India Infoline, a leading financial services company is the first customer to have crossed 1000 1KEY BI users on web. Rapid Adoption of 1KEY BI for reporting & analysis Fuels Growth at India Infoline.
MAIA Intelligence, the only Indian provider of powerful business intelligence (BI) software product for reporting and analysis, today announced that India Infoline, one of India’s most respected financial service company, has crossed 1000 1KEY BI Reporting & Analytics Software users on web, establishing it as the only company to have such huge 1KEY BI user base on web.
India Infoline has passed the 1000 1KEY users on web mark in about six months after its deployment to manage its growing volume of customer data, enable operational analysis on a real time basis, speed up its corporate decision-making process for rapid growth and to deliver overall higher quality of service to its customers. The users of 1KEY increase their performance with self-service BI and zero dependency.
Titus Gunaseelan – CTO Indian Infoline said “We have found 1KEY a very cost effective, quick to deploy and learn, easy to use and easily managed software. With such a large user base, the ROI for 1KEY has happened very rapid. “
“1KEY BI is been used by thousands of people across the industry reaping its benefits on a daily basis to discover inside enterprise-wide data, to get in depth analysis for taking informed decisions at all levels, and to find single version of truth.” said Sanjay Mehta, CEO, MAIA Intelligence. “There is no restriction to the no. of users accessing 1KEY BI on web, but over 1000 users have taken very little time to do so. This is a great opportunity for us to showcase our reporting and analytics software product capabilities, scalability & performance to our prospects.”
Titus said, “The privacy of our data is our top concern, so we were looking for a solution that provides reporting with powerful analysis tools without exposing the critical information or unwanted requests. Since 1KEY met these requirements and was already being used by many companies, it was an easy choice to go with 1KEY BI for reporting and analysis.”
Similar views were echoed by Nirmal Jain, Chairman & MD of India Infoline, who chose 1KEY for users Groups to enhance the company’s productivity. “We stopped creating reports in spreadsheets a few years ago because of security concerns by our executive-level users. 1KEYis easy to use and proved to be invaluable to our users because they were able to analyze the data before the occurrence of any event without exposing critical information to other users. Now, they are able to leverage the reports they built on the web to get more real time business decision making possible.”
Mehta added, “Our strategy from the beginning has been to attract an elite group of companies through a tool that is available enterprise-wide at the same time protects their critical data. Having attracted large numbers of customers across the industries, I’m not surprised that the 1KEY user base has now established itself far and away with the largest user base of BI users in India.”
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]]>But from the perspective of equity valuation and the company’s growth prospects, working capital is more critical to some businesses than to others. At the risk of oversimplifying, we could say that the models of these businesses are asset or capital intensive rather than service or people intensive. Examples of service intensive companies include H&R Block, which provides personal tax services, and Manpower, which provides employment services. In asset intensive sectors, firms such as telecom and pharmaceutical companies invest heavily in fixed assets for the long term, whereas others invest capital primarily to build and/or buy inventory. It is the latter type of business - the type that is capital intensive with a focus on inventory rather than fixed assets - that deserves the greatest attention when it comes to working capital analysis. These businesses tend to involve retail, consumer goods and technology hardware, especially if they are low-cost producers or distributors.
Objectives of Working Capital Management
The main objective is to ensure the maintenance of satisfactory level of working capital in such a way that it is neither inadequate nor excessive. It should not only be sufficient to cover the current liabilities but ensure a reasonable margin of safety also.
i. To minimize the amount of capital employed in financing the current assets. This also leads to an improvement in the “Return of Capital Employed”.
ii. To manage the current assets in such a way that the marginal return on investment in these assets is not less than the cost of capital acquired to finance them. This will ensure the maximization of the value of the business unit.
iii. To maintain the proper balance between the amount of current assets and the current liabilities in such a way that the firm is always able to meet its financial obligations, whenever due. This will ensure the smooth working of the unit without any production held ups due to paucity of funds.
Types of Working Capital
A. Permanent Working Capital
B. Temporary Working Capital
Permanent Working Capital: The operating cycle is a continuous feature in almost all the going concerns and therefore creates the need for working capital and their efficient management. However the magnitude of working capital required will not be constant, but will fluctuate. At any time, there is always a minimum level of current assets which is constantly and continuously required by a business unit to carry on its operations. This minimum amount of current assets, which is required on a continuous and uninterrupted basis is after referred to as fixed or permanent working capital. This type of working capital should be financed (along with other fixed assets) out of long term funds of the unit. However in practice, a portion of these requirements also is met through short term borrowings from banks and suppliers credit.
Permanent current assets and Temporary current assets
The amount of current assets required to meet a firm’s long-term minimum needs are called Permanent current assets.
For e.g., In a manufacturing unit, basic raw materials required for production has to be available at all times and this has to be financed without any disturbance.
Temporary Working Capital: Any amount over and above the permanent level of working capital is variable, temporary or fluctuating working capital. This type of working capital is generally financed from short term sources of finance such as bank credit because this amount is not permanently required and is usually paid back during off season or after the contingency. As the name implies, the level of fluctuating working capital keeps on fluctuating depending on the needs of the unit unlike the permanent working capital which remains constant over a period of time.
Current assets that fluctuate due to seasonal or cyclical demand are called temporary current assets.
Determinants of Working Capital: Working capital management is an indispensable functional area of management. However the total working capital requirements of the firm are influenced by the large number of factors. It may however be added that these factors affect differently to the different units and these keep varying from time to time. In general, the determinants of working capital which are common to all organizations can be summarized as under:
a. Nature and Size of Business
b. Production Cycle
c. Business Cycle
d. Production Policy
e. Credit Policy
f. Growth & Expansion
g. Proper availability of raw materials
h. Profit level
i. Inflation
j. Operating Efficiency
Sources of Working Capital: The working capital necessary and what constitutes working capital have been analyzed in depth. Now we look out what are the ways we can generate working capital.
a. Trade Credits
b. Bank Credit
c. Current provisions and non-bank short term borrowings: and
d. Long term sources i.e., equity share capital, preference share capital and other long term borrowings.
Short term source of funds are generally available at comparatively lower costs but theoretically these funds can be called back any moment and therefore it is more appropriate to meet at least two thirds of the permanent working capital requirements from the long term sources. The advantages of long term sources is, it reduces risk as there is no need to repay the loans at frequent intervals and funds can be employed gainfully and it increases liquidity.
Summary: Traditional analysis of working capital is defensive; it asks, “Can the company meet its short-term cash obligations?” But working capital accounts also tell you about the operational efficiency of the company. The length of the cash conversion cycle {Days Sales Outstanding (DSO) + Days Inventory Outstanding (DIO) –Days Payable Outstanding (DPO)} tells you how much working capital is tied up in ongoing operations. And trends in each of the days-outstanding numbers may foretell improvements or declines in the health of the business.
Implementing an effective working capital management system is an excellent way for many companies to improve their earnings. The two main aspects of working capital management are ratio analysis and management of individual components of working capital. Thus the importance of adequate of working capital in commercial undertakings can never be over emphasized. The various studies conducted by the Bureau of Public Enterprises have shown that one of the reasons for the poor performance of public sector undertakings in our country has been the large amount of funds locked up in working capital. This results in over capitalization. Over Capitalization implies that a company has too large funds for its requirements, resulting in a low rate of return a situation which implies a less than optimal use of resources. Insolvency risk is there in the case of under capitalization of working capital. Hence working capital management plays a pivotal role in growth or to sustain in market for any organization.
How can you get immense benefit from BI Tool
Now after all this discussion can we think that is this so simple to have control over various component of working capital effectively for smooth & profitable running of business?
Definitely answer is NO, but all this complexity becomes so simple, beyond your imagination, just with the help of BI tool.
Making the right decision for your company requires better analysis of the available data but discovering the right knowledge among those tides of information flow is the key behind the success of every corporation. In this age of information and technology, it is obvious to gather infinite number of information from various sources thereby making data warehouses essential for managing and better future planning on the basis of information. Here Business Intelligence (BI) provides solution for strategic decision-making.’
Next-era business intelligence is about putting actionable insight in the hands of the many without the cost, complication and IT constraints that have long held BI back. The idea is to support better decision making at all levels of the organization, whether in the executive suite or among sales and service reps meeting directly with customers.
Now realize the power of ‘1KEY Agile : BI tool from MAIA Intelligence, a new approach that empowers business owners and knowledge workers to easily get the inputs which is not mere information but the POWER INFORMATION, which makes your decision more rational & having strong supportive data.
NOW IT’s TIME TO FEEL THE POWER of 1KEY BI tool.
This post was submitted by CA Navneet Mehta.
To read part I of this article click here and part II click here.
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]]>a. Conversion of cash into raw materials
b. Conversion of raw materials to finished goods
c. Conversion of finished goods into receivables
d. Conversion of receivables into cash
The way working capital moves around the business is modelled by the working capital cycle. This shows the cash coming into the business, what happens to it while the business has it and then where it goes. A simple working capital cycle may look something like:-
Innovative Business Decision Support tool : 1KEY Agile
Making business decisions from a broader perspective, a new mindset With ‘1KEY Agile’- A BI Tool From MAIA Intelligence.
Nowadays, every company is under pressure, not only from the market itself but also from the stockholders. Balancing inventory and capacity, managing the product portfolio, working capital and the cost of its complexity, optimizing the cost to serve and ensuring the profitability have become even more critical concerns. Any gaps between strategy and execution invariably show up here first. Any inefficiency in the business performance invariably impacts the company’s ROI (Return on Investment). That is precisely why MAIA Intelligence has come with: a one of a kind business intelligence software solution: ‘1KEY Agile’ for making business decisions form a broader, 360° perspective.
Working Capital performance cannot be optimized by inspection of individual component of working capital in isolation. You can’t do anything about the cost or stock problem if you don’t look at it from all business perspectives. All departments must be involved. 1KEY makes the difference, not by adding a new more sophisticated formula, but by offering an integrated holistic perspective. Replacing emotions with facts and calculating the impact of different business scenarios from a 360° perspective is the best decision support tool for those around the executive table.
This article was submitted by CA Navneet Mehta.
To read part I of this article click here.
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]]>These real world facts introduce problems and require the necessity of working capital. The most important areas in the day to day management of the firm, is the management of working capital. Working capital management is the functional area of finance that covers all the current accounts of the firm. It is concerned with management of the level of individual current assets as well as the management of total working capital. Working capital management involves the relationship between a firm’s short-term assets and its short-term liabilities. The goal of working capital management is to ensure that a firm is able to continue its operations and that it has sufficient ability to satisfy both maturing short-term debt and upcoming operational expenses. The management of working capital involves managing inventories, accounts receivable and payable, and cash.
For example, an organization may be faced with an uncertainty regarding availability of sufficient quantity of crucial inputs in future at reasonable price. This may necessitate the holding of inventory i.e., current assets. Similarly an organization may be faced with an uncertainty regarding the level of its future cash inflows and insufficient amount of cash may incur substantial costs. This may necessitate the holding of a reserve of short – term marketable securities, again a short term capital asset. The unpredictable and uncertain global market plays a vital role in working capital. Though the globalization of economy and free trading of products envisages the continuous availability of products but how much it’s cost effective and quality based varies concern to concerns.
Working capital refers to the funds invested in current assets, i.e., investment in stocks, sundry debtors, cash and other current assets. Current assets are essential to use fixed assets profitably. The term current assets refers to those assets which in the ordinary course of business can be converted into cash within one year without undergoing diminish in value and without disrupting the operations of the firm. The current assets are cash, marketable securities, accounts receivable and inventory. Current liabilities are those which are to be paid within a year out of the current assets or earnings of the concern. The current liabilities are accounts payable, bills payable, bank overdraft and outstanding expenses.
Concepts & Definitions of Working Capital: There are two concepts of working capital
1. Gross Working Capital: It represents the total current assets and is also referred to as circulating capital because current capital as current assets, are circulating in nature.
2. Net Working Capital: It is a measure of liquidity and it can be defined in two ways.
a. The most usually implied definition of net working capital is that it represents the difference between current assets and current liabilities. Some people also define it as excess of current assets over the current liabilities.
b. It is that portion of the firm’s current assets, which is financed by long term funds.
Nett working capital as a measure of liquidity is generally not very useful to compare the performance of different units due to difference in scales of operation, efficiency, and creditability in the market etc., between the different firms. However it is a very useful measure for internal control purposes. It can also be used to compare the liquidity position of the same unit over a period of time. This will help in maintaining the acceptable level of net working capital.
Implementing an effective working capital management system is an excellent way for many companies to improve their earnings. The two main aspects of working capital management are ratio analysis and management of individual components of working capital.
A few key performance ratios of a working capital management system are the working capital ratio, inventory turnover and the collection ratio. Ratio analysis will lead management to identify areas of focus such as inventory management, cash management, accounts receivable and payable management.
Role of Finance Manager: The financial manager plays a vital role in management of working capital. The financial management of any business organization involves the three following vital functions:
1. Management of Long Term Assets
2. Management of Long Term Capital
3. Management of Short Term Assets and Liabilities
In most of the organizations the first & second one which refers to Capital Budgeting and Capital Structure respectively will be maintained and cope up with organization growth. The third one which refers to Working Capital Management requires more skills for sustaining and steady growth rate for any organization.
The working capital management includes decisions
i. How much stock/inventory to be hold
ii. How much cash/bank balance should be maintained?
iii. How much the firm should provide credit to its customers?
iv. How much the firm should enjoy credit from its suppliers?
v. What should be the composition of current assets?
vi. What should be the composition of current liabilities?
For e.g. a machine cannot be used without raw material. The investment on the purchase of raw material is identified as working capital. It is obvious that a certain amount of funds is always tied up in a raw material inventories, work in progress, finished goods, consumable stores, sundry debtors and day to day cash requirements. However the businessman also enjoys credit facilities from his suppliers who may supply raw material on credit. Similarly, a businessman may not pay immediately for various expenses. For instance, the labourers are pain only periodically. Therefore, a certain amount of funds is automatically available to finance the current assets requirements. However, the requirements for current assets are usually greater than the amount of funds payable through current liabilities. The satisfactory level of working capital is the main object of working capital management. Any organization which fails to maintain satisfactory level of working capital may be forced to bankruptcy. The current assets should always be large enough to cover its current liabilities in order to ensure a reasonable margin of safety. Thus the interaction between current assets and current liabilities is the main aim of working capital management.
How 1KEY: BI tool makes easy your decision making environment.
1KEY BI tool is meant for gathering, storing, analyzing, and providing access to data to help enterprise users make better business decisions.
A more business-like approach of BI, rather than this more technical definition, is that BI supports the decision making process, because users (among whom the management) use BI applications to extract knowledge from internal as well as external sources. BI provides actionable knowledge which supports the management with better decision making.
There’s no doubt that the current economic situation presents challenges for businesses of all sizes in every industry. Around the globe, companies must cut costs and reduce risks as they confront slower sales, hesitant suppliers, and tighter credit. But with challenges come opportunities. If you maintain a long-term perspective—even as you take short-term steps to adjust to economic realities—you can sharpen your organization’s focus. Even with limited resources, it’s possible to achieve your business objectives if you reduce costs, make smarter strategic decisions, and continue innovating new products and solutions.
The business environment changed in a way that led to the need of BI:
· Increased speed of business
· Information overload
· Increased globalization
· Increased complexity and dynamics of internal processes and of the environment
· Speed of technological changes
Industries that are known to benefit most from BI are data rich industries. Departments that are known to benefit most from BI are: Marketing, Sales, Finance, Accounts, treasury, and the, Top level Management.
With 1KEY Business Intelligence (BI), you can focus your resources—whether they are people, technology, or capital assets—to achieve these goals and generate the maximum return for your organization. You get the right information to the right people faster. As a result, they make smarter, more informed decisions, increasing efficiencies in the short term and positioning the company for growth in the long term.
This article was submitted by CA Navneet Mehta.
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]]>How to Release LIQUID component of your Working Capital in this recessionary scenario?
The Answer is very simple. Just analyze the working capital structure & focus on the areas in which unnecessarily Working Capital is blocked. Do you think that it is so simple to interpret the complex business structure? Definitely your Answer is NO. But can you imagine that with the help of a BI tool, it’s a just matter of few mouse clicks. Do you believe this? Whether you believe or not but now you will have to believe after having a view and feeling the Power of 1KEY BI.
1KEY BI makes your complex business structure in simple one. One can do multiple analysis with 1KEY BI for effective control over the business resources.
As we all know that Working Capital works in a business like blood in a human body. So it’s very important to have control over components of Working Capital to ensure smooth running of business, but at the same time it’s very difficult to impose control over component of working capital. But with the help of 1KEY BI tool, it’s just a matter of just few clicks.
Balance Sheet Items
- Accounts Receivable
- Accounts Payables
- Inventory
1KEY CFO Dashboard Provides details of these Balance Sheet items periodically for a particular point of time. It includes Baseline, Actuals & Target for each of these items. For e.g.: Data for Accounts Receivable is available for Current week, -2 weeks & +2 Weeks, means Actual figure is available for current week & -2 Weeks, Target is available for all the 5 weeks & baseline figure will remain same for all the weeks. At the same time we can have this data corresponding to SBU, BU, PC, Segment according to selection in parameters.
Profit & Loss Items
- Sales
- Raw Material Consumption
- Power & Fuel
1KEY CFO Dashboard provides details of these Profit & Loss items for a particular period of time. It includes Baseline, Actuals & Target for each of these items. For e.g.: data for sales is available for Current week, -2 weeks & +2 Weeks, means Actual figure is available for current week & -2 Weeks, Target is available for all 5 weeks & baseline figure will remain same for all weeks. At the same time we can have this data corresponding to SBU, BU, PC, Segment according to selection in parameters.
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]]>
As companies shift their attention from fighting the recession to getting the most from their targets, Sales Managers must keep themselves focused.
The recession and its shocks to the real economy has put Sales Managers on the front lines, as they implement sales policies and measures to help companies survive the recession. Now, as an eventual recovery begins to seem more likely, the Sales Managers’ task may become more complex.
Even for those whose companies avoided the most severe effects of the crisis, uncertainty about the future is abundant, and sales remains tough. Increase in turnover are dream for only a few relatively big & lucky ones, and a new appreciation of failures accompanies each opportunity.
So the Sales Managers’ judgement will be critical to push the management team’s thinking on the opportunities and to cast a dispassionate eye over the sales, margins, and risks of pursuing them.
Following are few of the many questions, Sales Managers often ask themselves and their executive colleagues as the new financial year approaches. Answer to these questions help Sales Managers’ decide the priorities to come out of the recession.
- How to make important decisions? - based on gut-feel and anecdotes or accurate current and historical data
- What to focus your 100% on and where to intervene to hit your number this quarter?
- What industries are strong? How does this compare to last year?
- What’s working? What’s not working? What are the trends?
- Which representative push the most? Where should we invest?
- Which deals are getting stuck in your pipeline and why?
- How big does your pipeline need to be to hit your number this quarter?
- How to analyze sales trends and track opportunities over time in monster excel spreadsheets?
- What is the repeated lost sales by individual salesmen?
- What is the value of sales lost by a particular reason? - Value of sales lost per time period (month, quarter, year) by the reason it was lost (project killed, competition, price, product feature, not interested, etc.). Identifying areas of sales and marketing improvement and overall market conditions. For example, it could be used to see how the market economy affects your sales (is project killed and price increasing over time?).
1KEY Business Intelligence (BI) reporting and analysis tool helps Sales Managers find the answers to all the above and many such questions.
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]]>Operational BI helps businesses make more informed decisions and take more effective action in their daily business operations. It can be valuable in many areas of the business, including reducing fraud, decreasing loan processing times, and optimising pricing.
Caters to middle management and frontline: Operational BI delivers information and insights to those managers that are involved in operational or transactional processes.
Customer service executives in branch, get a flash on their screens on the likely requirements of a customer (based on his profile and past transaction behaviour) while servicing a customer request over the counter. The executive at the counter can use this information to cross-sell other products to the customer, during the brief period the customer was at the counter. This is an example of operational BI being used to collect and analyse information midstream-running BI tools directly on transaction systems or using enterprise information integration tools to query the data where it lies. The ability to get a glimpse of the entire pipeline in and outside of the company is very valuable to the agility of a corporation. A loan recovery manager would do well to tailor the language of the demand notice or the phone call based on the total relationship of the customer (and may be his family) with the bank.
Just-in-time delivery: The information needs to be delivered in near real-time (within minutes or hours) for the purpose of managing or optimising operational or time-sensitive business processes.
The objective of operational BI is to reduce the time it takes for a line of business user or application to react to a business issue or requirement. This elapsed time is known as ‘action time’. The business case for operational BI is based on identifying business situations where reduced action times can bring business benefits to the organisation.
For instance, the ability to detect and react more quickly to the fraudulent use of a credit card is a good example of how operational BI can provide business value. By analysing the history of fraudulent situations, the BI system can be used to develop business rules that signify potential fraud, and operational BI can be used to apply those rules during daily business operations. The closer to real time the fraud can be detected, the less is the operational risk.
However, not all operational BI systems need to be near real-time. Reducing action times to close to zero are is beneficial only in specific types of business requirements such as the fraud example.
In fact, operational BI can be classified into being demand-driven and event-driven, the latter being more automated. If the action time requirement is a few hours, business users or applications can use the BI system at on-demand analysis and evaluate the results manually to determine whether any action is required. In the demand-driven case, it is the user who drives the BI system.
But if the action time requirement is two seconds, then on-demand will not be suitable. In this scenario BI systems must track business operations continuously and automatically run analyses to determine whether any action is required. If it is, the business user must be alerted about the situation and sent recommendations on potential courses of action. In case of a fraudulent credit card transaction, the BI system is expected to refuse authorisation. In event-driven BI, business operations and the BI system drive the user. It is obvious that the implementation of event driven operational BI is more complex than demand-driven BI.
Uses recent transaction data: Data used for operational analysis is frequently accessed before getting loaded into the data warehouse. The latency in a traditional data warehouse implementation results from the batch mode in which it is populated. It is more suited for strategic applications such as historical analysis, risk management, performance management etc. But a dashboard needs to be as close to transaction data as technically feasible.
Less aggregation, more granularity: In a sharp contrast to traditional BI in which pre-aggregation, with optional drill down to detail levels is a norm, operational BI normally requires more of data granularity to address the needs of the specific operational function it supports. Traditional BI aims at a holistic view of corporate performance, while operational BI is process and user specific. Yet, some operational BI requirements do require aggregated data, such as the lifetime value of a customer, which is required for a directed sales call.
Embedded into business processes: Operational BI is intricately connected to transactional business processes. The extent of this integration depends on the level of implementation. One could use it to generate operational reports to analyse processes, or monitor them using dashboards and scorecards. In these two levels there is not much of integration. In the other two levels, where operation BI is embedded into business processes either to facilitate them (demand-driven) or to execute other processes (event-driven), it is embedded into the process.
Handles disparate sources and unstructured data: Traditional databases and data warehouses do not take into consideration the increasing use of unstructured data; such as emails, telephone calls, letters, internal notes etc, stored outside these systems, which are of critical value in an operational BI implementation. Another issue that it has to handle arises out of the disparate transaction systems in use in most of the banks. The variety of banking services makes it very complex and often impractical for a single software solution to handle all kinds of transactions. Extracting data from such disparate systems and making use of unstructured data is required to be handled by an operational BI system.
Availability is a concern: The high level of integration with transactional business processes demand the same level of availability from operational BI implementations that transaction processing systems have to provide. An outage of an operational BI application could have a direct impact on the organization’s ability to do business or to service its customers. Therefore, availability becomes a critical issue for operational BI applications.
Requires different architecture: Traditional BI vendors had built their products using proprietary architectures. While these architectures are ideal for strategic BI, they are not suited for operational BI. Because operational BI entails coupling BI applications with operation applications and operational processes, a component-based, service-oriented architecture (SOA) is necessary to fully support operational BI. Service-oriented architecture that lets users access real-time knowledge with a set of service feeds can maximize business agility while reducing complexity. For example, SOA flexibly and cost-effectively supports the midstream, on-the-fly data collection and analysis necessary for operational BI. Service orientation also supports operational BI throughout the business by pushing BI data out to the mobile workforce and enabling workers across the enterprise to incorporate this vital data into their workflow. The straight-through processing requirements in the banking industry necessitate immediate risk analysis, which in turn requires an online BI capability.
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]]>Historical Analysis (time-series)
Banks analyse their historical performance over time to be able to plan for the future. The key performance indicators include deposits, credit, profit, income, expenses; number of accounts, branches, employees etc. Absolute figures and growth rates (both in absolute and percentage terms) are required for this analysis. In addition to time dimension, which requires a granularity of years, half year, quarter, month and week; other critical dimensions are those of control structure (zones, regions, branches), geography (countries, states, districts, towns), area (rural, semi-urban, urban, metro), and products (time, savings, current, loan, overdrafts, cash credit). Income could be broken down in interest, treasury, and other income; while various break-ups for expenses are also possible. Other possible dimensions are customer types or segments.
Derived indicators such as profitability, business per employee, product profitability etc are also evaluated over time.
The existence of a number of business critical dimensions over which the same transaction data could be analysed, makes this a fit case for multi-dimensional databases (hyper cube or ‘the cube’).
Though it is a major requirement, it hardly receives the attention of BI vendors. For sometime, these requirements were bundled as Executive Information Systems (EIS). But the safe, quantifiable world of computers runs up against a wall of unquantifiable abstractions, value judgments and opinions when designing an EIS system. For one, no two executives are alike. And how information is analyzed, interpreted and acted upon is a very subjective exercise. No surprise, therefore, that BI vendor shifted their focus to terra firma of customer relationship management (CRM) which continues to be the centre of their sales pitch to banks today. Even risk management comes a close second.
Performance Budgeting
Indian banks adopted performance budgeting as a management tool in the sixties. The success of the tool depended on historical data on which the current performance levels could be realistically based, and periodic reviews to take corrective actions if there were large variances between budgeted and actual figures. Historical analysis and performance budgeting used roughly the same indicators and the same dimensions, except for resource allocation to achieve the budgeted targets.
Customer Relationship Management (CRM)
As stated earlier, this application is at the centre stage of BI in banking. It is difficult to assess whether it is driven by technology or business. Traditional or conservative banking business models of Indian banking industry relied heavily on personal relationships that the bankers of yesteryears had with their customers. To that extent, ‘relationship’ in the present version of CRM is a misnomer. Let us look into the application of CRM in banking, a little more closely.
CRM is an industry term for the set of methodologies and tools that help an enterprise manage customer relationships in an organized way. It includes all business processes in sales, marketing, and service that touch the customer. With CRM software tools, a bank might build a database about its customers that describes relationships in sufficient detail so that management, salespeople, people providing service, and even the customer can access information, match customer needs with product plans and offerings, remind customers of service requirements, check payment histories, and so on.
A CRM implementation consists of the following steps:
Find customers
Get to know them
Communicate with them
Ensure they get what they want (not what the bank offers)
Retain them regardless of profitability
Make them profitable through cross-sell and up-sell
Covert them into influencers
Strive continuously to increase their lifetime value for the bank.
The most crucial and also the most daunting task before banks is to create an enterprise wide repository with ‘clean’ data of the existing customers. It is well established that the cost of acquiring a new customer is far greater than that involved in retaining an existing one. Shifting the focus of the information from accounts tied to a branch, to unique customer identities requires a massive onetime effort. The task involves creating a unique customer identification number and removing the duplicates across products and branches. Technology can help here but only in a limited way.
The transition from a product-oriented business model to a customer-oriented one is not an easy task for the banking industry. It is true of all the banks, Indian or otherwise. It is also true of all Indian banks; private, public, or foreign; and of whatever generation.
A few instances are worth mention here. Head of retail business of a technology savvy new generation private sector bank admits on conditions of anonymity, that there is no 360 degree view of a customer available in his bank. It treats credit card applications from its existing customers in the same way as it does for new customers. A retail loan application does not take into account the existing relationship of the customer with the bank, his credit history in respect of earlier loans or deposit account relationship. And this bank is one of the pioneers in setting up a data warehouse, and a world class CRM solution.
Most CRM solutions in Indian banks are, in reality, sales automation solutions. New customer acquisition takes priority over retention. That leads to the hypothesis that it is BI vendors that are driving CRM models in banks rather than banks themselves. Product silos have moved from manual ledgers to digital records. There is not a single implemented model of ‘relationship’ in Indian banking industry as of today.
Risk Management
Theoretically, banks transform, distribute and trade financial risks in their role of a financial intermediary. However, the risk management discipline as it is known today has its roots in statistical techniques, which require historical data, both internal and external. Statistical models for measurement of various risks such as credit, market, and interest rate depend on the availability, accuracy and amount of historical data for their predictive power.
Though most of this data gets generated out of banking transactions, it needs to be extracted, cleansed and transformed before it can be used in risk measurement models. Most of the risk management in Indian banking industry is regulatordriven.
Regulatory compliance
Regulatory compliance requirements in the banking industry worldwide are on the increase. Basel II, anti-money laundering, Sarbanes-Oxley, and Sebi clause 49 are a few examples. All these regulatory requirements share one common feature - they are data-intensive. Some of these requirements are now quite stringent about the quality of reporting, making the chief executive officer (CEO) and the chief information officer (CIO) personally liable for the correctness of reports.
Regulatory reporting, therefore, requires a properly-audited data collection and collation process.
However, all these BI applications cater to the needs of the top management in banks. But, line managers have a different set of BI requirements, which differ from those of the top management. These requirements constitute ‘Operational BI’.
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The information requirements of banking business differ from other businesses on account of the following:
a. Banking converts money into information and vice-versa
Modern banking offers a large variety of services. But the most fundamental activity of any bank is ‘accepting deposits for purposes of lending’. By accepting deposits it converts money into a piece of information that is commonly known as ‘bank balance’. It converts this information into cash at ATMs and its branches.
b. Banking manipulates this information to produce services
The large pool of banking services is a result of various ways in which banks manipulate this information. For instance, banks offer payment services through cheques, drafts, electronic remittance, plastic cards, and mobile phones.
What actually moves is the information, and what actually changes is also the information. It comes as no surprise, therefore, that banks worldwide are the major users of information technology.
c. Like any service industry, banks produce in real time
All services are produced and consumed in real time. When you want to deposit money, the bank produces ‘the deposit accepting service’ at that point of time. If you want to remit money to another person, the bank produces the remittance service to you by taking your instructions, money and effects the remittance.
When you pay through a credit or debit card at a merchant establishment, card issuing and transaction capturing banks collaborate (with other service providers like Visa acting as facilitators) to produce the payment service at that point of time.
d. Banks are geographically dispersed
Before the advent of technology-enabled alternate delivery channels, banks needed to have ‘points of presence’ to produce services for their customers near their physical location. Each ‘point of presence’ has its specific information requirements.
This geographic dispersion, in turn, dictates the ‘control structures’ in a banking organisation. In India, these are commonly known as ‘regional’, ‘zonal’, ‘circle’, or ‘local head’ offices. These offices used to depend on the ‘points of presence’ or ‘branches’ under their control area for all the management information needs.
e. Banking services have rich variety
The variety of banking services springs from the variety of requirements of their customers. Banks cater to individuals regardless of their financial status or profession, small businesses, industries, and large diversified corporate groups. Each of these customer segments has different needs for banking services.
This variety has given rise to multiplicity of technology solutions in banking. No single software solution today can satisfy even the transaction processing
requirements of a large bank.
To produce this variety of banking services at dispersed geographical locations, and to gain the competitive advantage, banks have an equally complex business intelligence (BI) requirements.
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The OEM partners include companies who extend, enhance, or complement MAIA Intelligence solutions. Software partners integrate, embed, or host MAIA products as part of their software offering. Software partners may also bundle and resell MAIA software products with their solutions. Our Reporting Tools are fully customizable and configurable and adds comprehensive reporting and analytical functionality to client’s software products.
MAIA’s objective for its OEM Partner Program is to offer a risk- mitigation strategy to your application product to add a business intelligence platform and to confidently and rapidly bring to market new capabilities that deliver immediate business value and drive both shorter and long-term revenue growth.
MAIA OEM Partners represent organizations that have chosen to standardize on 1KEY’s Framework as their analytics and reporting platform. They take maximum advantage of 1KEY’s analytics and reporting technology by eliminating the time and expense associated with building their own integration infrastructure. Instead they focus on their own core competence - investing their precious R&D resources into building innovative applications and offerings that maximize their competitive advantage.
Benefits for OEM Partners
By partnering with MAIA, the leading and only Indian business intelligence (BI) software Product Company, your business will gain access to an established brand and innovative and robust products. Our partner program offers numerous benefits that will help your company:
Scalable Pricing - OEM partners select the pricing structure that best suits their specific needs.
Press announcements - At the onset of the partnership, a joint press release highlighting the advantages of our combined solution will be issued. Any joint customer deals will be announced and displayed on MAIA Intelligence website.
Co-branding via Web - As our partner, your company’s products and services will be extended to our customer base by linking from our website to yours. Your logo will also be prominently displayed along with details of our combined solutions.
Technical Support - As our partner, you have full access to MAIA’s technical support specialists. You staff will gain privileged access to our expert guidance to ensure your team produces top quality systems. Our team is on hand to troubleshoot and resolve any technical issues that may arise.
Collaborative Marketing Programs - OEM partners are eligible to participate in collaborative marketing programs, including direct mail campaigns, trade shows, seminars and other co-marketing activities.
System Validation by Our Engineers - When offering MAIA’s product in bundled offering it is important for technical team to focus resources on integration validation of the final products and services OEM plan to offer in the marketplace.
Marketing tools and resources - including logos, sales guides, release notes, one sheet PDFs, product overview copy, screen shots and much more.
• Increase revenue
o Provide opportunity to develop market-leading and standards-based solutions
o Attain flexible licensing options for buy versus build
o Increase average deal size
o Leverage the comprehensive market presence of MAIA’s 1KEY
• Focus efforts on your core competencies
o Accelerate time to market
o Reduce development costs
• Provide incremental value to your customers
o Gain faster ROI by offering customers a complete solution