ARTICLES
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September 2007 AICPA Article
AICPA Corporate Finance Insider, September 2007 Issue
Value-Added Analysis:
The Right Tools Make the Difference
by Gerald W. Argabrite
When I got my first real job, my title was “Financial Analyst”. As I
remember it, the title seemed exciting and impressive to me at first. In
reality though, I found the majority of my responsibilities involved
gathering data and entering it into spreadsheets. There really wasn’t much
analysis to justify the “Analyst” portion of my title. It wasn’t that I didn’t
want to analyze the data, but the process of collecting it and formatting the
reports took so long there was no time left for analysis. I remember often
thinking, “There has to be a better way to do this.”
Since then, not much has changed. I still find many people with the word
“Analyst” as part of their title that do little or no analysis. Again, it is not
because they are incapable of doing their job, but because they spend too
much time preparing for the analysis and never get to the point of actually
doing it. They need a faster mechanism for collecting and distributing data
so they can have more time for value-added analysis.
Fortunately, there is a better way now. Modern technology offers a
powerful but affordable solution to this problem in a database format
called Online Analytical Processing (OLAP). OLAP specializes in
collecting and distributing data, automating many of the tasks an analyst
might have previously done manually. It also provides fast and flexible
analysis capabilities within the familiar spreadsheet environment that
enable the analyst to look deeper into the meaning behind the numbers
and provide suggested solutions
Let’s compare and contrast some of the key differences:
Ease of Collecting Data - As analysts gather data each period and
enter it into spreadsheets, they are essentially creating tiny databases
that are very specific and inflexible. With OLAP, they can directly
connect to all of your relevant data sources and automatically update
your data each period, eliminating an analyst’s need for manual
updates.
Availability of the Data - A manually created spreadsheet is limited
to the data on the spreadsheet. If you want more data, you will have
to link, copy/paste, or manually enter the data. OLAP gives access
to all of the data in the database. To get more data, an analyst can
merely select it from the database and it will appear on the report as
quickly as they can make the selection.
Slicing and Dicing the Data - OLAP stores the data by predefined
fields called dimensions. These dimensions are set up in a
hierarchical format with predefined roll-ups of the data (for instance,
months rolling to quarters rolling to years). OLAP enables analysts
to drill up and down the dimensions, add and remove dimensions,
and pivot dimensions between rows and columns. This is often
called “slicing and dicing”. Where an analyst can navigate through
OLAP data in seconds, it would likely take minutes, hours, or even
days to navigate through the same data without OLAP. Without
OLAP, an analyst would have to develop a different report each
time they would want to look at the data differently.
Report Scalability - In OLAP you can create a view of your data
once and rotate it through every account, department, and time
period combination that you desire. You can literally create
thousands of data view possibilities with one data view. Without
OLAP, you get only what you see on the spreadsheet. You need to
manually change the data each time you change an account,
department, or time period.
These are just a few of the major differences that make OLAP a key
component to effective analysis. The good news is that there are OLAP
products on the market that will sell to any size organization, including
single-users, so this is no longer a technology reserved only for the biggest
companies.
It is our experience that in most cases analysts are not able to do all of the
work they are tasked with doing. By using OLAP technology, it enables
the analysts to shift their roles from report writers to being true analysts.
We find that those who understand and embrace the power of OLAP
technology not only keep their jobs, but become significantly more
productive, and often even get promoted because they are able to add so
much more value.
Can you imagine a Financial Analyst without strong skills in electronic
spreadsheet software? It might have been acceptable 15 years ago, but
not today. In the near future, strong skills in OLAP software will be at
least as critical as spreadsheet skills. Don’t let yourself or the analysts
miss an opportunity to be ahead of the curve.
Value-Added Analysis:
The Right Tools Make the Difference
by Gerald W. Argabrite
When I got my first real job, my title was “Financial Analyst”. As I
remember it, the title seemed exciting and impressive to me at first. In
reality though, I found the majority of my responsibilities involved
gathering data and entering it into spreadsheets. There really wasn’t much
analysis to justify the “Analyst” portion of my title. It wasn’t that I didn’t
want to analyze the data, but the process of collecting it and formatting the
reports took so long there was no time left for analysis. I remember often
thinking, “There has to be a better way to do this.”
Since then, not much has changed. I still find many people with the word
“Analyst” as part of their title that do little or no analysis. Again, it is not
because they are incapable of doing their job, but because they spend too
much time preparing for the analysis and never get to the point of actually
doing it. They need a faster mechanism for collecting and distributing data
so they can have more time for value-added analysis.
Fortunately, there is a better way now. Modern technology offers a
powerful but affordable solution to this problem in a database format
called Online Analytical Processing (OLAP). OLAP specializes in
collecting and distributing data, automating many of the tasks an analyst
might have previously done manually. It also provides fast and flexible
analysis capabilities within the familiar spreadsheet environment that
enable the analyst to look deeper into the meaning behind the numbers
and provide suggested solutions
Let’s compare and contrast some of the key differences:
Ease of Collecting Data - As analysts gather data each period and
enter it into spreadsheets, they are essentially creating tiny databases
that are very specific and inflexible. With OLAP, they can directly
connect to all of your relevant data sources and automatically update
your data each period, eliminating an analyst’s need for manual
updates.
Availability of the Data - A manually created spreadsheet is limited
to the data on the spreadsheet. If you want more data, you will have
to link, copy/paste, or manually enter the data. OLAP gives access
to all of the data in the database. To get more data, an analyst can
merely select it from the database and it will appear on the report as
quickly as they can make the selection.
Slicing and Dicing the Data - OLAP stores the data by predefined
fields called dimensions. These dimensions are set up in a
hierarchical format with predefined roll-ups of the data (for instance,
months rolling to quarters rolling to years). OLAP enables analysts
to drill up and down the dimensions, add and remove dimensions,
and pivot dimensions between rows and columns. This is often
called “slicing and dicing”. Where an analyst can navigate through
OLAP data in seconds, it would likely take minutes, hours, or even
days to navigate through the same data without OLAP. Without
OLAP, an analyst would have to develop a different report each
time they would want to look at the data differently.
Report Scalability - In OLAP you can create a view of your data
once and rotate it through every account, department, and time
period combination that you desire. You can literally create
thousands of data view possibilities with one data view. Without
OLAP, you get only what you see on the spreadsheet. You need to
manually change the data each time you change an account,
department, or time period.
These are just a few of the major differences that make OLAP a key
component to effective analysis. The good news is that there are OLAP
products on the market that will sell to any size organization, including
single-users, so this is no longer a technology reserved only for the biggest
companies.
It is our experience that in most cases analysts are not able to do all of the
work they are tasked with doing. By using OLAP technology, it enables
the analysts to shift their roles from report writers to being true analysts.
We find that those who understand and embrace the power of OLAP
technology not only keep their jobs, but become significantly more
productive, and often even get promoted because they are able to add so
much more value.
Can you imagine a Financial Analyst without strong skills in electronic
spreadsheet software? It might have been acceptable 15 years ago, but
not today. In the near future, strong skills in OLAP software will be at
least as critical as spreadsheet skills. Don’t let yourself or the analysts
miss an opportunity to be ahead of the curve.
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