The following are conceptually the major benefits of implementing group-wide master taxonomies to the standards of precision, structure and discipline that I advocate.

Relative value is expressed in percentage out of total value delivery from the complete solution through the different factors – total for all factors is 100% -- these numbers are indicative based on my observations over the years and will vary from organization to organization.

In presenting these benefits it is perhaps important to note that my benchmark is the first commercial business computer solution I ever developed which enabled the client to double their turnover in twelve months because they could do things that competitors many times larger could not do by making better investment decisions.

1.       Strategic executive view of the data – 2%

All data is sorted and grouped in a manner that makes most sense from a strategic executive perspective of the organization.

Hierarchical taxonomies sorted from most strategic (essence of the business / thrive) information at the top of the taxonomy down to the most routine at the bottom with ease of drill down that reflects the strategic perspective on the business ensures that all users of the data share the same strategic view of the strategic priorities of the business.

If these taxonomies are deployed in operational software then these priorities are communicate throughout the organization simply by use of the software.  In principle, however, it is recommended that these taxonomies should FIRST be deployed in a tailored data warehouse.

The remainder of this document assumes that taxonomies are first deployed at the data warehouse level.

These benefits are material, but they are NOT where the true return on investment lies.

2.       Presentation of detail, roll-up and drill down are logical, intuitive and fast – 4%

Hierarchical logic and supporting code schemes make presentation of detail and roll-up to summary logical, intuitive, flexible and fast.

The strong hierarchy design principles ensure that there are generally between five and ten items at any level in the hierarchy which facilitates ease of use, speed of interpretation and speed of drill down.  These design principles recognize the cognitive span of the human mind and take account of the psychology of decision making.

The code scheme and hierarchy design rules that I apply ensure that the drill down capability of all reporting and analysis tools operates at peak performance, in some cases orders of magnitude improvement in ease of report construction with associated reductions in development and maintenance costs result provided that developers understand the logic and conventions and work with them.

3.       Operational reporting and system operation is streamlined and operational efficiencies result – 6%

Because the raw data is so highly structured and classified operational reporting and system operation is streamlined and operational efficiencies result provided that reports etc are designed to work WITH the taxonomies.

An extension of the previous point in terms of delivery of value.

4.       Emphasis on content precision improves data quality – 8%

Emphasis on content precision improves data quality throughout the organization with resultant low-key second order efficiency and presentation gains – reports, etc are neater and more accurate.

This is an overall cultural benefit that I did not anticipate but was lifted out as a key element by a client a few years ago.

5.       Data-warehouse mapping is greatly simplified resulting in a much higher level of report and model reliability and sustainability – 10%

If the precision strategic taxonomies are introduced between the ERP / Business Information System layer and the data warehouse / business intelligence layer ETL (extract, transform, load) is simplified and a much higher level of report and model reliability and sustainability is achieved.

If the taxonomies are introduced in the ERP the ETL in the Data Warehouse is massively simplified.

Providing highly structured strategic business logic in the input mappings to the data warehouse with either scenario opens the door for massive improvements in effectiveness and efficiency in the business intelligence layer – this is where the real benefits are delivered.

Implementing the taxonomies in the operational software must go hand-in-hand with a comprehensive re-implementation or new implementation of the business information systems and I am increasingly seeing that this should only happen once there is a comprehensive solution in the data warehouse space.  Refinement of code schemes in the operational software will be necessary during data warehouse design and construction.

The points that follow assume that the taxonomies are implemented in a clean, green fields data warehouse instance built from scratch to maximize the effective exploitation of the taxonomies.

6.       Enables greatly improved due diligence and ease of integration of acquisitions – 12%

This approach makes it possible to rapidly map data from potential acquisition targets during due diligence in order to evaluate performance using standard reports and models in use for the rest of the Group.

This same capability opens the door for greatly accelerated integration of acquisitions into Group standard analysis reports and models.

This is a spin-off benefit that may not be that material in your organization, however, if you are considering acquisitions this benefit alone could more than pay for the entire investment.

The key benefit of this approach is that because you have the tools to quickly and easily map source data to the new highly structured taxonomies you can then easily apply standard reports to the mapped data and produce comparative analysis of the target firms' financials and other data using exactly the same reports and models you use for the rest of the Group.

Effectively what this does is it enables you to analyse the target as though it was already part of the Group and get a good feel for its real performance using your own metrics.

By extension, immediately the acquisition has taken place these same mappings can be used to start reporting on the new member of the portfolio to the same standards of the rest of the group from month one.

This obviously assumes your acquisition is in the same business as the rest of the companies in the group.  If you are a bank and purchase a fleet of fishing trawlers there will be challenges – you will have to extend your existing taxonomies to accommodate the new business area first...

7.       Greatly improved sophistication of management reports improves operational and tactical (things right) decision support dramatically – 18%

Because of the highly structured logic of the data much more sophisticated management reports and graphs become readily achievable giving a quantum improvement in sustainable management information which greatly improves the quality of operational and tactical decision support.

At this point the investment really starts to pay for itself by enabling the capability to build robust reports and analysis tools that evaluate whether the business is doing things right.

A significant investment is required over and above the development and deployment of the taxonomies in order to develop reports to the same standards of precision and excellence that are inherent in the taxonomy approach which I advocate.

Once this investment has been made it becomes orders of magnitude faster and cheaper to produce reports and undertake more complex analysis which in most organizations would be impossible with the sort of data that is in general existence.

In order to understand this point it is important to note that I am coming from a perspective of practical experience in the application of really sophisticated graphical and statistical techniques which are seldom understood by people in the IT or management space and which few people know how to apply.

These techniques, if appropriately applied, open the door to a much more meaningful and much deeper understanding of the business, trends, relationships, sensitivities, correlations, etc than is possible with the data that is typically found in business information systems.

This is the point at which the concept of a dashboard as a range of precision instruments taking precision measurements starts to become really valid.

8.       Enables advanced sophisticated analytical models with greatly improved support for strategic (right things) decision making – 40%

This in turn makes it possible to construct sophisticated economic and other analytical models and use sophisticated analytical techniques which greatly improve the quality of strategic decision support information which facilitate decisions that enable the business to do the right things well (thrive).

This is where a quantum level of return on investment results IF executives exploit the resources created in order to make better competitive decisions.

This builds on the previous point but extends it into advanced economic and other models which permit the executive team to really manage the future long term direction of the business and supports them with the information they need in order to achieve exceptionally high value business decisions.

One high quality business decision that results in a high value sustainable business investment or divestment decision will pay for the investment in technology and services with geared multiples that cannot be realistically quantified.

The real value of an executive lies in the strategic decisions they make and the real value of what is being proposed here lies in the ability of the information infrastructure that is created to support such high value decisions.

The true value of your organization being able to make much better decisions than its competitors cannot be quantified in currency terms – it could be the difference between being the target of a take-over as opposed to being the acquiring firm in a take-over.

In moving into this dimension it must be stressed that it is necessary to bring in information that is not contained in the operational business information systems.  This would include soft information and there are robust techniques which, if implemented to the same standards of rigour, precision and taxonomy design will provide all sorts of possibilities in terms of analysis and decision support.

I would like to stress that all the above harnesses existing technology to its full potential – this is NOT a technology solution.

For years people have been trying to develop technology that compensates for mediocre or poor data quality.

The approach advocated here is different, this approach treats the problem at its root and provides exceptional structure from a strategic business perspective together with logical conventions that make the technology perform at exceptional levels.

This is the next frontier of business information – it is the next major opportunity – organizations which seize this opportunity will definitely gain an advantage over their competitors.

Achieving these benefits today is NOT trivial, there are lessons to be learned and software tools to be developed.  I have been doing the basic things described here for about 24 years but it is only in the last few years that I have realized that most people are not aware of this opportunity and that what I do is radically different to standard practice.

It is only in the last two years that we have started to develop software to facilitate and support what is described above.  The full magnitude of benefits cannot be accomplished without specialised software tools to assist with the development and maintenance of code schemes.  We have an overall concept design for the entire software solution and are in development of the software at this time.

In summary the final benefit of this investment is that strategic business information is provided in such a way that the factors that give rise to the phenomenon of 19 out of 20 businesses being dissatisfied with their ERP / business systems investment are overcome and the organization moves from the realms reported by Gartner of not making better decisions despite huge investments to a space of exceptional decision support.

This investment has the potential to equip executives with the resources that will allow them to make strategic decisions at a far more reliable and far more sophisticated level than competitors thereby opening the way for greatly enhances strategic competitiveness and therefore profitability.

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