Professional Documents
Culture Documents
Abstract. Striving for planning effectiveness and efficiency, corporate planning is subject to change. On the one hand, changed business requirements demand necessary adjustments. On the other hand, new planning applications promise to facilitate corporate planning. To support an aligned development of corporate planning and business intelligence (BI), an integrated maturity model is needed. Such a maturity model not only supports the assessment of strengths and weaknesses of a company's own efforts, but also provides an outlook on future developments in both domains. As current corporate planning maturity models do not address BI and existing BI maturity models lack a corporate planning functional perspective, this paper presents an integrated corporate planning and BI maturity model.
Introduction
Corporate planning typically consists of four major planning subsystems: strategic planning, long-term planning, operational planning, and forecasting [22, 25]. According to empirical studies, these subsystems change nearly every year regarding the planning content, models, and processes [3]. Corporate planners are striving for more efficiency in their field of work by reducing the partially large planning efforts and therefore modifying the subsystems. Furthermore, effectiveness is a major change driver: Changing context variables like economic situations, business models, technology development, and innovations in corporate planning itself demand adjustments of corporate planning in business practice [1, 21]. As corporate planning is heavily dependent on information technology (IT)-based planning applications, these are subject to change as well [28, 35]. Furthermore, software vendors are pushing new planning applications into the market, driven by new technology possibilities and improved user interfaces and self-administrable applications [28, 35]. In this situation, corporate planners need orientation from functional corporate planning development and also from new BI possibilities. In addiUniversity of St. Gallen, Institute of Information Management, St. Gallen, Switzerland, {frederik.marx, gerrit.lahrmann, robert.winter}@unisg.ch
1
tion, internal BI departments have to be aware of future corporate planning developments in order to support an adequate BI infrastructure. Maturity models are an established means to identify strengths and weaknesses of certain domains of an organization. They consist of multiple, archetypal levels of maturity of a certain domain and can be used for organizational assessment and organizational development. Our literature analysis shows that corporate planning maturity models do not or rarely address BI [16, 35]. Existing BI maturity models lack a corporate planning functional perspective [24]. Following the design science paradigm of information systems research [20, 29], this paper has the goal to bridge those gaps by outlining a combined corporate planning and BI maturity model. Such a model promises to assist aligned business and IT development. After setting the methodical foundations (cf. section 2), we describe what corporate planning and BI entail (cf. section 3). Subsequently, we focus on the maturity model itself by identifying maturity models of planning (cf. section 4.1) and allocating planning applications on maturity levels (cf. section 4.2). We end with an evaluation of the aligned maturity model by using seven case studies (cf. section 5) and a final discussion of our results (cf. section 6).
Research method
According to March & Smith [26], design research is defined to produce and apply knowledge of tasks in order to create effective artefacts that serve human purposes. In contrast to natural sciences, which aim for developing and verifying theories that explain and predict behavioural aspects of the reality, design research intend to advance existing capability limitations [20]. Design research is therefore considered as a problem-oriented approach that aims for building and evaluating innovative artefacts which can take the form of constructs, models, methods, and implementations [26]. As the overall goal of this work is to draft an aligned corporate planning and BI maturity model, this paper adheres to the design research paradigm [20, 26]. Maturity describes a state of being complete, perfect or ready [33]. In order to reach a desired state of maturity, an evolutionary transformation path from an initial to a target stage needs to be progressed [12]. Maturity models are used to guide this transformation process. Typically, a maturity model consists of several levels (also called stages) of maturity and a number of structuring dimensions. Each level has its own distinguishing descriptor that provides a clear indication of the intent of the level and a detailed description or summary of its characteristics. Dimensions are specific capability areas structuring the field of interest. Each dimension is further specified and described by a number of elements or activities (or measures) at each maturity level [9, 12]. Several procedure models have been developed that support the construction of maturity models [4, 9], which are basically instantiations of the general design sci-
ence research process [26, 29]. The maturity model in this paper is constructed by using the procedure model by De Bruin et al. [9] (c.f. Fig 1).
As we have already outlined the scope of the maturity model in the introduction of this paper, we are focusing on the design and population phase of maturity model construction. As this paper represents research in progress, we focus on the construction of the maturity model itself, neglecting the assessment model and the maintenance in this first iteration. By means of a literature analysis, we identify and describe relevant subsystems of corporate planning and corresponding BI applications. These define the solution space for the maturity model to be constructed. Then we design and populate the model by using an analytical top-down approach as proposed by De Bruin et al. [9]. A top-down approach at first specifies the maturity levels and their descriptions. In a second step, the corresponding characteristics are determined.2 We use an existing life-cycle model of organizations as underlying meta-model [31]. Organizational life-cycle models are a form of maturity models which describe the development of organizations by discrete stages and characteristics such as corporate strategy and organizational structure [31]. Stages are seen as successful patterns of organizational design, due to their internal logic and integrity [34]. As a result of their superior organizational perspective, they not only influence the subsequent design of but also align corporate planning and BI [10, 16, 27]. To populate the meta-model, we use the result of the literature analysis by mapping corporate planning subsystems and BI application to the maturity levels as proposed by IS design models [37]. For testing, we use seven qualitative case interviews evaluating the models at large organizations. According to Yin [39] case studies are an established means for explorative analysis and validation. Finally, we deploy the model within this article.
BI application types
Since the 1960s, the support of corporate management with IS has been an ongoing topic. From the support of transactional processing and reporting (transaction processing systems), the development of IT leads to an evolution of IS-based managerial decision support systems (DSS) [7]. In addition to applications, the corporate IS landscape also encompasses integration infrastructure, such as DWs and enterprise application integration systems, which are necessary to enable the communication and information sharing between the applications [32]. This leads to widespread accepted reference architecture models of BI, oriented towards the IS pyramid, incorporating source systems, integration infrastructure, and analytical applications [32, 36]. Following Watson, business intelligence is a broad category of applications, technologies and processes for gathering, storing, accessing, and analyzing data to help business users to make better decision [36]. As we aim at the identification of real-world designs in the field of corporate planning, we outline the relevant BI applications as identified in the literature [2, 35]. Thereby, we focus on standard software components, as this has been established in the field of corporate management [3, 28]. The following Fig. 3 shows the portfolio of BI applications available. The focus is on analytical applications, but we also provide relevant integration systems and source systems. The descriptions are derived from the literature [2, 28, 32, 35]. Examples of standard software from three leading vendors are provided [14]. In terms of analytics, we follow the differentiation proposed by Baars and Kemper [22] and distinguish between generic and concept-oriented applications. The latter are incorporating business logic (models and workflows) and are specific for some planning subsystems [2, 28, 35].
Category Type Strategic planning application Concept oriented analytical application Description Strategic planning solutions especially address strategy formulation and visualization and the subsequent defining and tracking of strategic initiatives. They support quantitative data and allow linking corporate strategy KPIs to divisional strategy KPIs and also to KPIs of strategic initiatives and projects. Often, they include BSC approaches for cascading strategic targets. Financial planning applications provide tools for the flexible development of planning models and offer planning functionalities like allocation, distribution, simulations, and scenarios. Often, they are based on OLAP databases. Usually, these planning applications support the planning workflow from data loading up to reconciliation. Consolidation applications are preliminarily designed for financial consolidation according to legal requirements and for management consolidation. Sometimes, consolidation applications are also used for data loading and the aggregation of planning values. Spreadsheet applications, are highly used in corporate planning, for decentralized and centralized calculation of planning figures. Advantages of spreadsheet solutions are the high degree of modeling flexibility, the user-friendliness and the low initial costs The central feature of OLAP applications is multidimensional data modeling. OLAP is interesting for corporate planning as it allows aggregation and even some moderate levels of financial consolidation of data along the corporate organizational and product hierarchies and some calculations, such as contribution margins. In terms of integration systems, the data warehouse centric architecture has been established. The DW (and data marts, as a subset of the DW) serves as data integrator from diverse source system and as data provider and storage for the following analytical applications. Enterprise resource planning systems (ERP) are important data sources for corporate management. They are used to support transactions along business processes. ERP also offers specific modules supporting integrated operational planning, but today ERP focus more on transactions processing than on planning. Vendor example IBM Cognos Balanced Scorecard Oracle PeopleSoft Scorecard SAP Strategy Management
Consolidation application
IBM Cognos Planning IBM Cognos TM1 Oracle's PeopleSoft Planning and Budgeting SAP Integrated planning SAP BO Planning and Consolidation, IBM Cognos Controller, Oracle Hyperion Oracle PeopleSoft Consolidation SAP Business Consolidation Microsoft's (MS) Excel
OLAP application
Integration system
DW
IBM's DB2 Oracle's 11g database SAB BW (Business Warehouse), Oracle Enterprise One SAP ERP
Source system
ERP
Level 3: Corporate financial planning: The company is in its second growth phase. The increasing size and diversification leads to divisional group structures. Management is decentralized with much autonomy and full responsibility: operational planning and strategy development is done on a divisional level. The corporate centre is staffed minimally and has its focus on financial planning and control: Annual budgets are the main focus of the corporate planning process complemented by a financial forecast. As corporate managers and planners have to learn to balance resources between divisions in the long run, the planning system is supplemented by financial-oriented long-term and cash-flow planning. The longterm planning is focused on three to five years and sets objectives for the annual budget of the divisions. Formal corporate strategic planning is missing. Divisions may develop their own strategic planning system. Level 4: Corporate strategic planning becomes necessary as the company shifts from internal growth to external growth (e.g. acquisitions) and develops matrix structures that demand cross-divisional coordination. Divisions are responsible for strategic planning, budgeting, and capital expenditure, but the corporate centre reserves the right to ensure that divisional strategic plans are sound and fit in with the corporate development. The corporate centre also sponsors and launches certain strategic initiatives. Corporate planning shifts from pure financial planning to a balanced planning of financial and qualitative information: Next to the annual budget and forecast, there is a formalized strategic planning with a horizon of three to five years as complement to or instead of financial long-term planning. Supporting the forward-looking shift, forecast and strategic planning use rolling horizons. Corporate strategic planning is done by integrating or setting targets for divisional strategic business plans. The strategic planning sets multidimensional targets for the annual budget, e.g. by using BSC dimensions. Other strategic instruments, e.g. scenarios and simulations, are implemented as well. Level 5: Corporate strategic management: The company manages hundreds of different evolving and also declining businesses. Strategic thinking is well spread all over the company. In order to align the different strategic initiatives within the company, strategic planning and operational planning are integrated in a company-wide planning framework, which consists of a long- and a short-term integrated strategic planning process, balanced in terms of financial and qualitative information. Both instruments shift from fixed to rolling planning horizons. This especially addresses a shift from operational planning and complementing forecast to a single rolling operational planning. Driven by planning efficiency and in order to compensate problems which are associated with a complete central framework, the corporate centre only requests a reduced set of key performance indicators (KPIs). The corporate centre reserves the right to selectively reduce the autonomy of divisions as financial pressure increases.
strategic planning applications. Next to financial aggregation, quantitative data should also be handled along the company hierarchies. Strategic initiatives should be based on the same data model as financial planning, so that strategic planning and tracking of cross divisional initiatives become fully integrated with the organizational structure. The following figure 1 provides an overview of the combined maturity model. We differentiate the dimensions of corporate (planning) contingencies, corporate planning, and BI. These group the sub-dimensions of corporate strategy, corporate structure, operational planning, forecasting, strategic planning, decentralized and central applications.
BI
Corporate planning
Corporate contingencies
10
In order to confirm the maturity model empirically, we conducted qualitative case interviews with seven large European companies each lasting about 120 minutes. In each case, interview partners from corporate management accounting with responsibility for the BI systems were selected to capture the required holistic view on corporate planning and BI. After a first interview session, the cases have been sent back for verification and completion of open questions. The interviewquestionnaire contained qualitative, open questions structured considering corporate strategy, organizational structure, corporate planning, and usage of BI. As a result, we have been able to identify the assumed maturity levels. The characteristics of the examined cases are presented in Fig. 5.
The cases confirm the model, as each case can be matched to one of the maturity levels. In consequence, it can be assumed that the combined maturity model measures corporate planning systems and corresponding BI of further companies as well. Nevertheless, the presented combined maturity model needs further testing, as it will help to further refine the combined maturity model and increase the scientific rigor of the artefact.
11
environment, should be integrated into the combined maturity model. As the derived BI dimension so far only focuses on planning applications, other corporate planning relevant BI aspects, such as BI platforms (i.e. integration with other analytical applications, shared data infrastructure) should be addressed by the model's next iteration.
References
1. Abernethy, M., Chua, W.F.: (1996) A field study of control system "redesign": The impact of institutional Processes on Strategic Choice. Contemporary accounting research 2:13, 569606. 2. Baars, H., Kemper, H.-G.: (2008) Management Support with Structured and Unstructured Data An Integrated Business Intelligence Framework. ISM 25:2, 132-148. 3. Bange, C., Dahnken, O., Friedrich, D.: (2008) Planung und Budgetierung in europischen Unternehmen: Konzepte, Lsungen und Potenzial von Performance Management. Springer, Heidelberg. 4. Becker, J., Knackstedt, R., Pppelbu, J.: (2009) Developing Maturity Models for IT Management - A Procedure Model and its Application. BISE 1:3, 213-222. 5. Bowman, E.H., Singh, H., Thomas, H.: (2006) The domain of strategic management: history and evolution. In: Pettigrew, A.M., Thomas, H., Whittington, R. (eds.): Handbook of Strategy and Management. SAGE Publication, London 31-52. 6. Churchill, N.C.: (1984) Budget Choice: planning vs. control. HBR 62:4, 150-164. 7. Clark Jr, T.D., Jones, M.C., Armstrong Curtis, P.: (2007) The Dynamic Structure of Management Support Systems: Theory Development, Research Focus, and Direction. MIS Quarterly 31:3, 579-615. 8. Clarke, P.: (2007) The Rolling Forecast as a catalyst for change. Acc. Ireland 39:5, 22-24. 9. de Bruin, T., Rosemann, M., Freeze, R., Kulkarni, U.: (2005) Understanding the Main Phases of Developing a Maturity Assessment Model. In: Proceedings of the 16th Australasian Conference on Information Systems, Sydney, Australia. 10. Eckerson, W.W.: (2009) TDWI's Business Intelligence Maturity Model. Springer, Heidelberg. 11. Ekholm, B.-G., Wallin, J.: (2000) Is the annual budget really dead? The European Accounting Review 9:4, 519-539. 12. Fraser, P., Moultrie, J., Gregory, M.: (2002) The Use of Maturity Models/Grids as a Tool in Assessing Product Development Capability. In: IEMC 2002, 244-249. IEEE Engineering Management Society, Cambridge, UK. 13. Frezatti, F., Aguiar, A.B., Guerreiro, R., Gouvea, M.A.: (2009) Does management accounting play role in planning process? Journal of Business Research, In Press. 14. Gartner, I.: (2010) Magic Quadrant for Business Intelligence Platforms. Springer, Heidelberg. 15. Gleich, R., Greiner, O., Hofmannn, S.: (2006) Better, Advanced and Beyond Bugeting: Von der Evolution zur Revolution. In: Gleich, R., Hofmann, S., Leyk, J. (eds.): Planungs- und Budgetierungsinstrumente: Innovative Anstze und Best-Practise fr den Managementprozess. Haufe, Freiburg 23-38. 16. Gluck, F.W., Kaufmann, S.P., Walleck, S.A.: (1980) Strategic management for competitive advantage. Harvard Business Review 58, 154-161. 17. Grinyer, P., Al-Bazzaz, S., Yasai-Ardekani, M.: (1986) Towards a contingency theory of corporate planning. Strategic Management Journal 7, 3-28. 18. Hahn, D., Taylor, B.: (2006) Vorwort. In: Hahn, D., Taylor, B. (eds.): Strategische Unternehmensplanung - Strategische Unternehmensfhrung. Springer, Berlin XI-XIV.
12 19. Hansen, S.C., Van der Stede, W.A.: (2003) Multiple facets of budgeting: an explanatory analysis. Management Accounting Research 15, 415-439. 20. Hevner, A.R., March, S.T., Park, J., Ram, S.: (2004) Design Science in Information Systems Research. MIS Quarterly 28:1, 75-105. 21. Hope, J., Fraser, R.: (2003) Beyond Budgeting. Harvard Business School Press, Boston (Massachussets). 22. Horngren, C.T., Sundem, G.L., Stratton, W.O.: (2008) Introduction to Management Accounting. Prentice-Hall, Upper Saddle River. 23. Horvth, P.: (2001) Controlling. Verlag Franz Vahlen, Mnchen. 24. Lahrmann, G., Marx, F., Winter, R., Wortmann, F.: (2010) Business Intelligence Maturity Models: An Overview. In: VII Conference of the Italian Chapter of AIS (itAIS 2010). Springer, Naples, Italy. 25. Malmi, T., Brown, D.A.: (2008) Management control systems as a package Opportunities, challenges and research directions. Management Accounting Research 19, 287-300. 26. March, S.T., Smith, G.F.: (1995) Design and Natural Science Research on Information Technology. Decision Support Systems 15:4, 251-266. 27. Moores, K., Yuen, S.: (2001) Management Accounting Systems and Organizational Configuration: A Lifecycle Perspective Accounting. AOS 26, 351-389. 28. Oehler, K.: (2006) Planung und Budgetierung: (Neue) Anforderungen an die Softwareuntersttzung. In: Gleich, R., Hofmann, S., Leyk, J. (eds.): Planungs- und Budgetierungsinstrumente. Rudolf Haufe Verlag, Freiburg 93-120. 29. Peffers, K., Tuunanen, T., Rothenberger, M.A., Chatterjee, S.: (2007) A Design Science Research Methodology for Information Systems Research. Journal of Management Information Systems 24:3, 45-77. 30. Pries-Heje, J., Baskerville, R.L., Venable, J.: (2008) Strategies for design science research evaluation. In: 16th European Conference on Information Systems, 255-266, Galway, Ireland. 31. Pmpin, C., Prange, J.: (1991) Management der Unternehmensentwicklung. Phasengerechte Fhrung und Umgang mit Krisen. Campus Verlag, Frankfurt. 32. Schelp, J., Winter, R.: (2007) Integration Management for Heterogeneous Information Systems. In: Desouza, K.C. (ed.): Agile Information Systems - Conceptualizations, Construction, and Management. Butterworth-Heinemann, Oxford 134-149. 33. Simpson, J.A., Weiner, E.S.C.: (1989) The Oxford English Dictionary. Oxford University Press, Oxford, UK. 34. Venkatraman, N.: (1989) The Concept of Fit in Strategy Research: Toward Verbal and Statistical Correspondence. Academy of Management Review 14:3, 423-444. 35. Wagner, C.: (2004) Enterprise strategy management systems: current and next generation. Journal of Strategic Information Systems 13:2, 105-128. 36. Watson, H.J.: (2009) Tutorial: Business Intelligence Past, Present, and Future. Communications of the Association for Information Systems 25, 487-510. 37. Winter, R.: (2003) An Architecture Model for Supporting Application Integration Decisions. In: Proceedings of the 11th European Conference on Information Systems, Naples, Italy. 38. Yasai-Ardekani, M., Haug, R.S.: (1997) Contextual determinants of strategic planning processes. Journal of Management Studies 34:5, 729-768. 39. Yin, R.K.: (2009) Case Study Research: Design and Methods. Sage Publications, Los Angeles.