Business Management and Information System

How Computers Are Used in Business Management

2012-05-25T12:45:00.000-07:00

Technological improvements in computers have provided many benefits for companies over the past three decades. Computers now play a significant role in several important business functions and business management decisions.

Facts
- According to the Smithsonian Natural Museum of American History, companies have been using computers en masse since 1974 to assist managers with calculations and computations of business information.
Types
- While desktop PCs are the staple computer in business offices, netbooks, Blackberries and iPhones now allow managers to track their employee's productivity and workflow through the Internet.
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Features
- Computers are loaded with software programs designed to collect and report financial information to company management. Companies may also track employee time clock hours or other internal business information through computers.
Functions
- Reporting company sales and internal financial information are the primary functions of computers in business. Managers use this information to decide where to make improvements in operations or invest in new business opportunities.
Potential
- Computers provide companies with the potential to review their operations for defects and streamline business processes. Managers also use computers to report on cost inefficiencies, allowing companies to improve their profit.

Five Bookkeeping Tips for Business Owners

2012-05-19T03:30:00.001-07:00

Adopting some good habits can help stave off costly errors when it comes to record keeping.

BY Eileen P. Gunn | April 20, 2011|

Entrepreneurs keep a lot of the financial details of their business in their heads. Doing so has its advantages: No new software to learn, no danger of a system crash that loses all your data, and you can tweak your budget as often as you need without sitting down at a desk.
But when you don't have a system and some processes in place, unpleasant surprises can pop up, goals can be easily missed and important paperwork forgotten. Getting a better handle on your money can help you to make and keep long-term goals, smooth out the seasonal ups and downs of your cash flow and maybe improve your profits. It can also help you to stay out of trouble with the Internal Revenue Service.
Here are five bookkeeping tips for entrepreneurs.
1. Plan for major expenses.
Why it's helpful: You're less likely to miss business opportunities or have to scramble for a loan when the expenses become unavoidable.

What to do: Put events like a major computer upgrade on the calendar a year in advance or, ideally, three to five years ahead. Acknowledge the seasonal ups and downs, something many entrepreneurs are reluctant to do.
"This helps you to be honest about the fact that it's coming and plan for it," says James LeMay, a director with the accounting firm Daigle & Associates in Boston.
You'll avoid taking money out of the company during the flush periods only to find yourself short in the slower months, when costly projects like upgrading computers or replacing factory components usually happen.

2. Track expenses.
Why it's helpful: You otherwise might some miss tax write-offs and may lose out on others.
What to do: A credit card that you use solely for business can be a basic accounting system, says Raffaele Mari, an accountant in Newport Beach, Calif., who teaches a financial course for entrepreneurs at Pepperdine University.
Most card statements categorize expenses, so you can see which outlays relate to which business activities. If you always use your business credit card for business expenses, you're less likely to pay cash at, say, Staples and lose the receipts, forfeiting tax-time write-offs. Pens and printer paper can add up.
Additionally, Mari says, routinely jot down business trips, lunches, coffee dates and other events with cash outlays in your electronic or paper day planner. This habit can go a long way toward substantiating those items for your tax records in the event of an audit.
"Often on tax returns, those numbers are too round. No one drives exactly 5,000 miles for business in a year, so the IRS knows this is an estimate," Mari says. "In an audit, if you can't substantiate those numbers, the whole category [of write-offs] can get thrown out."
One of his clients provides a link to a Google map for each trip instead of trying to remember to note the mileage for every trip he takes on his odometer. That data, along with a day planner recording the trip, are usually enough record keeping to satisfy the IRS, Mari says.

3. Record deposits correctly.
Why it's helpful: You may be less likely to pay taxes on money that isn't income.
What to do: Adopt a system for keeping your financial activities straight, whether it's a notebook you use consistently, an Excel spreadsheet or software such as Quickbooks. Business owners typically make a variety of deposits into their bank account through the year, including loans, revenue from sales and cash infusions from their personal savings. The trouble, Mari says, is that at the end of the year, you or your bookkeeper might erroneously record some deposits as income, and consequently pay taxes on more money than you've actually made.

4. Set aside money for paying taxes.
Why it’s helpful: The IRS can levy penalties and interest for not filing quarterly tax returns on time.
What to do: Systematically put a portion of money aside throughout the year for taxes. Then note tax deadlines on your calendar, along with prep time if you need it, to make sure you actually make payments when they're due.
Payroll taxes that go unpaid can be especially problematic, Mari says. He often sees cash-crunched entrepreneurs get through a down cycle by dipping into employee withholdings that they should have sent to the IRS.

"If you mess with [payroll taxes], you have a two-fold problem," Mari says. "You haven't paid taxes due and you've taken money that the IRS sees as belonging to your employees. They can be very unforgiving about that."
5. Keep a close eye on your invoices.
Why it's helpful: Late and unpaid bills hurt your cash flow.
What to do: Assign someone in your organizations to track your billing. Then put a process in place for issuing a second invoice, making a phone call and perhaps levying penalties such as extra fees at certain deadlines.
"You want to have a plan for what happens if they're 30, 60 or 90 days late," Mari says.
Some entrepreneurs believe that once they've sent out an invoice, they've taken care of billing. Not so, Mari says. "Every late payment is an interest-free loan and hurts your cash flow."

Importance of Computer in Management

2012-05-19T03:19:00.001-07:00

The use of computers and Information Technology (IT)-based systems in typical businesses has redefined workplace practices, operational metrics and business models. Top management and key business executives have been able to influence the various capabilities of computer-based systems and efficiency software technologies to get a better handle on business operations, channelize employee productivity and address calculated goals. The importance of computers in management cannot be overstated.

Planning

In order to be competitive, mega corporations, large-workforce organizations and even small and medium businesses need to do long range corporate planning in a systematic manner. Such organization development initiatives encompass human resources development, finance and budget allocation, procurement and supply chain, sales and marketing, research and development. Automated business processes, advanced computer systems and allied software applications provide companies with reports, tools and practices to address strategic objectives and the techniques and methods to achieve organizational goals.

Communication

Computer networks connected over an intranet-based system or Web-based environment can communicate with one another. In modern businesses, business owners and enterprise decision makers need employees to communicate instantly with each other, collaborate and share files, information and relevant documents quickly in order to execute work-related tasks and pursuits. Use of e-mail systems, instant messaging tools and more recently social networking applications has also enhanced swifter communication with business partners, customers, suppliers and other key external stakeholders

Transactions Management

Organizations and businesses perform thousands of transactions at varied customer and business partner --facing interfaces. Purchase managers, inventory system professionals and accounts and financial personnel need to keep track of invoices, purchase orders, payment gateways on organization websites and all transactions at the operational level. Computer systems integrate varied transaction processes and activities and facilitate real-time tracking of transactions. IT applications speed the process of transaction activities and help in calculations, generation of accurate summaries and reports.

Decision Making

In contemporary businesses, gigabytes and masses of data and information is generated on a daily basis. Computers, IT systems and allied software programs help companies to classify, arrange, systematize and analyze information. Use of CRM solutions, Enterprise Resource Planning (ERP) systems Management Information Systems (MIS) and database systems enable companies to operationally manage business processes and functional areas. Market intelligence, sales reports and customer insights generated from such systems aid business managers, top management and project heads in important decision making processes.

Improve Productivity

One of the primary purposes of deploying large-scale computer systems, software, networking and IT tools is to gain productivity on all levels in an organization. All departments, manufacturing and production facilities and offshore centers should be able to leverage the capabilities and of modern IT systems and technologies and function more effectively and efficiently. Used strategically, computers streamline employee workflows, operational activities and functional processes, ensure better control in business management and impact the bottom-line.

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Sample Marketing Plans

2012-04-25T14:59:00.000-07:00

Here is some ideas and plans with useful links:

Getting ready to create a marketing plan? Finding a sample plan for a similar company can be a great place to start. Get inspired with great example plans from our collection.

Top marketing plans

The following plans were created using Sales and Marketing Pro. With our inexpensive Sales and Marketing Software, you can edit and update these sample plans directly to produce your marketing plan faster and easier, or create your own plans from scratch.

Accounting and Bookkeeping Services Marketing Plan
Sorcerer's Accountant
Business Employee Trainer Marketing Plan
College Knowledge Centre
Business Operations Consultant Marketing Plan
Turnaround Consultant
Catering and Ballroom Rental Marketing Plan
Sumptuous Cuisine Catering
Education Marketing Plan
Allendale Language School
Equipment Manufacturer Marketing Plan
Equipment Manufacturer
Hotel and Motel Marketing Plan
The Drowzey Hotel
Houseboat Rental Marketing Plan
Houses on the Lake
Inventory Control Software Marketing Plan
Software Company
Jewelry Artisan Marketing Plan
MoraDora Jewelry
Locally Produced Clothing Retailer Marketing Plan
Local Threads
Marketing Coach Marketing Plan
Marketing Coach
Nonprofit Business Training Services Marketing Plan
Riverton Business Accelerator
Organic Bakery Marketing Plan
Orti's Organic Bakery
Personal Insurance Agent Marketing Plan
Plynthe Insurance
Personal Organization Consultant Marketing Plan
Declutter Coaches
Plumbing Company Marketing Plan
Plumbing Company
Portrait Photographer Marketing Plan
Ofeeld Photography
Real Estate Marketing Plan
Titicus Realtors
Remodeling Contractor Marketing Plan
Remodeling Contractor
Restaurant Marketing Plan
Neon Memories Diner
Sheet Music Website Marketing Plan
Winning Score
Sports and Fitness Club Marketing Plan
Jamestown Sports and Fitness
Toilet Rebate Promotion Marketing Plan
Toilet Promo
Tutoring Service Marketing Plan
Tutors by the Numbers
Window Cleaning Marketing Plan
Window Cleaning

How to Market Your Business

2012-04-25T14:57:00.001-07:00

Marketing strategies and sales ideas

No matter what business you’re in, you rely on customers and sales to bring in revenue. How are you going to do it efficiently? Start with a good marketing plan, then implement it with social media marketing, email marketing, and more.

The Essential Contents of a Marketing Plan

by TIM BERRY

Every marketing plan has to fit the needs and situation. Even so, there are standard components you just can’t do without. A marketing plan should always have a situation analysis, marketing strategy, sales forecast, and expense budget.

Situation Analysis: Normally this will include a market analysis, a SWOT analysis (strengths, weaknesses, opportunities, and threats), and a competitive analysis. The market analysis will include a market forecast, segmentation, customer information, and market needs analysis.
Marketing Strategy: This should include at least a mission statement, objectives, and focused strategy including market segment focus and product positioning.
Sales Forecast: This would include enough detail to track sales month by month and follow up on plan-vs.-actual analysis. Normally a plan will also include specific sales by product, by region or market segment, by channels, by manager responsibilities, and other elements. The forecast alone is a bare minimum.
Expense Budget: This ought to include enough detail to track expenses month by month and follow up on plan-vs.-actual analysis. Normally a plan will also include specific sales tactics, programs, management responsibilities, promotion, and other elements. The expense budget is a bare minimum.

Are They Enough?

These minimum requirements above are not the ideal, just the minimum. In most cases you’ll begin a marketing plan with an Executive Summary, and you’ll also follow those essentials just described with a review of organizational impact, risks and contingencies, and pending issues.

Include a Specific Action Plan

You should also remember that planning is about the results, not the plan itself. A marketing plan must be measured by the results it produces. The implementation of your plan is much more important than its brilliant ideas or massive market research. You can influence implementation by building a plan full of specific, measurable and concrete plans that can be tracked and followed up. Plan-vs.-actual analysis is critical to the eventual results, and you should build it into your plan.

Outline for a Marketing Plan

The exact nature of your plan, and your marketing situation, dictates its contents. You add detail or take it away to suit your needs.

In the real world you’ll want to customize your outline according to whether you are selling products or services, to businesses or consumers, or you’re a nonprofit organization. Although the outline does change in some respects as a result, this is a good standard sample outline for a basic marketing plan.

Expanded plan outline

1.0 Executive Summary

2.0 Situation Analysis

2.1 Market Summary

2.1.1 Market Demographics
2.1.2 Market Needs
2.1.3 Market Trends
2.1.4 Market Growth

2.2 SWOT Analysis

2.2.1 Strengths
2.2.2 Weaknesses
2.2.3 Opportunities
2.2.4 Threats

2.3 Competition
2.4 Services
2.5 Keys to Success
2.6 Critical Issues
2.7 Channels
2.8 Macroenvironment

3.0 Marketing Strategies

3.1 Mission
3.2 Marketing Objectives
3.3 Financial Objectives
3.4 Target Marketing
3.5 Positioning
3.6 Strategy Pyramids
3.7 Marketing Mix

3.7.1 Services and Service Marketing
3.7.2 Pricing
3.7.3 Promotion
3.7.4 Service
3.7.5 Channels of Distribution

3.8 Marketing Research

4.0 Financials, Budgets, and Forecasts

4.1 Break-even Analysis
4.2 Sales Forecast

4.2.1 Sales Breakdown 1
4.2.2 Sales Breakdown 2
4.2.3 Sales Breakdown 3

4.3 Expense Forecast

4.3.1 Expense Breakdown 1
4.3.3 Expense Breakdown 2
4.3.3 Expense Breakdown 3

4.4 Linking Sales and Expenses to Strategy
4.5 Contribution Margin

5.0 Controls

5.1 Implementation Milestones
5.2 Marketing Organization
5.3 Contingency Planning

Business Management

2012-04-25T14:44:00.001-07:00

Existing Companies Need Planning Too

by Tim Berry

Does your company have an annual strategic plan? Does your company develop an annual plan to polish its strategy, focus on main priorities, and manage its cash?

Every business needs to plan
Unfortunately, there is a myth that associates planning with start-ups. That’s particularly common in the United States. Because of that myth, inertia, putting out fires, and related reasons, a lot of businesses miss out on the opportunity to manage themselves a bit better.

As an owner or manager of a small or medium business, can you afford not to plan? Do you leave the annual plan for the large businesses, and let your business depend on reacting to events? Or do you want to plan for priorities, and manage your growth proactively. That’s a leading question, of course, the answer is obvious.

You could call it strategic plan, annual plan, operational plan; the name doesn’t matter as much as the management of it. While these kinds of plans are common in larger enterprises, they are surprisingly rare in small and medium business.

Benefits

Guide your growth: Your business will grow or not depending on a lot of different factors, including overall economic trends, location, specific market needs, hard work, and other elements. Businesses that plan do it to guide and influence their growth, so that they move proactively towards defined objectives rather than just reacting to business events.
Manage priorities: Strategy is focus. Allocate resources where they will do the most good. Work towards your strengths and away from your weaknesses. Develop the company by doing the most important things, according to your long-term objectives.
Assign responsibilities: A plan gives you a place to develop organizational responsibilities.
Track progress: Think of a plan as a business positioning device. With a plan, you can track your progress towards goals, measure results, and manage the business. Without a plan, how do you tell whether or not you are moving in the right direction. What do you measure against?
Plan for cash: Profits are not cash, and cash is not intuitive. You spend cash, you don’t spend profits. However, businesses don’t plan well for cash, and they need to. That may not sound strategic, but it is. It is also the core of an operations plan, and an annual plan. Whatever else, you have to plan for cash.

Main elements
Regardless of the name you use, strategic plan or annual plan or operational plan, the vast majority of these plans include some or all of the following main points:

High-level strategy: Strategy is focus. It guides your growth. Strategy assigns priorities. Of the whole range of possible market segments, and the whole range of services and possible sales and marketing activities, which are your main priorities? Strategy is often a matter of understanding when and how to say no, selecting opportunities.
Specific responsibilities, activities, deadlines, and budgets: We call these milestones. They are the bricks and mortar of business planning, critical to business success.
Financial plan: One of the most important gains from an annual plan is the financial plan, which of course hinges on cash flow. A business needs to stress its priorities by making sure they get the right amount of money. Growth costs cash.

Business Startup Strategy

2012-04-25T14:27:00.002-07:00

by Greg Balanko-Dickson

I strongly suggest that would-be entrepreneurs do a business plan. As a result of completing the plan you will be much better prepared and know whether or not your business idea is feasible. Try the following article for a short-cut. However, I caution you on following a short-cut unless you have substantial experience or knowledge about your area. Proceed with caution without a business plan!

How is your business unique, and why will your goods or services appeal to customers? What are the primary differences between your company and your competitors? What are the driving factors to choose your business over another?

In other words, what is the underlying reason a customer would do business with your company?

1) Define Your Business and Vision

Defining your vision is important. It will become the driving force of your business. Here are questions that will help you clarify your vision:

Who is the customer?
What business are you in?
What do you sell (product/service)?
What is your plan for growth?
What is your primary competitive advantage?

2) Write Down Your Goals

Create a list of goals with a brief description of action items. If your business is a start up, you will want to put more effort into your short-term goals. Often a new business concept must go through a period of research and development before the outcome can be accurately predicted for longer time frames.

Create two sets of goals:

Short term: range from six to 12 months.
Long term: can be two to five years.

Explain, as specifically as possible, what you want to achieve. Start with your personal goals. Then list your business goals. Answer these questions:

As the owner of this business, what do you want to achieve?
How large or small do you want this business to be?
Do you want to include family in your business?
Staff: do you desire to provide employment, or perhaps, you have a strong opinion on not wanting to manage people.
Is there some cause that you want the business to address?
Describe the quality, quantity and/or service and customer satisfaction levels.
How would you describe your primary competitive advantage?
How do you see the business making a difference in the lives of your customers?

3) Understand Your Customer

It is not realistic to expect you can meet the needs of everyone, no business can. Choose your target market carefully. Overlook this area, and I guarantee you will be disappointed with the performance of your business. Get this right and you will be more than pleased with the results.

Needs: what unmet needs do your prospective customers have? How does your business meet those needs? It is usually something the customer does not have or a need that is not currently being met. Identify those unmet needs.
Wants: think of this as your customer’s desire or wish. It can also be a deficiency.
Problems: remember people buy things to solve a specific problem. What problems does your product or service solve?
Perceptions: what are the negative and positive perceptions that customers have about you, your profession and its products or services? Identify both the negative and positive consequences. You will be able to use what you learn when you start marketing and promoting your business.

4) Learn From Your Competition

You can learn a lot about your business and customers by looking at how your competitors do business. Here are some questions to help you learn from your competition and focus on your customer:

What do you know about your target market?
What competitors do you have?
How are competitors approaching the market?
What are the competitor’s weaknesses and strengths?
How can you improve upon the competition’s approach?
What are the lifestyles, demographics and psychographics of your ideal customer?

5) Financial Matters

How will you make money? What is your break-even point? How much profit potential does your business have? Take the time to invest in preparing financial projections.

These projections should take into account the collection period for your accounts receivables (outstanding customer accounts) as well as the payment terms for your suppliers. For example, you may pay your bills in 30 days, but have to wait 45-60 days to get paid from your customers.

A cash flow projection will show you how much working capital you will need during those “gaps” in your cash position.

I recommend thinking about these six key areas:

Start up Investment
Assumptions
Running Monthly Overhead
Streamlined Sales Forecast
Cumulative Cash
Break-even

6) Identify Your Marketing Strategy

There are four steps to creating a marketing strategy for your business:

Identify All Target Markets: define WHO is your ideal customer or target market. Most companies experience 80% of their business from 20% of their customers. It makes sense then to direct your time and energy toward those customers who are most important.
Qualify the Best Target Markets: the purpose of this step is to further qualify and determine which customer profile meets the best odds of success. The strategy is to position your business at the same level as the majority of the buyers you are targeting. It is critical to figure out who your best customers are and how to best position your company in the marketplace.
Identify Tools, Strategies and Methods: a market you cannot access is a market you cannot serve. Marketing is the process of finding, communicating and educating your primary market about your products and services. Choose a combination of tools and strategies, that when combined, increase your odds of success.
Test Marketing Strategy and Tools: the assumptions we do not verify are typically the ones that have the potential to create business problems. Take the time to test all business assumptions, especially when you are making major expenditures.

About Greg Balanko-Dickson

Greg is a small business coach and consultant who has worked with hundreds of small business owners and entrepreneurs in over 20 industries. He fills the gap between the lawyers, accountants, web developers, marketing and technology professionals and specializes in business start up, planning, turn-around and expansion. Greg distributes free information about small businesses on his site:http://www.smallbusinesstransitions.com/

A Simple Plan Of Business

2012-04-25T13:27:00.000-07:00

This business plan is written by Tim Berry

Tim Berry is Founder and President of Palo Alto Software and a renowned planning expert. He is listed in the index of "Fire in the Valley", by Swaine and Freiberger, the history of the personal computer industry. Tim contributes regularly to the bplans blog, the Huffingtonpost.com as well as his own blogs, Planning, Startups, Stories, Up and Running, and others. His full biography is available at timberry.com.

Tim Berry says:

Business advisors, experienced entrepreneurs, bankers, and investors generally agree that you should develop a business plan before you start a business. A plan can help you move forward, make decisions, and make your business successful. However, not all business plans are the same, not every business needs the same level of detail. You might develop a fairly simple plan first as you start a small business, and that might be enough for you. You can also start simple and then elaborate as you prepare to approach bankers or investors.

For a simple example, imagine a woman making jewelry at home and selling it at a local flea market on the weekend. A business plan could give her a chance to step back from the normal flow and look at ways to develop and improve the business. The planning process should help her understand her business. It should help her define what she wants from the business, understand what her customers want, and decide how to optimize her business on her own terms. She might benefit from developing a simple sales and expense forecast, maybe even a profit and loss, so she can plan how to use and develop her resources. She might not need to create detailed cash flow, balance sheet, and business ratios. A simple plan may be just what she needs to get going.

This first stage of a plan, that we call the Concept Kick-Start, focuses only on a few starter elements. The Mission Statement, Keys to Success, Market Analysis, and Break-Even Analysis give you a critical head start toward understanding your business.

However, not all startups are that simple. Many of them need product development, packaging, retail fittings and signage, office equipment, websites, and sometimes months or even years of payroll before the sales start. Unless you’re wealthy enough to finance these expenditures on your own, then you’ll need to deal with bank loans or investors or both; and for that you’ll need a more extensive business plan. Startup company or not, the plan has to meet expectations.

One suggestion for getting started is to develop your plan in stages that meet your real business needs. A few key text topics might be enough to discuss the plan with potential partners and team members, as a first phase. You may well want to add a basic sales and expense forecast, leading to profit and loss, as next phase. Adding business numbers helps you predict business flow and match spending to income.

This might be an intermediate plan, incorporating a more extensive outline and business analysis:

Outline	Topic	Table	Chart
1.0	Executive Summary		Highlights
1.1	Objectives
1.2	Mission
1.3	Keys to Success
2.0	Company Summary	Start-up	Start-up
3.0	Product Description
4.1	Market Segmentation
4.2	Target Market Segment Strategy
4.3	Market Needs
4.4
5.0	Strategy and Implementation Summary
5.1	Competitive Edge
5.2	Sales Strategy	Sales Forecast
6.0	Management Summary
7.0	Financial Plan
7.1		Break-even	Break-even
7.2	Projected Profit and Loss
7.3	Projected Cash Flow	Cash Flow	Cash Flow

Ultimately, the choice of plan isn’t based as much on the stage of business as it is on the type of business, financing requirements, and business objective. Here are some important indicators of the level of plan you’ll need, even as a startup:

§ Some of the simpler businesses keep a plan in the head of the owner, but every business has a plan. Even a one-person business can benefit from creating a plan document with ideas written down, because the process of producing a plan is useful and valuable.

§ As soon as a second person is involved, the need for planning multiplies. The plan is critical for communicating values, goals, strategies, and detailed implementation.

§ As soon as anybody outside the company is involved, then you have to provide more information. When a plan is for internal use only, you may not need to describe company history and product features, for example. Stick to the topics that add value, that make you think, that help support decisions. When you involve people outside the company, then you need to provide more background information as part of the plan.

§ For discussion purposes, text is enough to get a plan started. Try describing your mission, objective, keys to success, target market, competitive advantage, and basic strategies. How well does this cover your business idea?

§ Can you live without a sales and expense forecast? Sometimes the one-person business keeps numbers in its (the owner’s) head. However, it’s much easier to use some tools that can put the numbers in front of you, and add and subtract them automatically. That’s where a plan helps.

§ Do you really know your market? A good market analysis can help you see opportunities that might not otherwise be obvious. Understand why people buy from you. What are the needs being served? How many people are out there, as potential customers?

§ Do you manage significant amounts of inventory? That makes your cash management more complicated, and usually requires a more sophisticated plan. You need to buy inventory before you sell it.

§ Do you sell on credit? If you are a business selling to businesses, then you probably do have to sell on credit, and that normally means you have to manage money owed to you by your customers, called accounts receivable. Making the sale is no longer the same thing as getting the money. That usually requires a more sophisticated plan.

§ Do you do your taxes on a cash basis, or accrual basis? If you don’t know, and you are a very small (one person, maybe 2-3 people) business, then you’re likely to be on a cash basis. That makes your planning easier. However, most businesses big enough to work with a CPA and have separate tax statements use accrual accounting because they want to deduct expenses as they are incurred, even if they aren’t fully paid for. By the time you are using accrual accounting, you’ll probably need more sophisticated cash flow tools, and a more extensive business plan.

§ As you approach banks and other lending institutions, expect to provide more detail on personal net worth, collateral, and your business’ financial position. Some banks will accept a very superficial business plan as long as the collateral looks good. Others will demand to see detailed monthly projections. No bank can lend money on a business plan alone; that would be against banking law. But a good bank wants to see a good plan.

§ If you’re looking for venture investment, take a good look at your plan. Professional investors will expect your plan to provide proof, not just promises. They’ll want to see market data, competitive advantage, and management track records. They’ll want to see robust and comprehensive financial projections. True, you’ll hear stories about investors backing new companies without a plan, but those are the exceptions, not the rule.

So, however you cut it, your business plan is very important, even at the early startup stage, and even if you can keep it in your head. Before you purchase business stationery, telephones, or rent a location, you should do a business plan.

Accounting

2012-04-10T11:17:00.004-07:00

The universal meaning of an audit is an assessment of a person, business, scheme, procedure, enterprise, product, System and System. The expression most commonly refers to audits in accounting, but same concept also exist in project management, Business Management, quality and Quantity management, construction management and energy preservation.

Accounting Information

The Performance of Audits is to determine the strength and reliability of information about the business, it also provide a judgment of a system's internal control. The purpose of an audit is to convey an opinion of the person who is running the business, organization or any other system in question, under costing based on work done on a trial basis.

Due to constraint, an audit seeks to provide only sound guarantee that the statements are free from material error. therefore, statistical sampling is often adopted in audits. In the case of financial audits, a set of financial statements are said to be true and fair when they are free of material misstatements - a concept predisposed by both quantitative (numerical) and qualitative factors. But recently, the argument that auditing should go beyond just True and fair is gaining momentum. And PCAOB has come out with a concept release on the same.

Auditing is a essential part of accounting. usually, audits were mainly associated with gaining information about financial systems and the financial records of a organization, company or a business. However, recent auditing has begun to include non-financial subject areas, such as Information system performance, safety and security, and other environmental concerns. With nonprofit organizations and government agencies, there has been an increasing need for performance audits, examining their success in satisfying mission objectives. As a result, there are now audit professionals who specialize in information systems audits and security audits,

The process for verifying the rate of producing and manufacturing of any article, on the basis of accounts measuring the use of material, labour or other items of cost. In simple words the term, cost audit, means a systematic and accurate verification of the cost accounts and records, and checking for adherence to the cost accounting objectives. According to the Institute of Cost and Management Accountants of Pakistan, a cost audit is "an examination of cost accounting records and verification of facts to ascertain that the cost of the product has been arrived at, in accordance with principles of cost accounting."

An audit must hold fast to generally accepted standards established by governing bodies. These standards assure third parties or external users that they can rely upon the auditor's opinion on the fairness of financial statements, or other subjects on which the auditor expresses an opinion.

The Definition for Audit and Assurance Standard AAS-1 by the Institute of Chartered Accountants of India (ICAI) - "Auditing is the independent examination of financial information of any entity, whether profit oriented or not, and irrespective of its size or legal form, when such an examination is conducted with a view to expressing an opinion thereon."

Integrated audits

In the US, audits of publicly traded companies are governed by rules laid down by the Public Company Accounting Oversight Board (PCAOB), which was established by Section 404 of the Sarbanes-Oxley Act of 2002. Such an audit is called an integrated audit, where auditors, in addition to an opinion on the financial statements, must also express an opinion on the effectiveness of a company's internal control over financial reporting, in accordance with PCAOB Auditing Standard No. 5.

There are also new types of integrated auditing becoming available that use unified compliance material (see the unified compliance section in Regulatory compliance). Due to the increasing number of regulations and need for operational transparency, organizations are adopting risk-based audits that can cover multiple regulations and standards from a single audit event. This is a very new but necessary approach in some sectors to ensure that all the necessary governance requirements can be met without duplicating effort from both audit and audit hosting resources.

Assessments

The purpose of an assessment is to measure something or calculate a value for it. Although the process producing an assessment may involve an audit by an independent professional, its purpose is to provide a measurement rather than to express an opinion about the fairness of statements or quality of performance.

As a general rule, audits should always be an independent evaluation that will include some degree of quantitative and qualitative analysis whereas an assessment implies a less independent and more consultative approach.

Auditors

Auditors of financial statements can be classified into two categories:

External auditor / Statutory auditor is an independent firm engaged by the client subject to the audit, to express an opinion on whether the company's financial statements are free of material misstatements, whether due to fraud or error. For publicly-traded companies, external auditors may also be required to express an opinion over the effectiveness of internal controls over financial reporting. External auditors may also be engaged to perform other agreed-upon procedures, related or unrelated to financial statements. Most importantly, external auditors, though engaged and paid by the company being audited, are regarded as independent auditors.

The most used external audit standards are the US GAAS of the American Institute of Certified Public Accountants; and the ISA International Standards on Auditing developed by the International Auditing and Assurance Standards Board of the International Federation of Accountants

Internal auditors are employed by the organization they audit. They perform various audit procedures, primarily related to procedures over the effectiveness of the company's internal controls over financial reporting. Due to the requirement of Section 404 of the Sarbanes Oxley Act of 2002 for management to also assess the effectiveness of their internal controls over financial reporting (as also required of the external auditor), internal auditors are utilized to make this assessment. Though internal auditors are not considered independent of the company they perform audit procedures for, internal auditors of publicly-traded companies are required to report directly to the board of directors, or a sub-committee of the board of directors, and not to management, so to reduce the risk that internal auditors will be pressured to produce favorable assessments.

The most used Internal Audit standards are those of the Institute of Internal Auditors

Consultant auditors are external personnel contracted by the firm to perform an audit following the firm's auditing standards. This differs from the external auditor, who follows their own auditing standards. The level of independence is therefore somewhere between the internal auditor and the external auditor. The consultant auditor may work independently, or as part of the audit team that includes internal auditors. Consultant auditors are used when the firm lacks sufficient expertise to audit certain areas, or simply for staff augmentation when staff are not available.

Quality auditors may be consultants or employed by the organization.

Quality audits

Quality audits are performed to verify conformance to standards through review of objective evidence. A system of quality audits may verify the effectiveness of a quality management system. This is part of certifications such as ISO 9001. Quality audits are essential to verify the existence of objective evidence showing conformance to required processes, to assess how successfully processes have been implemented, for judging the effectiveness of achieving any defined target levels, providing evidence concerning reduction and elimination of problem areas and are a hands-on management tool for achieving continual improvement in an organization.

To benefit the organization, quality auditing should not only report non-conformance and corrective actions but also highlight areas of good practice and provide evidence of conformance. In this way, other departments may share information and amend their working practices as a result, also enhancing continual improvement.

Project Management

Projects can undergo 2 types of audits:

Regular Health Check Audits: The aim of a regular health check audit is to understand the current state of a project in order to increase project success.

Regulatory Audits: The aim of a regulatory audit is to verify that a project is compliant with regulations and standards. Best practices of NEMEA Compliance Center describe that, the regulatory audit must be accurate, objective, and independent while providing oversight and assurance to the organization.

Energy audits

An energy audit is an inspection, survey and analysis of energy flows for energy conservation in a building, process or system to reduce the amount of energy input into the system without negatively affecting the output(s).

Operations Audit

Operations audit is examination of the operations of the client’s business. In this audit the auditor thoroughly examines the efficiency, effectiveness and economy of the operations with which the management of the entity (client) is achieving its objective. The operational audit goes beyond the internal controls issues since management does not achieve its objectives merely by compliance of satisfactory system of internal controls. Operational Audit covers any matters which may be commercially unsound. The Objective of operational audit is to examine Three E’s, namely Effectiveness – doing the right things with least wastage of resources. Efficiency – performing work in least possible time. Economy – balance between benefits and costs to run the operations

Finance

2012-04-07T05:20:00.001-07:00

Finance is often defined simply as the management of money or “funds” management. Modern finance, however, is a family of business activity that includes the origination, marketing, and management of cash and money surrogates through a variety of capital accounts, instruments, and markets created for transacting and trading assets, liabilities, and risks. Finance is conceptualized, structured, and regulated by a complex system of power relations within political economies across state and global markets. Finance is both art (e.g. product development) and science (e.g. measurement), although these activities increasingly converge through the intense technical and institutional focus on measuring and hedging risk-return relationships that underlie shareholder value. Networks of financial businesses exist to create, negotiate, market, and trade in evermore-complex financial products and services for their own as well as their clients’ accounts. Financial performance measures assess the efficiency and profitability of investments, the safety of debtors’ claims against assets, and the likelihood that derivative instruments will protect investors against a variety of market risks.
The financial system consists of public and private interests and the markets that serve them. It provides capital from individual and institutional investors who transfer money directly and through intermediaries (e.g. banks, insurance companies, brokerage and fund management firms) to other individuals, firms, and governments that acquire resources and transact business. With the expectation of reaping profits, investors fund credit in the forms of (1) debt capital (e.g. corporate and government notes and bonds, mortgage securities and other credit instruments), (2) equity capital (e.g. listed and unlisted company shares), and (3) the derivative products of a wide variety of capital investments including debt and equity securities, property, commodities, and insurance products. Although closely related, the disciplines of economics and finance are distinctive. The “economy” is a social institution that organizes a society’s production, distribution, and consumption of goods and services,” all of which must be financed. Economists make a number of abstract assumptions for purposes of their analyses and predictions. They generally regard financial markets that function for the financial system as an efficient mechanism. In practice, however, emerging research is demonstrating that such assumptions are unreliable. Instead, financial markets are subject to human error and emotion. New research discloses the mischaracterization of investment safety and measures of financial products and markets so complex that their effects, especially under conditions of uncertainty, are impossible to predict. The study of finance is subsumed under economics as financial economics, but the scope, speed, power relations and practices of the financial system can uplift or cripple whole economies and the well-being of households, businesses and governing bodies within them—sometimes in a single day.
Three overarching divisions exist within the academic discipline of finance and its related practices: 1) personal finance: the finances of individuals and families concerning household income and expenses, credit and debt management, saving and investing, and income security in later life, 2) corporate finance: the finances of for-profit organizations including corporations, trusts, partnerships and other entities, and 3) public finance: the financial affairs of domestic and international governments and other public entities. Areas of study within (and the interactions among) these three levels affect all dimensions of social life: politics, taxes, art, religion, housing, health care, poverty and wealth, consumption, sports, transportation, labor force participation, media, and education. While each has a vast accumulated literature of its own, the effects of macro and micro level financing that mold and impact these and other domains of human and societal life typically have been treated by researchers as “policy,” “welfare,” “work,” “stratification,” and so forth, or have been largely unexplored. Recent research in "behavioral finance" is promising, albeit a relative newcomer, to the existing body of financial research that focuses primarily on measurement.
Loans have become increasingly packaged for resale, meaning that an investor buys the loan (debt) from a bank or directly from a corporation. Bonds are debt instruments sold to investors for organizations such as companies, governments or charities. The investor can then hold the debt and collect the interest or sell the debt on a secondary market. Banks are the main facilitators of funding through the provision of credit, although private equity, mutual funds, hedge funds, and other organizations have become important as they invest in various forms of debt. Financial assets, known as investments, are financially managed with careful attention to financial risk management to control financial risk. Financial instruments allow many forms of securitized assets to be traded on securities exchanges such as stock exchanges, including debt such as bonds as well as equity in publicly traded corporations.
Central banks, such as the Federal Reserve System banks in the United States and Bank of England in the United Kingdom, are strong players in public finance, acting as lenders of last resort as well as strong influences on monetary and credit conditions in the economy.

Techniques and sectors of the financial industry

An entity whose income exceeds its expenditure can lend or invest the excess income. On the other hand, an entity whose income is less than its expenditure can raise capital by borrowing or selling equity claims, decreasing its expenses, or increasing its income. The lender can find a borrower, a financial intermediary such as a bank, or buy notes or bonds in the bond market. The lender receives interest, the borrower pays a higher interest than the lender receives, and the financial intermediary earns the difference for arranging the loan.
A bank aggregates the activities of many borrowers and lenders. A bank accepts deposits from lenders, on which it pays interest. The bank then lends these deposits to borrowers. Banks allow borrowers and lenders, of different sizes, to coordinate their activity.
Finance is used by individuals (personal finance), by governments (public finance), by businesses (corporate finance) and by a wide variety of other organizations, including schools and non-profit organizations. In general, the goals of each of the above activities are achieved through the use of appropriate financial instruments and methodologies, with consideration to their institutional setting.
Finance is one of the most important aspects of business management and includes decisions related to the use and acquisition of funds for the enterprise.
In corporate finance, a company's capital structure is the total mix of financing methods it uses to raise funds. One method is debt financing, which includes bank loans and bond sales. Another method is equity financing - the sale of stock by a company to investors, the original shareholders of a share. Ownership of a share gives the shareholder certain contractual rights and powers, which typically include the right to receive declared dividends and to vote the proxy on important matters (e.g., board elections). The owners of both bonds and stock, may be institutional investors - financial institutions such as investment banks and pension funds — or private individuals, called private investors or retail investors.

Personal finance

Questions in personal finance revolve around

How can people protect themselves against unforeseen personal events, as well as those in the external economy?
How can family assets best be transferred across generations (bequests and inheritance)?
How does tax policy (tax subsidies or penalties) affect personal financial decisions?
How does credit affect an individual's financial standing?
How can one plan for a secure financial future in an environment of economic instability?

Personal financial decisions may involve paying for education, financing durable goods such as real estate and cars, buying insurance, e.g. health and property insurance, investing and saving for retirement.
Personal financial decisions may also involve paying for a loan, or debt obligations.

Corporate finance

Managerial or corporate finance is the task of providing the funds for a corporation's activities (for small business, this is referred to as SME finance). Corporate finance generally involves balancing risk and profitability, while attempting to maximize an entity's wealth and the value of its stock, and generically entails three interrelated decisions. In the first, "the investment decision", management must decide which "projects" (if any) to undertake. The discipline of capital budgeting is devoted to this question, and may employ standard business valuation techniques or even extend to real options valuation; see Financial modeling. The second, "the financing decision" relates to how these investments are to be funded: capital here is provided by shareholders, in the form of equity (privately or via an initial public offering), creditors, often in the form of bonds, and the firm's operations (cash flow). Short-term funding or working capital is mostly provided by banks extending a line of credit. The balance between these elements forms the company's capital structure. The third, "the dividend decision", requires management to determine whether any unappropriated profit is to be retained for future investment / operational requirements, or instead to be distributed to shareholders, and if so in what form. Short term financial management is often termed "working capital management", and relates to cash-, inventory- and debtors management. These areas often overlap with the firm's accounting function, however, financial accounting is more concerned with the reporting of historical financial information, while these financial decisions are directed toward the future of the firm.

Finance of public entities

Public finance describes finance as related to sovereign states and sub-national entities (states/provinces, counties, municipalities, etc.) and related public entities (e.g. school districts) or agencies. It is concerned with:

Identification of required expenditure of a public sector entity
Source(s) of that entity's revenue
The budgeting process
Debt issuance (municipal bonds) for public works project

Financial risk management

Financial risk management is the practice of creating and protecting economic value in a firm by using financial instruments to manage exposure to risk, particularly credit risk and market risk. (Other risk types include Foreign exchange, Shape, Volatility, Sector, Liquidity, Inflation risks, etc.) It focuses on when and how to hedge using financial instruments; in this sense it overlaps with financial engineering. Similar to general risk management, financial risk management requires identifying its sources, measuring it (see: Risk measure: Well known risk measures), and formulating plans to address these, and can be qualitative and quantitative. In the banking sector worldwide, the Basel Accords are generally adopted by internationally active banks for tracking, reporting and exposing operational, credit and market risks.

Financial economics

Financial economics is the branch of economics studying the interrelation of financial variables, such as prices, interest rates and shares, as opposed to those concerning the real economy. Financial economics concentrates on influences of real economic variables on financial ones, in contrast to pure finance. It centers on decision making under uncertainty in the context of the financial markets, and the resultant economic and financial models. It essentially explores how rational investors would apply decision theory to the problem of investment. Here, the twin assumptions of rationality and market efficiency lead to modern portfolio theory (the CAPM), and to the Black Scholes theory for option valuation; it further studies phenomena and models where these assumptions do not hold, or are extended. "Financial economics", at least formally, also considers investment under "certainty" (Fisher separation theorem, "theory of investment value", Modigliani-Miller theorem) and hence also contributes to corporate finance theory. Financial Econometrics is the branch of Financial Economics that uses econometric techniques to parametrize the relationships suggested.

Financial mathematics

Financial mathematics is a field of applied mathematics, concerned with financial markets. The subject has a close relationship with the discipline of financial economics, which is concerned with much of the underlying theory. Generally, mathematical finance will derive, and extend, the mathematical or numerical models suggested by financial economics. In terms of practice, mathematical finance also overlaps heavily with the field of computational finance (also known as financial engineering). Arguably, these are largely synonymous, although the latter focuses on application, while the former focuses on modeling and derivation (see: Quantitative analyst). The field is largely focused on the modelling of derivatives, although other important sub fields include insurance mathematics and quantitative portfolio problems. See Outline of finance: Mathematical tools; Outline of finance: Derivatives pricing.

Experimental finance

Experimental finance aims to establish different market settings and environments to observe experimentally and provide a lens through which science can analyze agents' behavior and the resulting characteristics of trading flows, information diffusion and aggregation, price setting mechanisms, and returns processes. Researchers in experimental finance can study to what extent existing financial economics theory makes valid predictions, and attempt to discover new principles on which such theory can be extended. Research may proceed by conducting trading simulations or by establishing and studying the behavior of people in artificial competitive market-like settings.

Behavioral Finance

Behavioral Finance studies how the psychology of investors or managers affects financial decisions and markets. Behavioral finance has grown over the last few decades to become central to finance.
Behavioral finance includes such topics as:

Empirical studies that demonstrate significant deviations from classical theories.
Models of how psychology affects trading and prices
Forecasting based on these methods.
Studies of experimental asset markets and use of models to forecast experiments.

A strand of behavioral finance has been dubbed Quantitative Behavioral Finance, which uses mathematical and statistical methodology to understand behavioral biases in conjunction with valuation. Some of this endeavor has been led by Gunduz Caginalp (Professor of Mathematics and Editor of Journal of Behavioral Finance during 2001-2004) and collaborators including Vernon Smith (2002 Nobel Laureate in Economics), David Porter, Don Balenovich, Vladimira Ilieva, Ahmet Duran). Studies by Jeff Madura, Ray Sturm and others have demonstrated significant behavioral effects in stocks and exchange traded funds. Among other topics, quantitative behavioral finance studies behavioral effects together with the non-classical assumption of the finiteness of assets.

Intangible asset finance

Intangible asset finance is the area of finance that deals with intangible assets such as patents, trademarks, goodwill, reputation, etc.

Business Intelligence

2012-04-06T17:43:00.002-07:00

Business intelligence (BI) mainly refers to computer-based techniques used in identifying, extracting, and analyzing business data, such as sales revenue by products and/or departments, or by associated costs and incomes.
BI technologies provide historical, current and predictive views of business operations. Common functions of business intelligence technologies are reporting, online analytical processing, analytics, data mining, process mining, complex event processing, business performance management, benchmarking, text mining and predictive analytics.
Business intelligence aims to support better business decision-making. Thus a BI system can be called a decision support system (DSS). Though the term business intelligence is sometimes used as a synonym for competitive intelligence, because they both support decision making, BI uses technologies, processes, and applications to analyze mostly internal, structured data and business processes while competitive intelligence gathers, analyzes and disseminates information with a topical focus on company competitors. Business intelligence understood broadly can include the subset of competitive intelligence.
In a 1958 article, IBM researcher Hans Peter Luhn used the term business intelligence. He defined intelligence as: "the ability to apprehend the interrelationships of presented facts in such a way as to guide action towards a desired goal."
Business intelligence as it is understood today is said to have evolved from the decision support systems which began in the 1960s and developed throughout the mid-1980s. DSS originated in the computer-aided models created to assist with decision making and planning. From DSS, data warehouses, Executive Information Systems, OLAP and business intelligence came into focus beginning in the late 80s.
In 1989, Howard Dresner (later a Gartner Group analyst) proposed "business intelligence" as an umbrella term to describe "concepts and methods to improve business decision making by using fact-based support systems." It was not until the late 1990s that this usage was widespread.

Business intelligence and data warehousing

Often BI applications use data gathered from a data warehouse or a data mart. However, not all data warehouses are used for business intelligence, nor do all business intelligence applications require a data warehouse.
In order to distinguish between concepts of business intelligence and data warehouses, Forrester Research often defines business intelligence in one of two ways:
Using a broad definition: "Business Intelligence is a set of methodologies, processes, architectures, and technologies that transform raw data into meaningful and useful information used to enable more effective strategic, tactical, and operational insights and decision-making."When using this definition, business intelligence also includes technologies such as data integration, data quality, data warehousing, master data management, text and content analytics, and many others that the market sometimes lumps into the Information Management segment. Therefore, Forrester refers to data preparation and data usage as two separate, but closely linked segments of the business intelligence architectural stack.
Forrester defines the latter, narrower business intelligence market as "referring to just the top layers of the BI architectural stack such as reporting, analytics and dashboards."

Business intelligence and business analytics

Thomas Davenport has argued that business intelligence should be divided into querying, reporting, OLAP, an "alerts" tool, and business analytics. In this definition, business analytics is the subset of BI based on statistics, prediction, and optimization.

Applications in an enterprise

Business intelligence can be applied to the following business purposes, in order to drive business value.

Measurement – program that creates a hierarchy of performance metrics (see also Metrics Reference Model) and benchmarking that informs business leaders about progress towards business goals (business process management).
Analytics – program that builds quantitative processes for a business to arrive at optimal decisions and to perform business knowledge discovery. Frequently involves: data mining, process mining, statistical analysis, predictive analytics, predictive modeling, business process modeling, complex event processing.
Reporting/enterprise reporting – program that builds infrastructure for strategic reporting to serve the strategic management of a business, not operational reporting. Frequently involves data visualization, executive information system and OLAP.
Collaboration/collaboration platform – program that gets different areas (both inside and outside the business) to work together through data sharing and electronic data interchange.
Knowledge management – program to make the company data driven through strategies and practices to identify, create, represent, distribute, and enable adoption of insights and experiences that are true business knowledge. Knowledge management leads to learning management and regulatory compliance/compliance.

In addition to above, business intelligence also can provide a pro-active approach, such as ALARM function to alert immediately to end-user. There are many types of alerts, for example if some business value exceeds the threshold value the color of that amount in the report will turn RED and the business analyst is alerted. Sometimes an alert mail will be sent to the user as well. This end to end process requires data governance, which should be handled by the expert

Prioritization of business intelligence projects

It is often difficult to provide a positive business case for business intelligence initiatives and often the projects will need to be prioritized through strategic initiatives. Here are some hints to increase the benefits for a BI project.

As described by Kimballyou must determine the tangible benefits such as eliminated cost of producing legacy reports.
Enforce access to data for the entire organization. In this way even a small benefit, such as a few minutes saved, will make a difference when it is multiplied by the number of employees in the entire organization.
As described by Ross, Weil & Roberson for Enterprise Architecture, consider letting the BI project be driven by other business initiatives with excellent business cases. To support this approach, the organization must have Enterprise Architects, which will be able to detect suitable business projects.

Success factors of implementation

Before implementing a BI solution, it is worth taking different factors into consideration before proceeding. According to Kimball et al., these are the three critical areas that you need to assess within your organization before getting ready to do a BI project:

The level of commitment and sponsorship of the project from senior management
The level of business need for creating a BI implementation
The amount and quality of business data available.

Business sponsorship

The commitment and sponsorship of senior management is according to Kimball et al., the most important criteria for assessment. This is because having strong management backing will help overcome shortcomings elsewhere in the project. But as Kimball et al. state: “even the most elegantly designed DW/BI system cannot overcome a lack of business [management] sponsorship”. It is very important that the management personnel who participate in the project have a vision and an idea of the benefits and drawbacks of implementing a BI system. The best business sponsor should have organizational clout and should be well connected within the organization. It is ideal that the business sponsor is demanding but also able to be realistic and supportive if the implementation runs into delays or drawbacks. The management sponsor also needs to be able to assume accountability and to take responsibility for failures and setbacks on the project. It is imperative that there is support from multiple members of the management so the project will not fail if one person leaves the steering group. However, having many managers that work together on the project can also mean that the there are several different interests that attempt to pull the project in different directions. For instance if different departments want to put more emphasis on their usage of the implementation. This issue can be countered by an early and specific analysis of the different business areas that will benefit the most from the implementation. All stakeholders in project should participate in this analysis in order for them to feel ownership of the project and to find common ground between them. Another management problem that should be encountered before start of implementation is if the Business sponsor is overly aggressive. If the management individual gets carried away by the possibilities of using BI and starts wanting the DW or BI implementation to include several different sets of data that were not included in the original planning phase. However, since extra implementations of extra data will most likely add many months to the original plan, it is probably a good idea to make sure that the person from management is aware of his actions.

Implementation should be driven by clear business needs

Because of the close relationship with senior management, another critical thing that needs to be assessed before the project is implemented is whether or not there actually is a business need and whether there is a clear business benefit by doing the implementation. The needs and benefits of the implementation are sometimes driven by competition and the need to gain an advantage in the market. Another reason for a business-driven approach to implementation of BI is the acquisition of other organizations that enlarge the original organization it can sometimes be beneficial to implement DW or BI in order to create more oversight.

The amount and quality of the available data

This ought to be the most important factor, since without good data – it does not really matter how good your management sponsorship or your business-driven motivation is. If you do not have the data, or the data does not have sufficient quality, any BI implementation will fail. Before implementation it is a very good idea to do data profiling; this analysis will be able to describe the “content, consistency and structure of the data. This should be done as early as possible in the process and if the analysis shows that your data is lacking, it is a good idea to put the project on the shelf temporarily while the IT department figures out how to do proper data collection.

User aspect

Some considerations must be made in order to successfully integrate the usage of business intelligence systems in a company. Ultimately the BI system must be accepted and utilized by the users in order for it to add value to the organization. If the of the system is poor, the users may become frustrated and spend a considerable amount of time figuring out how to use the system or may not be able to really use the system. If the system does not add value to the users´ mission, they will simply not use it.
In order to increase the user acceptance of a BI system, it may be advisable to consult the business users at an early stage of the DW/BI life cycle, for example at the requirements gathering phase. This can provide an insight into the business process and what the users need from the BI system. There are several methods for gathering this information, such as questionnaires and interview sessions.
When gathering the requirements from the business users, the local IT department should also be consulted in order to determine to which degree it is possible to fulfill the business's needs based on the available data.
Taking on a user-centered approach throughout the design and development stage may further increase the chance of rapid user adoption of the BI system.
Besides focusing on the user experience offered by the BI applications, it may also possibly motivate the users to utilize the system by adding an element of competition. Kimball suggests implementing a function on the business intelligence portal website where reports on system usage can be found. By doing so, managers can see how well their departments are doing and compare themselves to others and this may spur them to encourage their staff to utilize the BI system even more.
In a 2007 article, H. J. Watson gives an example of how the competitive element can act as an incentive. Watson describes how a large call center has implemented performance dashboards for all the call agents and that monthly incentive bonuses have been tied up to the performance metrics. Furthermore the agents can see how their own performance compares to the other team members. The implementation of this type of performance measurement and competition significantly improved the performance of the agents.
Other elements which may increase the success of BI can be by involving senior management in order to make BI a part of the organizational culture and also by providing the users with the necessary tools, training and support. By offering user training, more people may actually use the BI application.
Providing user support is necessary in order to maintain the BI system and assist users who run into problems. User support can be incorporated in many ways, for example by creating a website. The website should contain great content and tools for finding the necessary information. Furthermore, help desk support can be used. The help desk can be manned by e.g. power users or the DW/BI project team.

Marketplace

There are a number of business intelligence vendors, often categorized into the remaining independent "pure-play" vendors and the consolidated "mega vendors" which have entered the market through a recent trend of acquisitions in the BI industry.
Some companies adopting BI software decide to pick and choose from different product offerings (best-of-breed) rather than purchase one comprehensive integrated solution (full-service).

Industry-specific

Specific considerations for business intelligence systems have to be taken in some sectors such as governmental banking regulations. The information collected by banking institutions and analyzed with BI software must be protected from some groups or individuals, while being fully available to other groups or individuals. Therefore BI solutions must be sensitive to those needs and be flexible enough to adapt to new regulations and changes to existing laws.

Semi-structured or unstructured data

Businesses create a huge amount of valuable information in the form of e-mails, memos, notes from call-centers, news, user groups, chats, reports, web-pages, presentations, image-files, video-files, and marketing material and news. According to Merrill Lynch, more than 85% of all business information exists in these forms. These information types are called either semi-structured or unstructured data. However, organizations often only use these documents once.
The management of semi-structured data is recognized as a major unsolved problem in the information technology industry. According to projections from Gartner (2003), white collar workers will spend anywhere from 30 to 40 percent of their time searching, finding and assessing unstructured data. BI uses both structured and unstructured data, but the former is easy to search, and the latter contains a large quantity of the information needed for analysis and decision making. Because of the difficulty of properly searching, finding and assessing unstructured or semi-structured data, organizations may not draw upon these vast reservoirs of information, which could influence a particular decision, task or project. This can ultimately lead to poorly-informed decision making.
Therefore, when designing a business intelligence/DW-solution, the specific problems associated with semi-structured and unstructured data must be accommodated for as well as those for the structured data.

Unstructured data vs. semi-structured data

Unstructured and semi-structured data have different meanings depending on their context. In the context of relational database systems, it refers to data that cannot be stored in columns and rows. It must be stored in a BLOB (binary large object), a catch-all data type available in most relational database management systems.
But many of these data types, like e-mails, word processing text files, PPTs, image-files, and video-files conform to a standard that offers the possibility of meta data. Meta data can include information such as author and time of creation, and this can be stored in a relational database. Therefore it may be more accurate to talk about this as semi-structured documents or data, but no specific consensus seems to have been reached.

Problems with semi-structured or unstructured data

There are several challenges to developing BI with semi-structured data. According to Inmon & Nesavich, some of those are:

Physically accessing unstructured textual data – unstructured data is stored in a huge variety of formats.
Terminology – Among researchers and analysts, there is a need to develop a standardized terminology.
Volume of data – As stated earlier, up to 85% of all data exists as semi-structured data. Couple that with the need for word-to-word and semantic analysis.
Search ability of unstructured textual data – A simple search on some data, e.g. apple, results in links where there is a reference to that precise search term. (Inmon & Nesavich, 2008) gives an example: “a search is made on the term felony. In a simple search, the term felony is used, and everywhere there is a reference to felony, a hit to an unstructured document is made. But a simple search is crude. It does not find references to crime, arson, murder, embezzlement, vehicular homicide, and such, even though these crimes are types of felonies.”

The use of metadata

To solve problems with search ability and assessment of data, it is necessary to know something about the content. This can be done by adding context through the use of metadata. Many systems already capture some metadata (e.g. file name, author, size, etc.), but more useful would be metadata about the actual content – e.g. summaries, topics, people or companies mentioned. Two technologies designed for generating metadata about content are automatic categorization and information extraction.

Future

A 2009 Gartner paper predicted these developments in the business intelligence market:

Because of lack of information, processes, and tools, through 2012, more than 35 percent of the top 5,000 global companies will regularly fail to make insightful decisions about significant changes in their business and markets.
By 2012, business units will control at least 40 percent of the total budget for business intelligence.
By 2012, one-third of analytic applications applied to business processes will be delivered through coarse-grained application mashups.

A 2009 Information Management special report predicted the top BI trends: "green computing, social networking, data visualization, mobile BI, predictive analytics, composite applications, cloud computing and multi touch."
Other business intelligence trends include the following:

Third party SOA-BI products increasingly address ETL issues of volume and throughput.
Cloud computing and Software-as-a-Service (SaaS) are ubiquitous.
Companies embrace in-memory processing, 64-bit processing, and pre-packaged analytic BI applications.
Operational applications have callable BI components, with improvements in response time, scaling, and concurrency.
Near or real time BI analytic s is a baseline expectation.
Open source BI software replaces vendor offerings.

Other lines of research include the combined study of business intelligence and uncertain data. In this context, the data used is not assumed to be precise, accurate and complete. Instead, data is considered uncertain and therefore this uncertainty is propagated to the results produced by BI.
According to a study by the Aberdeen Group, there has been increasing interest in Software-as-a-Service (SaaS) business intelligence over the past years, with twice as many organizations using this deployment approach as one year ago – 15% in 2009 compared to 7% in 2008.An article by Info World Chris Kanaracus points out similar growth data from research firm IDC, which predicts the SaaS BI market will grow 22 percent each year through 2013 thanks to increased product sophistication, strained IT budgets, and other factors.

Business Management information System

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We will provide Business Management information System which is needed to manage organizations professionally and effectively. Management information systems engross three primary resources: people, technology, and information or decision making. Management information systems are distinct from other information systems in that they are used to examine operational activities in the organization. Academically, the term is commonly used to refer to the group of information management methods attached to the automation or support of human decision making, e.g. decision support systems, expert systems, and executive information systems.

To begin within businesses and other organizations, internal reporting was produced manually and only occasionally, as a by-product of the accounting system and with some additional statistic(s), and gave limited and late information on management performance. Data was organized manually according to the requirements and necessity of the organization. As computational technology developed, information began to be illustrious from data and systems were developed to produce and organize abstractions, summaries, relationships and generalizations based on the data.
Early business computers were used for simple operations such as tracking sales or payroll data, with little detail or structure. Over time, these computer applications became more complex, hardware storage capacities grew, and technologies better for connecting previously isolated applications. As more and more data was stored and linked, managers sought greater detail as well as greater concept with the aim of creating entire management reports from the raw, stored data. The term "MIS" arose to describe such applications providing managers with information about sales, inventories, and other data that would help in managing the enterprise. Today, the term is used broadly in a number of contexts and includes (but is not limited to): decision support systems, resource and people management applications, enterprise resource planning (ERP), enterprise performance management (EPM), supply chain management (SCM), customer relationship management (CRM), project management and database retrieval applications.
The successful MIS supports a business's long range plans, providing reports based upon performance analysis in areas critical to those plans, with feedback loops that allow for titivation of every aspect of the enterprise, including recruitment and training regimens. MIS not only indicate how things are going, but why and where performance is failing to meet the plan. These reports include near-real-time performance of cost centers and projects with detail sufficient for individual accountability.

Types

Most management information systems specialize in particular commercial and industrial sectors, aspects of the enterprise, or management substructure.

Management information systems (MIS), per se, produce fixed, regularly scheduled reports based on data extracted and summarized from the firm’s underlying transaction processing systems^[4] to middle and operational level managers to identify and inform structured and semi-structured decision problems.
Decision support systems (DSS) are computer program applications used by middle management to compile information from a wide range of sources to support problem solving and decision making.
Executive information systems (EIS) is a reporting tool that provides quick access to summarized reports coming from all company levels and departments such as accounting, human resources and operations.
Marketing information systems are MIS designed specifically for managing the marketing aspects of the business.
Office automation systems (OAS) support communication and productivity in the enterprise by automating work flow and eliminating bottlenecks. OAS may be implemented at any and all levels of management.
School management information systems (MIS) cover school administration, often including teaching and learning materials.

Advantages

The following are some of the benefits that can be attained for different types of management information systems

Companies are able to highlight their strengths and weaknesses due to the presence of revenue reports, employees' performance record etc. The identification of these aspects can help the company improve their business processes and operations.
Giving an overall picture of the company and acting as a communication and planning tool.
The availability of the customer data and feedback can help the company to align their business processes according to the needs of the customers. The effective management of customer data can help the company to perform direct marketing and promotion activities.
Information is considered to be an important asset for any company in the modern competitive world. The consumer buying trends and behaviors can be predicted by the analysis of sales and revenue reports from each operating region of the company..

Enterprise applications

Enterprise systems, also known as enterprise resource planning (ERP) systems provide an organization with integrated software modules and a unified database which enable efficient planning, managing, and controlling of all core business processes across multiple locations. Modules of ERP systems may include finance, accounting, marketing, human resources, production, inventory management and distribution.

Supply chain management (SCM) systems enable more efficient management of the supply chain by integrating the links in a supply chain. This may include suppliers, manufacturer, wholesalers, retailers and final customers.

Customer relationship management (CRM) systems help businesses manage relationships with potential and current customers and business partners across marketing, sales, and service.

Knowledge management system (KMS) helps organizations facilitate the collection, recording, organization, retrieval, and dissemination of knowledge. This may include documents, accounting records, and unrecorded procedures, practices and skills.

Developing Information Systems

The actions that are taken to create an information system that solves an organizational problem are called system development. These include system analysis, system design, programming/implementation, testing, conversion, production and finally maintenance. These actions usually take place in that specified order but some may need to repeat or be accomplished concurrently.

Conversion is the process of changing or converting the old system into the new. This can be done in four ways:

Direct cut-over – The new system replaces the old at an appointed time.
Pilot study – Introducing the new system to a small portion of the operation to see how it fares. If good then the new system expands to the rest of the company.
Phased approach – New system is introduced in stages.