If you receive errors when attempting to view this white paper, please install the latest version of
"More than 23,000 leading companies and organizations around the
world choose Cognos performance management solutions. Use business intelligence software to
understand performance and make better decisions. Use financial performance management software
to set targets and allocate the resources to achieve them."
Source: Cognos, an IBM Company
ROI Evaluation Report: IBM Cognos Software
IBM Cognos Software
is also known as :
Business Performance Management
Business Intelligence Software
Business Intelligence System
IBM Cognos 8 BI
Corporate Performance Management,
Business Intelligence Solutions,
Cognos Business Intelligence,
Cognos Framework Manager,
IBM Cognos TM1,
Cognos Business Objects,
Business Intelligence Analytics,
IBM Cognos Now,
IBM Cognos 8 Planning,
Department and Vertical Specific PM Tools,
Business Intelligence Reporting,
Cognos 8 Business Intelligence,
Business Intelligence Technology,
THE BOTTOM LINE
Companies that use IBM Cognos software are able to improve productivity,
reduce or avoid headcount, reduce financing costs, and increase
profitability. These benefits are achieved because when employees can
rapidly access and analyze data in consistent ways, they are better able to
make business changes that both lower costs and increase revenues.
IBM Cognos software helps companies make better use of their data when
performing tasks related to reporting, financial statements, budgeting, and
analysis. The product offering includes:
- IBM Cognos 8 BI, which offers reporting, analysis, dashboard, and scorecard
functionality for monitoring performance, analyzing trends, and evaluating
operational or financial results. The application also offers tools for modeling
how data in a business intelligence (BI) or performance management (PM)
environment will be maintained, governed, and shared.
- IBM Cognos TM1, which is a performance management tool that enables
companies to consolidate, view, edit, and analyze large volumes of data on a
- IBM Cognos Now, which is an operational BI solution that continuously
monitors key performance indicators and line-of-business operational metrics.
- Department- and vertical-specific PM tools, which are for tasks related to
workforce analytics, financial performance analysis, and credit risk
- IBM Cognos 8 Planning, which provides planning, budgeting, and forecasting.
Although organizations typically find it easy to accumulate data, it often remains
unusable or unavailable to the decision makers who need it. Some of the barriers
to better use of data include:
- Cost. Organizations often balk at the cost of strategic investments necessary
to make data usable, such as master data management and tools for creating
standardized reports, scorecards, and dashboards.
- Ad-hoc tools. In the absence of automation, people create their own reporting
and analysis tools - typically in Excel - which leads to various versions of the
truth and different ways to interpret data, which both reduce productivity.
- Static reports. Reporting systems based on static reports are also costly
because they require report builders to continually create new customized
report iterations in order to meet end users' evolving needs and preferences.
- Silos. In the absence of a structured way to use and analyze data, and without
integration among data sources, employees get at best a limited view of their
business, which severely limits their analytical and decision making abilities.
Even when companies adopt applications such as BI or PM, benefits are not always
fully realized. Companies that have partially deployed BI or PM should consider
extending their deployments in order to maximize benefits in the form of cost
savings and productivity improvements.
Identifying the opportunity
Nucleus has found that limitations in reporting and analysis typically reveal
themselves in the form of some common behaviors that include:
- Guesswork. Managers and employees who make critical operational decisions
based on intuition and their own observations typically do so based on a
relatively limited body of data which may be inaccurate and focus on the wrong
- Reconciliation. In the absence of automation, employees find it difficult to
collaborate because they need to first reconcile the various ways in which they
analyze and interpret critical data points and key performance indicators.
- Rote input. The more budgeting and other finance-related processes force
people to manually and repetitively enter data rather than thoughtfully
consider their operational and competitive environments, the more automation
is required. Additionally, the more rote input processes have, the more error
prone they are.
This report identifies the benefits that Nucleus finds companies can achieve by
deploying IBM Cognos software. It is meant as a guide for CFOs, managers, or
investment committees that are considering an investment in these applications
and provides validations of benefits as well as best practices that make users more
able to achieve them.
KEY BENEFIT AREAS
Companies that use IBM Cognos software are able to improve productivity, reduce
or avoid headcount, reduce financing costs, and increase profitability. These
benefits are achieved because when employees can rapidly access and analyze
data in consistent ways, they are better able to make business changes that both
lower costs and increase revenues.
IBM Cognos software improves productivity by making it easier for people to
locate, identify, and analyze data. Companies that deploy these applications also
improve productivity because their managers and business analysts are able to use
data to make more efficient use of their workers.
Productivity improvements are most readily achieved for report builders, finance
staff, and line of business managers who perform analyses on a regular basis.
IBM Cognos software improves the productivity of report builders by both making it
easier for them to rapidly build reports and offloading some of their workload to
end users. These applications also enable both report builders and end users to
create standardized reports, clone them, and build customized reports using highly
intuitive interfaces designed for use by people without an IT or report-building
background. Because this enables end users - who tend to modify their reports
on a continual and iterative basis -to build their own reports, report building staff
and developers receive far fewer report requests and become significantly more
- One customer said, "Because there is so much functionality in IBM Cognos 8.3
BI, and it's wired into SAP, we spend a lot lest time building custom reports."
- Another user that upgraded to IBM Cognos 8 BI said, "Cognos 8 integrates
reporting capabilities with the cube data. So now we build reports from the
ground up within Cognos BI framework, and publish to our Web site, all
without intervention from developers."
- A financial institution that deployed IBM Cognos TM1 said, "To get the level of
reporting that I have now with the old system. I would have to hire about two
to three people. And these are MBA types, not just report builders."
IBM Cognos software makes finance and line-of-business staff more productive by
replacing budgeting processes that are semi-automated or spreadsheet-based with
workflows that involve far fewer budgets and automate the consolidation of
budgets up from the smallest business units, rather than relying on managers to
accurately create their own consolidating spreadsheets. This means that finance
personnel, as well as anyone participating in the annual budget process, spend far
less time inputting data, reconciling spreadsheets, and combining statements.
Nucleus found that companies readily identified productivity improvements for
employees in their finance or accounting departments:
- "Automating the budgeting and financial close process improved the
productivity of my five accountants by about 20 percent."
- "I have a headcount of seven in my accounting group, and they are about 15
percent more productive because of the automation of reporting workflows."
IBM Cognos software makes line-of-business managers more productive by making
it easier to locate and analyze data. In addition to providing end-user driven
reporting, these applications enable end users to independently monitor or
investigate key performance indicators and other factors with a variety of tools
including dashboards, alerts, and database queries. Additionally, interactive
reporting - which enables users to drill down into data points to investigate
underlying drivers - enables people to independently and iteratively explore data
while also spending less time on research. End users typically became more
productive as a result of these improvements to their workflows:
- "Now that it's easier to build and use reports, people spend less time hunting
for data and manually reconfiguring it or asking IT for follow-on special report
- "There are 223 end users consuming data from Cognos. Because they're now
doing their own ad-hoc reporting with things like drilling down in interactive
reports, they are about 10 percent more productive."
Nucleus finds that IBM Cognos software can improve the productivity of workers
involved in reporting, finance, or analysis by up to 20 percent.
When the scale of benefits is large enough, or when IBM Cognos software is used
as a tool for labor analytics, the benefits can go beyond productivity and be
achieved in the form of reduced staffing needs.
Reduced staffing needs
IBM Cognos software enables organizations to reduce staffing requirements by both
improving the productivity of large teams performing data-related functions and
giving line-of-business managers the labor analytics they need to utilize their staff
more cost effectively. When managers use BI to achieve productivity
improvements for large groups of workers performing similar or identical tasks,
companies can reduce costs by laying off workers, redeploying them, or not
replacing them as attrition reduces headcount over time. For example, a bank
manager with responsibility for staffing at 15 branches could combine demand
drivers such as weather and promotional activity with information on the available
pool of tellers to reach conclusions that help her both assign the right number of
tellers to each branch and utilize the least-cost employees with the required skill
sets. Reduced staffing needs such as this are most readily achieved for general
workers, but they can also be achieved for business analysts, accountants, and
staff dedicated solely to report building:
- "We laid off five FTEs out in the lines of business; three analysts and two
- "We're using analytics to figure out where our investigators are needed and
compare this to where they are deployed. If we hadn't done these analyses, we
probably would have added 100 investigators to our staff."
Nucleus finds that when organizations use IBM Cognos software to improve the
productivity of its workforce or analyze how it is deployed, staffing needs can be
reduced by up to 15 percent.
Companies can use IBM Cognos software to reduce the amounts of inventory,
accounts receivable, and other assets they purchase and maintain on their balance
sheet. Even though companies typically have aging reports for their inventories
and accounts receivable, this information is typically underutilized because it is
either ignored by managers or is stranded at the business-unit level. However, a
company with a BI deployment can create a unified view of the levels of these
assets. Senior line-of-business managers or analysts in the department of finance
can use such a view to identify assets that are stale or converting to cash too
slowly, and then identify the root cause of the problem. In fact, Nucleus finds that
IBM Cognos software deployments can be so effective at identifying bloated assets
and determining their root cause that this is often one of the first business
challenges tackled after the go-live date. Nucleus commonly sees IBM Cognos
software used to better control asset levels:
- An IBM Cognos TM1 user that operates gift shops at its resorts said, "We use
TM1 to monitor inventory and identify slow-moving stock. Immediately we
reduced inventory by half a million dollars. Now we use it to make sure only
this year's models are in inventory, because otherwise the gross margin slips."
- A company that uses Cognos for budgeting and planning said, "Cognos enables
us to plan production better and identify inventory padding. We've reduced
inventory by 700 tons."
Nucleus finds that IBM Cognos software enables companies to reduce asset levels
by up to 15 percent.
IBM Cognos software enables line-of-business managers to analyze their operating
environments and identify changes they can make to increase revenue or reduce
costs. Managers and other workers are typically too busy with day-to-day
operations to stop and effectively analyze the factors that determine profitability or
their trends. For example, call-center center managers with no BI tools are likely
to evaluate customer service representatives based on their mean time to
resolution even though the real goal of a call center is maximizing customer
satisfaction so that customer churn is minimized. Similarly, managers with pricing
responsibility typically have little or no meaningful data about customer demand,
leaving them to make pricing decisions based on intuition. In fact, Nucleus
typically finds that when employees and managers have strong BI tools -
especially those with end-user driven functionality that enable iterative and
experimental exploration of data - they are able to make day-to-day operational
decisions that improve profitability:
- An IBM Cognos TM1 user said, "In TM1, our front-line managers combine data
about current bookings, customer demand, seasonality, and weather so that
they can maximize room utilization without hurting margins."
- A Cognos 8 user at a financial services firm said, "We use Cognos to identify
which customers are more likely to be long term customers, which have
investments that are about to mature, and who should be cross sold. So our
average revenue per customer is up and our churn is down."
IBM Cognos software can also be used to achieve operational visibility that protects
existing revenues and customer satisfaction levels from external disruptions. When
a major manufacturer of IP telephony systems extended its Cognos deployment to
overcome a critical disruption in its value chain, one of its managers said, "By
integrating Cognos with SAP, we were able to deliver on $40 million to $50 million
of quarterly sales that was at risk because of this contract manufacturer problem.
We also would have lost services equal to 30 percent of these hardware sales. Ten
percent of his revenue probably would have been lost permanently."
For an organization to be successful with BI and PM, it needs to make sure that
both the applications and the underlying data accommodate end-user needs and
preferences. It's also important to achieve a mandate early on in the deployment,
and to scale the costs with the benefits. Nucleus found that companies were most
successful when they kept this in mind and followed a number of best practices.
Right size the deployment
Too often, companies choose not to adopt BI or PM because they think it will be too
expensive or because a vendor's proposal makes it look cost prohibitive. One way
around this is to match the level of software purchases to the number of users and
the robustness of the functionality each will be using. IBM Cognos software helps
its customers follow this best practice with pricing that both increases with the
scope of the deployment and takes into account the fact that users will require a
broad range of functionality. Pricing is both role and task based. Roles consist of
administrator, author, and consumer. The tasks consist of reporting, analysis, and
score carding. Companies can also purchase functionality on a per-user or per-CPU
basis. Champions of BI or PM deployments who are looking to ensure that their
proposed deployment will generate a sufficient ROI should consider this pricing
structure as a way to not only minimize costs, but also address the concerns of
CFOs or investment committees who evaluate potential deployments.
Drive a mandate with early success
Creating valuable wins early on is critical to the success of a BI or PM initiative. BI
and PM generate the most returns the more broadly they are deployed and
adopted, so it's helpful if the CFO's office or investment committee understands the
value of these applications when it comes time for investments in new software
seats or training. Early projects should address a broken workflow or management
blind spot that is easily fixed with automation of reporting or analysis. The keys
here are to select something small in scope, which is readily fixed, has little
operational risk, and will catch the eye of senior management. For example, one
company used the planning functionality within IBM Cognos 8 BI to improve the
budgeting process in one subsidiary while maintaining the old workflows in parallel.
Once a group of finance users were enthusiastic about how much more rapidly they
completed their budget work, senior finance personnel viewed these tools more
Focus on end-user needs
Deployment teams should collaborate with end users throughout the project - and
even past the go-live date - because the more end users adopt a deployed IBM
Cognos application, the higher the ROI on the deployment will be. Project teams
should, as early in the deployment as possible, interview end users in order to have
detailed information about data-related workflows and analyses that will be
improved by the deployment. Nucleus finds that companies are most successful
when this is done with a combination of face-to-face interviews, focus groups, and
Even after business requirements have been identified and development is
underway, deployment teams should repeatedly test the tools and applications
under development with end users in order to maximize adoption. Iterative enduser
testing is important because end users often have limited knowledge of BI and
PM capabilities when their business requirements are being identified at the outset
of a deployment. As a result, testing is likely to give end users a better
understanding of the capabilities of these tools, enabling them to refine their
business requirements in ways that will help the deployment team deliver more
functionality that improves productivity or decision making ability.
Be prepared to spend time on the data
Automating reporting and analysis typically relies on large amounts of data from
different applications, databases, and entities within a company. Because of the
potential scale and complexity of working with data in this way, deployment teams
should both analyze the data at the outset, and find ways to mitigate any potential
risk that data will throw the project off track. Deployment teams should plan to
build the data cubes that IBM Cognos software will be accessing based on both the
analysis or reporting needs of end users and the workflow challenges to be
overcome. This will enable the right data to be stored, and in formats that provide
the proper reporting and query results.
Deployment teams should also anticipate how they will get around integration
challenges. If a deployment will be migrating or integrating data that is highly
diverse, then many one-to-one mappings will be necessary. Deployment teams
should avoid creating custom code development for this, because this is extremely
labor intensive and costly. It also makes a deployment more costly to maintain.
Teams should instead utilize applications which automate mappings based on the
data sources and destinations. Automating the creation of these mappings means
that data integration and migration - the riskiest part of a deployment - is less
likely to disrupt a project and this portion of the platform will be less costly to
maintain over its lifetime.
CFOs and other managers in charge of utilizing IT budgets should consider
deploying IBM Cognos software to streamline their reporting, budgeting, and
analysis workflows. When employees involved with these tasks are supported with
automation, their productivity improves, and they become better able to
independently perform research and analysis that leads to profitability-improving
operational changes. When undertaking such a deployment, project champions
and their teams should be prepared to use proof-of-concept successes to drive a
mandate and keep end users involved throughout the deployment. They should
also analyze the data demands of their deployment before it begins, and be
prepared to consider automating tasks related to data transfer, integration,
migration, and quality control.
Nucleus Research is a global provider of investigative technology research and advisory services. Building on
its unique ROI case study approach, for nearly a decade Nucleus Research has delivered insight and analysis
on the true value of technology and strategies for maximizing current investments and exploiting new
technology opportunities. For more information or a list of services, visit www.NucleusResearch.com, call
+1-617-720-2000, or e-mail info@NucleusResearch.com.