Question

1.what a manager can learn about this article and the conclusion for it, as a leader

Subject :The use of Business Intelligence in the strategic planning and budgeting process

July 21, 2018

By Mara Jos Carranco Villalpando.

The main goal of abusiness engineeris to understand all the components of a company: operations, finance, business strategies, economics, accounting, marketing, and so on. All seen from an engineering angle, using programming tools as well as knowledge of trends in information technologies to have a comprehensive vision of all the functional areas of a company and to be able to identify those that can be improved through the implementation of different technological tools.

Businessengineering isan interdisciplinary branch of engineering, focusing on how national and international business should be designed and managed. It includes a comprehensive vision of the design of companies through the generation of patterns and the generalization of processes and activities in what is now called Company Architecture.

As a student of this career, it is in the interest of the author to explore and expose in this essay the advantages and opportunities as well as identify weaknesses and areas of improvement within the budgeting process of the operation of a business using the applicationof Business Intelligenceto have more reliable information and thus, the result is budgets with lower margins of error.

Business Intelligence (BI) is defined as the set of applications, technology, and processes necessary for the transformation of data into useful information for the decision making of an individual, company or organization.

Business Intelligence takes the data generated by the observation, operation, and experience of the business that by themselves do not provide any type of knowledge or metrics for the use of the resources of the object of study. It is through data refining methods that the information is polished in such a way that it provides a more complete, relational, interdisciplinary vision and therefore, useful to have a better understanding of the financial and administrative situation as well as the efficiency of processes, effectiveness of business systems and other indicators of business performance and thus, make informed decisions supported by information accumulated in an orderly manner.

Within the administrative area of companies, there has been a tendency to automate processes such as inventory control and valuation, production control, purchase and sales control, accounts payable and accounts receivable. However, the process of forecasting and analyzing budgets still represents an obstacle within companies as mentioned by Alan Hart in his 2014 article,Automated Budgeting, Forecasting and Business Intelligence in a Manufacturing Environment, where he indicates that one of the most common practices is to use an Excel spreadsheet despite its capacity limitations and refresh speed.

Likewise, Butler Group, in a study conducted in 2003, highlights the importance of companies recognizing the value of information as an asset. It also says that information has a fundamental role in reducing the uncertainty inherent in decision-making.

Thus, it is possible to identify an opportunity for the integration of information technologies into the decision-making process in the form of the use of Business Intelligence..

WHAT IS BUSINESS INTELLIGENCE?

Business Intelligence is the set of computational and mathematical tools that allow the extraction of data, transformation of these into ordered information and its subsequent upload to the repository of information used by the company, whether databases or any other type of information warehouse.

The concept of BusinessIntelligencewas introduced between the 1970s and 1980s as a reaction or an alternative to the use of transactional systems (OLTP) that is, systems designed to record as many transactions as possible of the company generating huge volumes of data almost impossible to interpret. On the other hand, Business Intelligence enables the consolidation of information through the analysis of patterns of data behavior and thus, generate knowledge for the business.

The value added by the implementation of Business Intelligence techniques in the decision-making process lies in the fact that Business Intelligence results in useful knowledge, which can be generated in real time through predictive models. This knowledge is acquired through the deep and systematic analysis of data generated by the daily operation of the business.

It is important to mention that a Business Intelligence system is as valuable as its data sources because if they are damaged, disordered, not approved or incomplete, the knowledge generated would be less valuable than that knowledge resulting from an analysis of ordered, homologated, homogeneous and available data.

Generally, Business Intelligence is seen as a project of the IT department however, it is important to understand that this is not true since the implementation of Business Intelligence techniques implies a change in the organizational culture in the sense that it gives rise to a reassessment of the information. It is important that information is recognized, in all areas and levels of the company, as an asset detonator of competitive advantages and generator of necessary and enriching knowledge for decision making.

The effect of the implementation of Business Intelligence applications is especially observable in medium and small companies (SMEs) since they are the ones that have greater flexibility in the face of changes. It has been observed that the decision-making process is simpler because changes in these companies take less time.Similarly, the implementation process is more agile since by not having such specific requirements, training is faster compared to the requirements of a large company where an implementation project, on average, usually takes months. Another important factor is that it is currently not necessary to make a significant investment due to the offer that exists of Business Intelligence programs that are not only free, but also, open source and easy to adopt which represents a significant increase in the probability of a simple transition and a complete integration of the system to the business. This is more complicated in larger companies due to the volume of employees and information, the number of different levels that have to be trained, the process of system approvals, adaptation, validation, etc.

Citing the degree work of Alfonso Castro Vzquez,"The need to invest in Business Intelligence tools occurs in an unconventional way since it is difficult to make a cost-benefit case in which an evident monetary gain results after implementing such solutions."

One of the main strategies of integrating Business Intelligence tools into budgeting processes within companies is to do so gradually and consistently with employee practices. This in order to achieve a transition without major obstacles. It is suggested to integrate Business Intelligence software to processes and systems used for the creation of budgets; this ensures greater acceptance of the practice by users. It is also important to design workflow diagrams in order to have an orderly plan and be able to identify obstacles and make appropriate adjustments.

One of the advantages of using Business Intelligence in the budgeting process is the variety in organizing information in such a way that it is possible to easily identify trends and behaviors of costs, processes, production, and movements of the company in general.

In the field of strategic planning, one of the applications of Business Intelligence is the development ofBalanced Scorecardsthat visually expose how inline the business activities are with the mission and vision of the company; it helps to improve communication between the various areas within the company as well as communication with external agents such as shareholders based on in-depth analysis of trends. and the behaviors of the elements of each balanced scorecard perspective.On the reporting side, Business Intelligence also provides many benefits. One of the most important is that it ensures that information is always up to date and therefore decision-makers from executives at the managerial level to those in managerial positions. Also, Business Intelligence tools enable the generation of didactic and dynamic reports that facilitate the interpretation of the information generated by the business through key indicators of the organization and performance of the company, exposed through alerts, graphs, tables, etc., thus contributing to the difficult task of simplifying the decision-making process.

Regarding the budgeting process, the use ofBusiness Intelligencetechniques in the business world has not had as rapid growth as has been observed in areas of marketing and sales, production, inventory valuation, etc. However, the budget planning process can benefit from the integration of Business Intelligence practices since it allows to propose hypothetical scenarios to identify optimal solutions and discard those that do not meet the conditions established by the company's policies or that are not compatible with the strategic objectives.

It is important that during the implementation the objectives of the project are kept in mind, as listed by Alan Hart (2014):

"1.- Create a comprehensive, wide-ranging plan tailored to the organization as well as have the ability to maintain and update said plan.

2.- Obtain accurate and complete budgeted financial statements including a statement of financial position and cash flow statement as well as a significant set of KPIs (key performance indicator) and financial reasons.

3.- Allow management to see completely and precisely the future health of the organization that will lead to reasonable and error-free decisions.".

If a company can base the processes of Strategic Planning and Budget Planning on knowledge generated by Business Intelligence applications in addition to constantly comparing the budgeted against the real, it will obtain all the benefits of Business Intelligence. Regardless of the size of the company, it is important to consider the implementation of this type of technology since the benefit of implementing is high and there are free, open access and open-source tools, which represents an opportunity for improvement in strategic planning processes.

Currently,Gartner Inc.is one of the consulting firms in

most important technological trends. Annually they publish a report on theBusiness Intelligencesoftware market where each product is classified in one of the quadrants of the Gartner Magic Quadrant: leaders, visionaries, challengers, and niche players. In the February 2016 report, leading platforms include Microsoft, Qlik and Tableau. These tools allow you to generate clear and easy-to-interpret reports through dashboards. Among the companies that use Business Intelligence software are Deloitte, Dell, Cornell University, the Dallas Cowboys, Cisco, Gatorade, Heinz, Sony, Tommy Hilfiger, among others. Although this sample of users is small, it can be noted that there is no common denominator among these companies other than the desire to make use of the information and use it to their advantage to improve decision making.

CONCLUSIONS

Strategic planning and budgeting processes are tasks that have a fundamental impact on the operation and direction of companies, however, the common practice is to use processes designed from long ago and that have not been adapted to modern times of significant volumes of information at increasing speeds.

Business Intelligence tools allow companies to have a broader knowledge of the processes and operations within them through visual aids, which facilitates interpretation and communication inside and outside the organization.

The advantages offered by the integration of Business Intelligence to planning processes are: the creation of a comprehensive and high-scope plan, the obtaining of accurate and complete budgeted financial statements and finally, allowing management to have an overview, complete and comprehensive of the state of the business to have better tools for decision making. These advantages, if exploited, can result in competitive advantages within the market, cost reduction, better business practices, better allocation of resources and an improvement in the processes and state of the company.

It is important that organizations are informed about technological trends since in the digital age, information and its correct interpretation are assets of great value from which companies can take advantage or be excluded from the development that potentiates the use of the great technological offer that exists today.