CCM (Part 2) - 5 things you should know - and 2 things you better not forget - when building a CCM data analytic environment
This post is the second of a multi-part article which is titled “5 things you should know - and 2 things you better not forget - when building a data analytic environment”. It is about data analytics in general, but with a focus on building bigger solutions like a CCM (Continuous Controls Monitoring Environment).
The full article contains several parts. The first five parts describe attention points:
Part 1 has already been covered (they are linked above, so you can go back anytime there). This is now part 2, “Know your systems”:
Five things you should know, continued (2/5)
We continue with the second aspect out of the five things that I see as “essential”. After pointing out in the last article that you should “Know what you want to know”, it is great that we managed to identify one analytic question. So the first step was about a getting proper business understanding and stating as-detailed-as-possible questions that can actually be answered. Only by knowing your business well you can make a good list of analytic questions. The area we were interested in was “Compliance”, the topic “Payments to critical countries” and the detail questions that were raised we stated as follows:
“Identify payment transactions that have been done in context of partners like vendors, or customers, or even where an expense account is directly debited.
Create a list of these transactions and identify the payee’s bank country for those payments.
Match these detail transactions versus a list of countries that are seen as critical because they are on the embargo list, known as tax haven or having a Corruption Perception Index > x.”
So how can we proceed in answering this?
Aspect 2: Know your systems
At this point we will need to start talking a bit more detailed about IT and IT infrastructure. Before it really makes sense trying to apply data analytics, you need to raise the question, if the data is in “the system” at all, and if so, where.
For example, if you want to analyze the approval process of a purchase order, and you find out that these approvals are done by having the purchase requisitions printed out and signed by the manager on paper, the paper put in folder in a cupboard – well, then data analytics may not be the right approach there. So obviously we need digital data, best case stored somewhere where we can access it.
For our question raised above “Identify payments to critical countries”, let’s assume the data is in *drums* THE SYSTEM. Well, thankfully, it is in THE SYSTEM. But what system are we talking about? Take SAP® for example. It is an ERP system (Enterprise Resource Planning). There may be the material data, customer and vendor data, purchasing data, sales data, accounting and controlling data stored. Another example would be Microsoft Dynamics AX or NAV (formerly known as Navision) or Oracle Finance. Business processes are creating tons of data every day, and the data is put into (or created by) systems like that.
Figure 1 shows that below the user interface and application logic there is a database where the actual data is stored. A user may enter data (for example, a purchase order). This gets processed by the applications logic (for example, the payment terms automatically get pulled, etc.). Then all the data goes to the back end, the data base.
For data analytic approaches that are about accessing that data this is an important point.
If you want to analyze financial transactions, what system is used in your company to actually do the accounting? Is it SAP®, or is it Oracle Finance®, or some other system? Going back to our example in the previous chapter of this article we need the system which contains the payment transactions, in our example this will be SAP®. However this is not the complete picture. Some companies have one SAP® system in place, others have 2 and others have 200. Let’s say we have 8 – is on every one of those accounting done for certain company codes then?
So the question basically is “Which data is where?”, or “What business processes are represented on which ‘boxes’”?
Does for example each of the 8 systems represent an area (like Western Europe, Eastern Europe, North America, South America, Africa, Middle East, Asia, etc.?).
Or is it split by business processes, like Sales & Distribution on one system, Procurement on another, Plant Maintenance on a third one, and so on?
For our example scenario the last one is the case. We have only one separate SAP® system on which the accounting for all legal entities worldwide is performed. In our picture above this is system named “SY2”.
This knowledge allows us to pick the correct system to establish the data analytic or CCM solution. Now, identifying the system also allows us to check its accessibility: Usually you will need a proper user with appropriate rights to access the data (as we will see later on, with your tools for data extraction or direct assess, this will get very important as well).
Follow-up questions related to that are:
Who is the data owner?
Who maintains the system, is it internal or maybe an external IT department?
How does the workflow of getting an appropriate user be triggered?
Technically speaking, what version of (in our example) SAP® is running on that machine, is it for example SAP® R/3™ 4.5, or mySAP® ERP or the latest SAP® ERP ECC 6.0 version?
If we take our 5 things as checklist, currently we managed to did the first two steps:
We know what we want to know, and we located the appropriate system where the data is stored. Regarding the system, we were able to get some background information about who is responsible and how it can be accessed. But to continue with our analytic approach for building a CCM environment, we not only have to locate the system, we have to find the actual data. In our case, we need the business partner and payment information to answer our “Payments to critical country”-question. It is getting slightly more technical again, as now we need to discuss data structures. We will do so next week in the third part of our article. Stay tuned!
I hope you enjoyed this second part of our CCM articles! For any comments or questions, feel free to write us at firstname.lastname@example.org.
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