Management Decision Making:
what’s there to improve and how can we handle this?
'Nice to Know' vs. 'Need to Know'
White Paper – Part 1
(2011 - EN)
www.linio.nl
©
Published by Linio – New Interim Solutions
Author: Peter Reij
Jupiterhof 7
3951 EA Maarn
Netherlands
T. + 31 6 4285 4983
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White Paper ´Nice to Know vs. Need to Know’ – Part 1
Linio – New Interim Solutions ©

I. Executive Summary
Linio Whitepaper – 'Nice to Know' vs. 'Need to Know' – Part 1
For any company the central objectives and business parameters determine the extent to
which management is 'on track' to meet these targets. The business parameters are crucial and
include KRI's and KPI’s. With KRI's (the critical result indicators) we refer to historical results;
KPI’s (critical performance indicators) are about projections into the future.
In practice, however, many companies, whatever the sector or industry in which they operate,
have difficulties to set and monitor these business parameters in a correct, solid way. It is also
clear that essential, underlying data – which is often increasing in quantity – is incorrect and
unreliable.
Senior management consequently receives inadequate qualitative information, to take adequate
decisions, and to steer the company in a responsible, necessary way in the current competitive
arena. So every moment there is an important consideration: 'Nice to Know' vs. 'Need to Know'!
Experience shows that there are six essential steps to fundamentally improve the decision
making for managers, independent of software applications, analysis tools or technical systems
used. This applies for Business Intelligence as well as for Marketing Intelligence and Customer
Intelligence. The six steps are:
 Determining which business parameters apply (KPIs and KRI's).
 Analysis and assessment of necessary data (e.g. with a data audit).
 Improve data quality and establish rules to guard data quality.
 Provisioning reporting processes/management and setting up effective reports.
 Organising a Reporting Council (or reporting team).
 Internal communication.
There are important benefits with this approach: Quick Win's and financial savings, accuracy
and functionality of the Management Information System, and a significant competitive
advantage.
This is the first part of a series of White Papers (in Dutch and English) about Management
Decision Making and Information Management, published by Linio. In part 2 various best-
practices and lessons-learned will be covered. Part 3 talks about creating a 'Reporting
Council' and Best Practices for organisations dealing with Information Management.
About Linio – New Interim Solutions ©
Linio is an independent company, focused on Information Management, and aiming at improved
Management Decision Making. A broad international experience helps Linio to look at these subjects in a
practical manner. Without a preference for software applications, technical analysis tools or other 'tricks':
the (commercial) success of the company and the functioning of the management are paramount.
Facilitation of the correct 'tools' for managers, to take better decisions, and make the company controls
its activities more effectively. That's what Linio stands for!
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White Paper ´Nice to Know vs. Need to Know’ – Part 1
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II. Management Problems
General
One of the key problems managers are facing every day is taking the right decisions. And even
so, not taking the right decisions can have far-reaching effects. This applies to any company,
non-profit organisation or governmental body, regardless of the industry or sector in which it
operates.
Management Decision Making is an important subject that requires attention, at each level in
the organisation. Important are the responsibility of managers, the dependencies, and
consequences of decisions. But also the – financial - risks associated with this. Literature
is even talking about 'the Art of Decision Making ': an essential component that can make or
break the success of a company.
A classic example is the manager receiving a monthly print-out on his desk, and turning to
page 25 or 26 for net sales per product group. He/she then moves to a few pages about gross
margins, this time by product class. And just like last month looking at average unit prices of
products (page 42/43). He/she doesn’t take any further action with this figure mush: it is the
view of what has happened over the past month, so there is not much to do anymore.
The decision of this manager is in fact 'no decision at all'; he/she continues with the day-to-
day problems.
Conclusion: this paper is superfluous, this management information is outdated, and the
quality of the decisions this manager takes (based on this material) is questionable.
Various research * confirms this conclusion and shows very clearly the signals of the outlined
problems. For Example:
 '56% of senior managers are concerned about making poor choices because of bad data.'
 'Less than 10% of executives receive the information they need.'
 ' ... the biggest obstacles to successful decision-making throughout the organisation:
o Inadequate tools for gathering, integrating or analysing operational information
(39% of respondents).
o Inconsistent reporting of information among business units, geographies or
functional operations (36%).
o Lack of accurate, timely and relevant data from across the business (31%).'
Only 3% of respondents describe their companies as "experts" in using business data to drive better decisions,
and only 27% agree that their company makes better, faster business decisions than their main competitors.
* The Economist Intelligence Unit © 2009
Only 13% of senior marketers felt confident in their ability to forecast the sales impact of
their marketing programs.
* Forrester © 2010
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Only 23% of Fortune 1000 companies have KPI’s that are accurately tied to business strategy and
financial results: this group earned almost 3% higher return on assets and more than 5% higher return
on equity than the companies with inaccurately correlated metrics and strategy.
* Harvard Business Review 2009
How would companies operate if management base their decisions on a fundamental different
way of looking at information management?
For each enterprise Objectives are essential, and steering parameters help us determine to
what extent we are 'on track' to meet these targets. Steering parameters are crucial and
include KRI's and KPIs. The KRI's (the critical result indicators) are about the historical results;
KPI’s (the critical performance indicators) project the results into the future.
In practice, many companies, regardless of the business, sector or industry, have difficulty in
a correct, solid way to define and monitor these steering parameters. It is clear that essential,
underlying data, which often greatly increases in quantity, is not correct and not reliable.
Managers get insufficient qualitative information (see the example) to take appropriate
decisions to manage the company in a responsible way. In practice it results in companies
that lag behind their competition.
Information management – more than figures only
The basics of information management are explained by four related topics:
I - Data
These are the figures in an ERP system or computer, normally loaded in a so-called data
warehouse: this is accessible with certain software. For example: number of products, order
data, inventory figures, customer data, billing data +volumes, and various amounts of money.
II - Information
This relates to data that is displayed in a more structured and comprehensive form. For
example, the number of products in categories, number of customers in customer segments,
inventory quantities by product category, number of invoices on a certain date, gross or net
turnover, costs prices etc.
III - Knowledge
Refers to the intelligent rational of information: for example net sales per customer group for a
month, in Euro, totalled in descending order. Or the payment behaviour of customers and
trend figures on stocks. There are many ‘knowledge’ examples: company-, sector-and
business specific.
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IV - Decision (Behaviour)
This concerns the actual choice one makes with the knowledge of specific customer behaviour, on
certain price changes or on special trends that become visible with this knowledge. So the
(correct?) decision is taken with the obtained knowledge, which is based on the right information.
This seems obvious for good 'management decisions'. But we recognise from many issues
around information management, especially for the first two topics, can cause major
problems: data quality and definitions.
Data Quality
The following complications are known:
• Data quality is poor or insufficient: the company information is unreliable.
• Number of data sources and size of these sources is growing fast (almost exponentially).
• Ownership of data sources is unclear and often questionable.
An extra problem for the 'hierarchy' of data-information-knowledge-decision occurs with
the first subject: there is so much information available, increasingly in quantity, and in so
many variations. Think of click/surfing behaviour, social-media traffic, blog-texts, input of
customer information by using Web pages etc.
In addition, the processes to collect and save data can cause ‘moderate to poor data quality’
(so we get the known problem 'garbage in is garbage out'). That doesn’t make it any easier:
how we categorize data? What are main issues, and what are the side issues? And how do we
filter relevant information? This classic issue is in fact the idea behind this White Paper ('Nice-
to-Know versus Need-to-Know').
Definitions
A lot of time is lost on internal discussions about 'the correct information’: when various
reports show for example net sales, direct costs or gross margin, and it doesn’t lead to the
same values… then what is the truth? And also, the value of a lead, prospect or a new
customer is not clear in all cases.
Next to the problems of data quality and insufficient consensus on definitions, other
complications are known:
• Business objectives and Balanced Scorecard parameters are not fully 'translated'
into practical business parameters for the organisation.
• Duplication of information, reports, pivot tables, KPI/KRI-documents etc.
There are (too) many reports, dashboards, maps, and so-called scorecards.
• Who is responsible for data, reporting, and the available information?
• The variety of reports and different interpretations can result in a mess, and with the
use of PivotTables and spreadsheets even more new reports are added. It explains
why certain people get the title ‘Excel Knight'.
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This White Paper pretends not to be a scientific study or evidence about Business Decision
Making. But a simple model shows how the hierarchy of Information Management can indicate
the current situation of an enterprise (the names of reports are here only for illustrations). It
helps to explain the 'maturity' of Information Management.
A. At the left is the distinctive operational level from the given example: many classic reports
on paper, monthly statements, and such. This 'management information' is published
internally and afterwards. The predictive value of such information is limited. We call these
KRI’s: critical result indicators. IT has a substantial influence on the application that creates
this reporting. There is little or no involvement from the business with this 'intelligence'.
B. Left from the centre is the situation with a multitude of reports, dashboards, and
scorecards. Each manager has their own preference for layout, format, and frequency of
these reports. Internal discussions are typically associated with the quality and reliability
of the figures: the available information shows mainly the actual status and historical
results. This enables practically no reliable forecast of results. The value of KRI's is
reasonable, but that doesn’t apply to KPI’s (critical performance indicators).
C. Right from the middle refers to strongly rationalised management information. The excess
of reports and scorecards is reduced: they are published according to agreed standards
and frequency. Clear definitions apply. Content of the information has significantly more
quality, resulting in reasonably accurate predictions. The business has a lot of influence on
the quality of the application.
D. At the right is the most ideal situation of management information: a high degree of
predictability, forward projections, and typical KPI’s. It enables management, with reliable
historical data, to focus especially on the future.
This 'Hierarchy of Information Management' is a typical development that companies go
through. The model helps explain the status of Information Management we need to take into
account. And what level of ambitions an enterprise may have or may not have. In other words,
the model helps to raise awareness of the issue 'management decision making', and the
changes that are achievable for this subject.
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Recognisable problems! What is the solution?
How to resolve these problems? What is a sensible approach? Are there any 'best practices'?
What risks and pitfalls should we consider? And … what could be the role for Linio?
A fundamental understanding of 'information management' will create more awareness – for
all staff involved – and explain the difference between ' Nice-to-Know’ and ‘Need-to-Know '. In
the immense quantity of data-information-knowledge many people get lost very quickly;
and that’s the key to make the right decisions. Managers will need to look at the essentials,
the 'Need-to-Know' subjects. It also requires the correct, clear definitions of the business
parameters. Side issues, 'Nice-to-Know’, are interesting to know, but don’t play an essential
role for the success of a company.
In practice, there are different ways to solve this problem. Often the approach is dictated by
the interests of suppliers of Business/Marketing Intelligence applications. Indeed solutions
from the technical environment, for example with changes of software configurations, data
warehouse and dashboards. Usually these precious interventions do not solve the problem!
It creates high expectations among senior management, but the quality of decision making
does not improve a lot. In other words: more beautiful and colourful dashboards do not
necessarily result in better decisions!
In essence, here are three distinct areas:
a - Strategic choices : the assessment by senior management of business parameters for
the company. It is related to the urgency management information needs to meet
contemporary requirements and to compare results with these parameters.
b - Tactical considerations : the design, development and management of reports. This will
also include internal processes, definitions of the parameters and the role of
employees with the necessary management information. The data quality has to be
mentioned, and there must be a clear understanding on what the rules are to improve
(and securing) of data quality and data processes.
c - Operational implementation : the actual build (production) and distribution of reports,
dashboards, and abovementioned KRI's/KPI’s (the key result and key performance
indicators). It concerns the use of reports, scorecards and dashboards.
Experience shows, also in the practice of Linio, that mainly six steps are needed to improve
decision making for managers in a fundamental way. Regardless of the size of the company,
the sector or industry; it is applicable for each management level. Important: it works for any
software applications, analysis tools or technical systems used in the company!
For all these steps, we have an important purpose, namely:
'Have the right information available throughout the
organisation, for the right staff, at the right time, in the correct
format, to manage the company in the preferred direction.'
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White Paper ´Nice to Know vs. Need to Know’ – Part 1
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1- Determine which business parameters apply for the business (KPIs and KRI's):
a. Define relevant business parameters for the company.
b. Create awareness about the importance of 'Nice-to-Know vs. Need-to-Know'.
c. Agree with senior management what business drivers are valid.
d. Define the business case, to draw up a plan of actions, and agree about the
expectations. Assign responsibilities and authority.
2- Analysis and assessment of necessary data (including data audit):
a. Performing a data audit or quick scan.
b. Determine availability of relevant data.
c. Activities to improve data quality and data enrichment.
3- Fix/improve processes:
a. Optimise data processes: recommend how to improve data quality and data processes,
as well as securing data quality.
b. List management: querying and selection work in (marketing) database environments.
Tuning where these activities are to be done and who will handle this.
c. Related activities (by third parties for technical expertise): advice and design of ETL,
data marts, DWH (incl. architecture).
4- Organisation:
a. Structure of current reports (' Reporting Grid ').
b. Organising a Reporting Council or reporting team. This is also called a (Business
Intelligence) Competence Centre.
c. Monitor processes, roles and responsibilities.
d. Project management of the above activities.
e. Outsourcing or insourcing is a possible alternative to limited internal expertise or
to deal with missing resources.
5- Arrangements for reporting process/management + establish effective reporting:
a. Definitions (+ retain this!) of parameters, data, and information within IT/Business.
b. Designing, developing and deploying reports and (marketing) management
dashboards: prototyping, development and production.
c. Determine who builds the reports, who maintains them, and who is using them.
d. Rules to customise standard reports (KRI's and KPI’s, dashboards, scorecards),
and to what extent it is allowed to create new reports.
e. Access rules for data: authorisation.
f. Naming conventions, categories of reports etc.
g. Assurance of these solutions within the company + version control.
h. Managing mailing lists and distribution of reports.
6- Internal communication about Management Information:
a. Create ‘user acceptance’ in the entire organisation.
b. Awareness of changes: what reports are used now, what are the restrictions,
which items can be improved, and what improvements should be expected?
c. Managing internal changes: with assistance of 'internal' ambassadors,
presentations by senior management, the role of super-users (all to clarify
the improvements and benefits of the changes – at operational level).
What are the real benefits of this approach?
And what improvements can be achieved?
Financial benefits – Quick Win’s and tangible results
 ICT investment and cost reductions:
o Limitation of direct costs by reducing work within the ICT department;
questions about ad-hoc reporting, and requests for special reports are no
longer accepted by ICT.
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o Lower indirect costs by less internal discussions on definitions and contents of
reporting: unambiguity and consistency of the different names and terminology,
as is used in reports and dashboards. This applies not only to the ICT staff but
also on the ‘business’ side’ (so the users of this information; sales, service,
marketing, operations, etc.)
 Lower costs by reducing 'wrong' reports and eliminating inefficient reporting:
o Monitoring 'the right' reports will result in spending less energy on unnecessary,
redundant information. That is time efficient, so a saving!
o With accurate and reliable information there is less risk of incorrect decisions.
 Fast, efficient reporting: KPI’s-KRI’s, dashboards, and scorecards:
o By better streamlining reporting, the required information, at the right time, in the
correct format will be available to the right managers.
o Less waiting times for users and stakeholders of reports; in particular, in creating
new reports and changes or improvements of existing ones.
 Reduced dependency on 'Excel Knights' and manual reporting:
o If clear choices have been made for specific reports (and we know this discipline is
kept and monitored), then it must also be clear what reports are no longer needed.
As a result, there is less need to compile additional reports (for example in Excel)
and distribute them.
Accuracy and functionality of the Management Information System
 Relevant, up-to-date data is available for a large group of users:
o In addition to reports and dashboards, ad-hoc queries can be processed as
part of special analyses: such as 'what if' scenarios and projections.
o A wide range of users consume identical and uniform information: that is a
must to achieve and maintain a professional impression to customers, suppliers
and stakeholders (such as investors and finance authorities!).
 Lasting solutions:
o Improvement of data quality and reliable data is an essential part of a
robust and professional management information system.
o The authority of the Reporting Council is the foundation of a durable, reliable
information system that can be changed as required within the structure and
processes of the (commercial) operating conditions.
o The growing demand for mobile information (smart phones) can demand the
Reporting Council to work together with ICT on further professionalisation of
accurate management information: to be available any time (24/7).
Competitive Advantage
 Advanced analytical intelligence:
o Better data quality and greater accuracy of information makes it possible to obtain
more and better insights in the management information system. And these views
are not only backwards, but can be intelligent projections in the future.
o Strategic and operational decisions can be taken quickly and reliable, when the
desired information is available in a faster pace. If that is possible at any
management level, compared to competitors who are less well organised, we
can speak of a distinct competitive advantage.
o Correct information means less annoyance for customers, and a higher reliability
of the enterprise in general terms: it will result in higher customer satisfaction.
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White Paper ´Nice to Know vs. Need to Know’ – Part 1
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Linio would like to play a role in improving Information Management
This White Paper is based on a broad experience with information management at various
companies, both B2B and B2C. Linio wants to share this knowledge with others, to create
awareness of the concept 'Nice to Know vs. Need to Know', and to help with the right
approach.
About Linio – New Interim Solutions ©
Linio is an independent company, focused on Information Management and aiming at improving
Management Decision Making. A broad international experience helps Linio to look at these
subjects in a practical manner. Without a preference for software applications, technical analysis
tools or other 'tricks': the (commercial) success of the company and the functioning of the
management are paramount. Whether it be for Business Intelligence, Marketing Intelligence,
or Customer Intelligence.
Linio looks at the business objectives first: the technical solution is a tool to achieve these
goals. Facilitation of correct 'tools' for managers, to take better decisions, and make the
company (profit, non-profit or not-for-profit) controls its activities more effectively.
That's what Linio stands for!
For more information, contact Peter Reij: +31 (0)6 4285 4983 (email to peterreij@linio.nl)
www.linio.nl
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White Paper ´Nice to Know vs. Need to Know’ – Part 1
Linio – New Interim Solutions ©