The Economist is the Information Analyst of Tomorrow’s Organizations

30 Jun 2014
Economists hold a unique status in organizations – it is they who are required to analyze and present management with the information relating to all organizational departments, including production, marketing and HR – information that impacts cardinal decisions within the organization. In order to do so, modern economists must be equipped with methodologies and tools that enable them to analyze and research the impact that internal and external processes have on the organization’s profit line. In this regard, the economist can definitely be considered a critical organization resource. When provided a proper position in the organizational decision making process, the economist can generate growth, create profit or improve current profitability. Analytical decision-making Nowadays, economists face diverse and multi-system challenges. One of the challenges is the economist’s ability to capture the right spot on organization management and to introduce management to insights toward building a modern, analytics based decision-making process. This process is not limited only to the finance department, but rather takes place along with all other members of management in a reality where the complexity of the decision making process increases with organizational complexity. This reality calls for a function that can take apart the processes impacting the organization – both internal and external – and evaluate their impact on the organization’s business results. The economist is the person to fill this function and provide management with a full and complete image that can link between the organizational processes and its business results. Another challenge facing the economist is creating a cohesive organizational truth. Organizational truth has become a known phrase and it is relatively easy to achieve in terms of revenues and expenses, but very difficult to attain in terms of product or customer profitability. Revenues and expenses are subject to meticulously defined and regulated accounting principles, while the economic aspect, including profitability, does not apply a consistent method; there is no single authority to determine the method, no consistent standard for analyzing profitability and the method changes from one industrial vertical to the next. Profitability analysis in the insurance industry differs from profitability analysis in the telecom market, industry and more. This challenge requires the economist to work with a proper data model, with a proven methodology and to create work processes that will enable him to properly reflect the processes impacting the organization’s profit line. Integrating Technology, Processes and Data Organizations have greatly invested in technology and they have a profound impact on every business process within the organization, including the economist’s work. Most organizations operate an ERP system that provides a picture of the organization’s expenses and there is a BI system that provides a picture of the organization’s customers and revenues. However, in most cases, the economist is still unable to attain the business insights for supporting the decision-making processes in a timely manner. The economist is still unable to analyze profitability in a timely manner that can add value to the organization and motivate it into action .Thus, in many organizations, the huge investment in IT fails to generate the information and insights that the decision makers need in order to improve profitability. In order to better utilize the existing technology, an analytical and methodical skill must be developed to locate and handle the data entry weak points and improve cooperation with the organization’s IT professionals. Only the economist who understands the use of information can serve as an integrator between technology, processes and data. Decisions must be made according to an analytical model. The economist undoubtedly fills a significant position here, both in terms of his involvement in preparing the model and in terms of presenting the picture to the decision makers. The result could lead to a bottom line improved by several percentage points, but such improvement could transform a losing organization to a profitable one, or change its market position from second place to leadership. Decisions must be made according to an analytical model. The economist undoubtedly fills a significant position here, both in terms of his involvement in preparing the model and in terms of presenting the picture to the decision makers. In closing, business decisions – whether at senior management or field level – must be reached through evaluating their impact on the organization’s profit line. The result could lead to a bottom line improved by several percentage points, but such improvement could transform a losing organization to a profitable one, or change its market position from second place to leadership.