Why BARR CPA LLC using Business Inteligence ?
BARR CPA LLC use BI to improve decision making, cut costs, identify new business opportunities for clients as well as identify risk. BI is more than just corporate reporting and more than a set of tools to coax data out of enterprise systems.
Consider the scenario of a company with the goal: "to increase sales of Product A by 15 percent." Instead of merely having a one-dimensional view of the information, a comprehensive activity model can help do a "what if" analysis and determine the goal's impact on many areas, including parts inventory, manufacturing capacity and activity levels, warehouse storage, distribution channels, and customer support. By entering different assumptions into the model – such as "increase price by 10 percent" or "increase units sold by 20 percent" – we can analyze the resulting data to determine what financial or operational impact different assumptions will have on the organization as a whole. We work with the business units to help them understand how to work with the reports or alerts and understand the information being presented.
The Real Value of BI
The real value from Bl, the ability to do business analytics, whether as part of audits to examine reasonableness or to substantiate an account balance or as the controller or outsourced accountant to examine liquidity, compliance with bank covenants, break even points or operating efficiency (e.g. inventory turns); BARR CPA LLC have been doing financial analytics for a long time. The increasing accessibility of internal data ease of use of tools, and increasing sophistication of tools now allows US to move beyond finance-oriented analyses. In fact, we can add value to an organization by helping to design analyses that incorporate non-financial data and correlate them with financial results providing insights into an organization's performance and business drivers.
For example, when working with a car dealership we could analyze their sales by looking at the average price per car sold (financial) and also look at the number of cars sold per month (non-financial). This may identify some seasonality in their car sales but could also show that while the actual dollar revenue earned over several months may be the same, that the actual number of cars sold may be less due to special promotions that were run during the month.
Type of Analysis
This type of analysis can be shifted to help with revenue projections and employee performance management. Knowing the averages of sale price, accessory/add-on sales, service plan sales per car, you can then take your annual sales goal (financial) back into the number of cars that need to be sold (non-financial) to meet that goal. Translate that into the number of cars that a salesperson needs to sell per week and you've got an operational goal that they can understand ;and also one that you can build into performance incentive plans to help motivate them to meet that goal.
Now, this is just the revenue side of the equation. We would also need to analyze the gross margin, inventory, and operating costs aspects. You get the idea, and you can apply the same type of thinking to develop a set of metrics that helps owners and managers think more intelligently about their businesses by using the data from their systems rather than just a "gut feeling:
External data can also be brought into the analysis scope. We use several software tools that provide us with data from a multitude of identified as well as de-identified organizations in a given industry. For example, one allows us to enter financial statement data and a NAICS code for a client and will project a benchmarking report showing how the client compares to other companies of a similar size in the same industry. Another allows us to do the same with a client's tax return data to help benchmark deductions and other financial ratios. We also have tools available if you want to build your own database and perform some custom analyses or apply a special analysis model, often with only limited IT involvement. Using insights from the benchmarking analyses, we can discuss the reasons for the variations with you and help determine if corrective actions or a change in business strategy may be necessary.
Some tools also provide the ability to do "what-if" modeling to help predict the impact of options. For example. With the car sales example above, if the dealership was doing a lot of promotional events to drive sales, essentially using a higher volume but lower price strategy. The advertising inventory and staffing costs for these promotions may be increasing the cost of sales and reducing profitability. Perhaps a change to lower volume of sales, but higher average sales price or higher accessory or service plan sales may maintain the same revenue but decrease cost of sales and thereby increase profitability. Doing the "what if" analyses will help predict the impact of options based on changes to different business drivers. It can also help identify incentives to put in place for employees, like more focus on accessory and sale plan sales vs. number of cars sold, to support the change in strategy.
Performing these types of analyses require us to obtain a better understanding of our clients' business models and operations. BARR CPA LLC long shift their role from one of compliance (financial statements and tax returns) to performance (budgeting, planning, business intelligence, and business strategy). This shift also takes us from "trusted reporter" to "business partner."