Part 2 – Interview with the TM1 book author. More about TM1

Last Thursday, I posted an interview with the author of the new TM1 book Karsten Oehler. Here is the continuation of the conversation. This part of the interview focuses on the new IBM Cognos TM1 10.1 release.

Christoph Papenfuss: IBM Cognos TM1 10.1 was released in February of 2012. What is so special about this release?

Karsten Oehler: One of the central components of version 10.1 is a new modeling environment. It is called Performance Modeler. It really encourages finance and business professionals to develop their own models. Performance Modeler allows them to develop complex rules and links. You can also easily import data into applications. None of this requires deep technical knowledge.

Christoph Papenfuss: Does Performance Modeler replace Architect?

Karsten Oehler: Performance Modeler is an enhancement. The user can choose which tool to use. Architect is closer to Excel and has some features which are currently not supported by Performance Modeler. This includes dynamic subsets and report generation of Excel sheets from the cube viewer.

Christoph Papenfuss: There is a new desktop tool call Cognos Insight. It looks similar to TM1. Is there a relationship or connection between the products.

Karsten Oehler: Cognos Insight is a very powerful desktop tool that allows business people to conduct analysis, explore data and to develop prototypes. TM1 and Cognos Insight are closely connected – a local TM1 engine is part of Cognos Insight. It uses the same rule syntax and a simplified Turbo-Integrator version for data import. You can also import Cognos Insight models into Performance Modeler and refine them further.

Christoph Papenfuss: What is the advantage of using Cognos Insight in the planning process along with TM1

Karsten Oehler: There are two aspects: Planning applications are often created by prototyping. Cognos Insight is a great tool to express ideas and to develop prototypes. Secondly Cognos Insight can be used an additional front-end for contributors to the planning, budgeting and forecasting process.

TM1 Book
The TM1 book was the big star at the Budapest Finance Forum on May 9th

Christoph Papenfuss: Who should use Cognos Insight as a client for planning and forecasting models?

Karsten Oehler: TM1 has strong tools to support a highly decentralized planning and forecasting process. I recommend to use the IBM Cognos Contributor front-end because it is easy to distribute (non-local installation). With TM1 10.1 you can also integrate web sheets created via the Excel add in. However if somebody is using Insight for data discovery it is very interesting to contribute to the planning process directly within Cognos Insight. Another advantage is the scalability: With Insight it is possible to let the local insight engine do all the calculation which is needed for the planning slice assigned to the user.

Christoph Papenfuss: What do you like best about TM1?

Karsten Oehler: It is definitely the rule language. It is the most compact way to formulate all kinds of calculations to solve all kinds of business problems. The most complex cost and profitability calculations often look pretty easy after modeling them with TM1 rules.

Christoph Papenfuss: Thank you so much, Karsten!

You can purchase the TM1 book on Amazon.com: IBM Cognos TM1 – The Official Guide

About Dr. Karsten Oehler (author of the TM1 book):

Karsten is head of the Performance Management Client Technical Professionals at IBM Germany. Prior to joining IBM, he spent more than 15 years with several international software companies as a product manager, marketing executive, and consultant for financial accounting and business intelligence software. He has published several books and well over 130 articles about business analytics.

Budgeting – Your Northern Star (Guest Post)

A budget plants an iron rod of confidence and accountability into the spine of your business.

I recently blogged about Six Ideas for Setting Successful Budgets:

  1. Budgeting begins with assessing the current business environment
  2. Leave your optimism at the curb
  3. Budgeting must be driven by strategy
  4. Connect the dots
  5. A careless budget will cause more pain
  6. Don’t forget the smell test

Today, I expand on ideas 4 and 5, which deal more with the actual preparation of the budget; the practical challenges.

Connect the dots

Because we assemble budgets at the line item level, we risk believing the process is simply the aggregation of line item budget amounts. This fragmented approach will yield a fragmented result, with little value to you or the business.

Budgets are not forecasts or estimates of what could happen. The budget is your plan of what will happen. Accordingly, the budget process actually starts from the top. A quality budget will tell a complete and coherent story at the highest level – like a navigator’s map, reflecting your point of origin, your destination (goals), the terrain (environment), distance to travel (measure progress), direction, optional routes (when stuff happens) and landmarks (reference points).

Northern Star
The Budget - Your Northern Star?

Getting the big picture requires that you understand the correlation/interaction of its components – the line items. For example, if you are increasing your direct marketing budget, have you also considered?

  • A possible corresponding reduction in display advertising
  • Costs for crafting direct marketing campaigns (usually more work than display ads)
  • Staffing costs for timely follow up on leads form direct marketing campaigns
  • Costs incidental to the staffing increase (tax, benefit, training, etc)
  • Effect of strategy on the fulfillment/sales/collection cycles

There are few items in your budget that truly stand alone. Make your budgeting process worth the effort you are putting into it by connecting all the dots to plot next year’s journey.

A careless budget will cause more pain

Understandably, the budgeting process can feel like a tedious, time consuming and futile effort. “Why set a budget? I can’t control what is going to happen to my business. We respond how we have to respond and spend what we have to spend anyway.”

This attitude will doom your efforts. The very purpose of budgeting is to gain control. As I noted, budgets are not just casual estimations of what might happen. A quality budget plants an iron rod of confidence and accountability into the spine of your business.

Sure, “stuff happens” to your business, but you control how it responds. Succumbing to the belief that budgeting is a pointless exercise will result in a careless effort to “just get it done.” The real pain will come the following year when stuff does happen and the maps (budget) you are using to navigate your business lack a Northern Star to guide you.

This was part 2 of the 2011 budgeting series on the Performance Ideas blog. More to follow soon.

About the author of this post:

Mike Duncan is Partner and co-founder of Bizzeness, LLC. Mike began his career with KPMG and Deloitte. He has been a business owner and advisor for over 30 years serving over 300 businesses in various capacities. Mike focuses on SMB’s with concept development, business modeling, start-up, market adaption, strategy and succession. Mike lives in the Kansas City area. You can contact Mike at mike@bizzeness.com.

Mike has written a prior guest post on this blog.

Why improving your AQ is critical for personal and organizational success

Do you know your AQ? AQ stands for Analytical Quotient. It is a new measure that provides you with insights about your organization’s ability to leverage business analytics. Most importantly, AQ helps you determine how to best go about improving your capabilities. I would highly recommend taking the self-assessment test on the IBM Website. It takes just a few minutes and provides you with very interesting feedback and ideas.

FOUR STAGES & THE NOVICE

IBM found that organizations typically go through four stages with their business analytics programs: Novice, Builder, Leader & Master. Companies that belong to the Novice category are still stuck in a spreadsheet world. And that can be a big problem. Spreadsheets are a great productivity tool, but they are not the right tool for managing your business. That raises the question: what exactly is the problem with being at the Novice stage? Let’s take a look at the Finance department as an example.

WHAT IS THE PROBLEM WITH SPREADSHEETS?

A few years ago, my team started conducting some surveys amongst finance professionals. For this purpose we teamed up with David Axson (co-founder of the Hackett Group, book author). We specifically went after professionals that were not using Performance Management software, yet (i.e. organizations that belong to the Novice category). One of the key things we were interested in was the type of work finance professionals do in these organizations. It quickly appeared that there were five major categories of work. The results from our survey looked like this:

Cognos Finance Survey 2008

The majority of the time is spent on manual tasks such as collecting data (loading data from systems into spreadsheets, copying & pasting, manually entering budgeting numbers, etc..), maintaining spreadsheets (developing worksheets, fixing formulas, aggregating spreadsheet data, Visual Basic programming etc.) and then also developing reports & presentations (creating spreadsheet reports, graphs, Powerpoints etc.). Only about 20% of the overall time is spent on the high-value tasks such as performing in-depth analysis, running what-if scenarios, personal development etc.. A shocking but not a surprising picture. When we present the results to finance professionals we get a lot of head-nods. But I often sense a certain level of resignation as well (“Oh yeah….I know….that’s just the way it is.”).

A COMPLETELY DIFFERENT PICTURE

Statistics are always a bit dry. So we took the data and applied the percentage distribution to a work week. The picture now looks quite interesting. What do you think?

Cognos Finance Survey 2008 - part 2

How does this feel? Same numbers. Just a different perspective. Two key questions come to mind: Can we live with that situation? Would we want to live with this situation? I doubt it. I have been there and didn’t necessarily like this. Sure, it’s nice to play around with spreadsheets knowing that you are indispensable. But is that what we want to get out of our professional lives? Is that why we went to business school? Is that why we spent so many hours studying for the CPA, CMA, CFA exams? This what being at the Novice stage can feel like.

MOVING TO THE NEXT LEVEL

Technology helps shift this picture around tremendously. Business analytics can help you make a lot more time for the important things. What do you think about these insights? Are you familiar with this situation? I would love to hear your thoughts and about your own experiences.