Ask an FEI researcher about...business intelligence. (Resources).

After reading the article "Leveraging BPI Applications to Drive Value" in the May 2002 issue of Financial Executive, I'd like to know: What are the current trends in business intelligence, and where is it heading?

We asked Dean Sorensen, one of the authors of the article, to provide a response (and also refer to the "Special Report" beginning on page 45). Sorensen says that the trend towards integration continues as vendors look for ways to differentiate their products. Corporate Performance Management (CPM) is a term that has evolved to describe applications that have integrated planning, budgeting, reporting and performance management capabilities.

Cartesis (www.cartesis.com) has been a pioneer in integrated financial management systems. Strategic Financial Management (SFM[TM]) integrates strategic planning, budgeting, reporting, consolidation and performance measurement. "Magnitude," its high-end solution, supports SFM.

Recently, Cognos (www.cognos.com) acquired Adaytum (planning and budgeting) to improve its ability to provide CPM. However, vendors such as Hyperion, Armstrong Laing Group and SAS Institute (see table in the third column) are taking this integration to the next level by integrating activity-based costing into their applications. The result: process integration.

Sorensen believes that process integration will become even more important over the coming years as CFOs address four key business trends.

1. Expanding CFO Role

CFOs are increasingly being expected to play a more active role in shaping and executing strategy. The ability to translate strategy into business processes provides the basis to more effectively execute strategy. Moreover, these same capabilities enable organizations to more effectively reduce costs, while simultaneously delivering superior service and value.

2. Sarbanes-Oxley Act of 2002

Financial executives are now under greater scrutiny, with legislation such as Sarbanes-Oxley imposing new requirements. Process integration provides powerful tools to address these growing regulatory requirements.

3. Role of Budgeting

There is growing sentiment that budgeting, in its current form, is not appropriate for today's economy. Many believe that it actually detracts from value. Process integration provides new options that aren't otherwise available.

4. Scarce Investment Capital

In light of current economic conditions, CFOs are seeking a clearer connection between BPI capabilities and the bottom line to justify such investments. Process integration provides the type of benefits that can justify such investments.

The ability for CFOs to address these issues will likely be governed by the BPI application in which they choose to invest.

What does Sorensen recommend? When evaluating potential BPI solutions, focus on how they will help you address the four key business trends listed above, as well as your other business issues. This will keep you focused on evaluating the application as a whole, not just its individual components and the potential value they can create.

RELATED ARTICLE: RECOMMENDATIONS

* Armstrong Laing Group (ALG) www.algsoftware.com/content/products/eposuite.asp will become the newest entrant to the integrated BPI market with the introduction of its balanced scorecard product. This application will be the first to integrate a balanced scorecard with "continuous activity-based planning."

* Hyperion Essbase XTD (www.hyperion.com/products/bi_platform) continues to be one of the most recognized names in this market, being the first vendor to integrate multiple BPI components into one application. Its software enables organizations to translate strategies into plans, monitor execution and provide insight to improve financial and operational performance.

* SAS Business Intelligence (www.sasinstitute.com/technologies/business_intelligence/index.html) is recognized for its data warehousing and analytical capabilities. However, last year's acqusition of ABC Technologies positions it to play a significant role in this market. Moreover, its ability to provide CRM capabilities gives it a competitive edge for those looking for a "one-stop" solution.

William M. Sinnett ([e-mail]) is Manager of Research for Financial Executives Research Foundation (FERF). "Business Performance Intelligence Software," is available at: www.fei.org/rf bookstore/). Dean Sorensen can be reached at 425.260.6817; [e-mail].