandable.  They want a cheap proof-of-concept first with one or two people, and Excel, which is a fine place to start. I would argue, though, that you should incorporate an ABM tool (such as Acorn ABM or SAS ABM) as soon as humanly possible, for three main reasons:

1)       As the model becomes more and more complicated, with incorporation of more clients, client segment, products, expense groups, and driver data, the harder it is to maintain and manipulate.  In the end, it’s usually one person who understands the model and if they happen to leave, it’s a massive setback.  ABM tools standardize the logic and methodology which make them much easier to endure a transfer of ownership.

2)      Allocation methodologies often lead to multiple allocations across the model, so transparency is lost almost immediately. In the end, you may be able to determine what is profitable or unprofitable, but not why. ABM tools maintain the integrity of multiple allocations, so you can always easily trace the assigned cost (to a client for instance), back to the financial account detail. Reconciliation then becomes a cinch rather than a painful two week exercise.

3)      Version control becomes a big issue as the model gets updated over time with new financial or driver data, or allocation methodologies change. ABM tools allow you to not only better organize and track version of the model, they also allow you to make changes that retroactively impact past models. This is absolutely required if you want to do period-on-period or trend analysis of results.

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