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Business Analysis is part of all types of organizations. All too often
business analysis focuses on expenses and the comparison of actual expenses
versus budget. A poll showed that 27% of companies felt their budget was
obsolete even before the new year started and 67% felt the budget was obsolete
within 6 months of the year starting.
Budget to actual variance analysis is not a good use of time and can lead to
poor decisions.
- If sales volume is higher than budget than it may be reasonable that
shipping, production, and call center expenses may also be higher than
budget.
- On the other hand if sales volume is less than budget, but shipping,
production, and call center expenses equal budget, then this may indicate a
real problem even though these departments are at budget.
Successful Business Analysis must de-emphasize comparisons of actual versus
budgeted expenses. They may even want to consider giving up the budgeting
process and replacing the annual budget with quarterly forecasts.
Success Business Analysis needs to include Business Process Management.
Business Process Management looks at
- cost
- cycle time
- quality
- customer satisfaction
over an entire enterprise as well as over complete processes.
For example, if purchasing in a hospital buys lower quality cement used for
hip replacements because lower quality cement is cheaper, it may actually be
more expensive. If a surgeon performing the hip replacement has problems getting
the cement to set up or if the cement does not hold as well and the hip surgery
has to be redone, then that cheaper cement was actually more expensive.
Think about your own organization and how
one cost center or one department can increase the expenses of another
department or increase the expenses of the entire organizations.
So successful organizations need to incorporate process management when doing
business analysis.
Call John Antos, Jim Brimson or Pat Dowdle at
972-980-7407
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