Financial Performance Management Print
Financial performance management, it must be said, is a pretty valid concept for almost every company in the current economic climate.
That heightens the relevance of IBM Cognos TM1, which provides real-time consolidation, viewing and editing of enormous volumes of multidimensional data using a patented, 64-bit, in-memory OLAP server.

Stated like that, TM1 doesn’t necessarily sound very exciting, except perhaps to hard core techies. Let’s, then, rather look at how it is used in the field.

A good example is how the internal finance department of an insurance company came under increasing pressure to build an accurate ‘cost per policy model’ to accurately see how and where costs are accrued in the execution of business. Before TM1, the approach was simple…or, rather, simplistic, with the cost as taken from the General Ledger spread over the volumes of policies in terms of activity-based costing theory.

However, after deploying TM1, it was possible to show decision-makers figures which they had, simply put, never seen before. Instead of just ‘cost per policy’, now they could also see ‘cost per product’, ‘cost per business unit process’, ‘cost per activity’. The difference is that it is now possible to drill so deep into each individual policy that it is possible to see exactly where and how costs are incurred.

The previous approach was ‘top down’. Internal finance would say, ‘OK, there is R10 available per policy for administration’ and that was that. Now, with a ‘bottom up’ approach, every point at which cost is accrued can be accurately viewed; the ability to do this means that it is also possible to examine that cost and optimise it.
What makes TM1 unique is its in-memory multidimensional ability. It can analyse volumes of data practically instantly; with no delay, it brings a level of flexibility to the business which was previously absent.

By explanation: previous reports would be published days or weeks after analysis is done. That meant the ability to take action is pushed out – and once the analysis is done, the situation might change. The effects of taking action can also only be evaluated even more weeks down the line. TM1 provides information to be acted in immediately while the results of that action can be seen immediately.

It also provides for scenario planning – so action doesn’t necessarily have to be taken before the possible results are evaluated. That brings a level of assurance to the business; no tinkering with cost models without knowing what may happen.

While the example discussed is that of how TM1 has been used by an insurance company, the TM1 solution is suitable for any business which has complex business processes in which it is difficult to view where and how costs are accrued and where clarity is sought to improve operations.