Dimitrios V.

Siskos

- Natural Language Processing (NLP) systems

- Metrics for CEO, CFO, VP Manufacturing, and
VP Sales
To: Dr. Thomas Grisham
March 6, 2014

This paper is submitted in partial fulfillment of the requirements for Controlling and Performance
Management (Doctorate of Finance)

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Contents
Contents.................

Abstract..............

How will natural language processing (NLP) systems change the business intelligence arena
and enhance measurement systems? ............

What metrics do you think would be appropriate for the following positions: CEO, CFO,
VP Manufacturing, and VP Sales? Why?........

References....................... 10

Appendices......................... 12

Appendix 1........................... 12

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SMC Working Papers

- Natural Language Processing (NLP) systems

- Metrics for CEO, CFO, VP Manufacturing, and VP Sales
Siskos V. Dimitrios
Swiss Management Center (SMC) University
March 6, 2014
Abstract
A companys success lies in its ability to buy and sell products or services in a competitive market
place in order to increase revenue and to strengthen shareholder value (Petersen et al, 2009). As such, there is
a lot of raw information in form of text language which requires some specialists to sort it, and then compile
findings into a knowledge database (Sammut, 2012). Initially, this paper examines how natural language
processing changes the business intelligence arena and enhances measurement systems. Alongside the
business efforts to become competitive, firms seek ways to measure performance and examine whether their
strategies have been achieved. Such a management tool is the use of performance metrics. Thus, this paper
also suggests appropriate metrics for different management positions in a company (CEO, CFO, VP
Manufacturing, and VP Sales).

Keywords: Business Intelligence (BI), Natural Language Processing (NLP), Metrics, CEO, CFO

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How will natural language processing (NLP) systems change the business intelligence arena and
enhance measurement systems?
In todays complex and rapidly changing business environment, organizations keep large amount of
operational data, generated by daily transactions, in databases. However, in decision making process
managers do not need data in a raw form, but rather in an optimal readable mode, in the most expeditious
manner. Khan and Quadri ((2012) summarize that need, introducing the processes and tools that turn data
into information.
Business Intelligence (BI) encompasses the process used to extract data from multiple sources,
transform it to fit specific analytical needs, and load it into a data warehouse for subsequent critical decision
making process, aimed at improving business performance (Sammut, 2012). While in the early 1990s the
end-users had to rely on the IT department to create custom reports, the modern face of BI represented by the
performance dashboards span both the data management and analytical sides of business intelligence
providing a self-service access to information (Eckerson, 2005). The performance dashboards work best in a
corporate culture that encourages users to share information, otherwise organizations are five times more
likely to struggle (Eckerson, 2005).
Research shows that most benefits from BI solutions are intangible in nature, such as improve decision
making and identify new business opportunities. According to Appendix 1, the BI solutions result in tangible
benefits too, such as cost savings, ROI and new revenues. However, more than half of all business
intelligence projects fail to deliver the features and benefits that are optimistically agreed on at their outset
(Moss and Atre, 2003). In particular, while firms seek more multi-dimensional data embraced with rich text,
they get complex quantitative reports which have to be translated by experts. Moreover, the extraction of
meaningful information from corporate documents has remained a largely unsolved problem.
As such, Natural Language Processing (NLP) techniques represent a potential solution for:

Opening BI to unconventional and unstructured data.

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Analyzing corporate texts.

Enhancing measurement systems.

Extracting meaningful information from their contents.

Many companies have already adopted tools to capture their own data, organize and analyze it in
conjunction with the massive amount of data available, while in the same time they enhance their business
measurement systems. Currently, NLP is a major player in making search engine results more useful to the
browsing public. For example, in July 2013, Microsoft introduced a new suite of business intelligence tools,
the InfoNav, officially known as "Q&A", which is a natural language query engine that helps users ask
questions of their data by typing into a dialog box which the system then understands and generates answers
in the form of interactive tables, charts and graphs (Foley, 2013).
Generally, NLP functions are considered to be a kind of quasi-artificial intelligence, as they translate
and map human language into symbols, classifying then into information taxonomies (Laurent, 2010).
Semantic1 web is another example of a NLP system technology that promises to facilitate this kind of work.
Given the fact that the cost of management coordination has to be less than the cost of interorganizational transactions2 for the organization to continue to exist (Bourne, 2008), NLP techniques reduce
people-hours and accelerate the decision-making processes. Moreover, Boinet (2012) points out that NLP
system reduces the need for management to use structured language to obtain or input raw information into
the system.
To conclude, the new reality derived by the combination of NLP and BI leads to a real time situational
awareness for managers, which greatly aids their decision making process. To truly be the future, technology

The Semantic Web is the extension of the World Wide Web that enables people to share content beyond the boundaries of
applications and websites.
2

These transactions conform to differing trade cycles and are applicable to different e-Commerce solutions.

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would have to possess the artificial intelligence level of an advanced end user who knows and evolves with
the company's unique business processes and the ERP database system being used (Carter, 2013).

What metrics do you think would be appropriate for the following positions: CEO, CFO, VP
Manufacturing, and VP Sales? Why?
One of the most critical parts of a strategic planning session, that most companies overlook, is the task
of translating strategy into metrics (Eckerson, 2005). As such, a number of metrics exist to measure different
business effectiveness in terms of meeting the market demand at the minimum cost, as well as to facilitate
organizational learning regarding what works (Fritzen, 2007). To be considered as good, a metric must be
precise, tied to overall profit, applicable to all employees, and designed to encourage extra normal effort
(Hauser and Katz, 1998). Without them, companies have no idea how well their strategy is being carried out
in the field and cannot make course corrections to stay on track.
This part of the paper suggests appropriate metrics for different management positions in a company.
CEO
Metric
Brand equity

Justification
It positively relates to the firm value and his main
task is to increase the firm value informing the
shareholders about the performance of the firm;

Balanced Scorecard (BSC)

To turn the companys strategic vision into clear and

understandable objectives (Bose & Thomas, 2007);

Shareholder Value

To maximize earnings, dividends and share price;

Investments plan

To ensure the highest levels of returns that

would increase the firm's value with the
minimum cost of capital;

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Quarterly Earnings

To monitor the business performance and align it

Customer Lifetime Value (CLV)

with the shareholders and market expectations;

To determine the economic value customers bring
over their lifetime with the business;

Labor turnover

To ensure on employees motivation and morale;

CFO
Metric
EBITDA

Justification
To analyze and compare profitability per year and
per unit eliminating the effects of financing and
accounting decisions;

Return on Investment (ROI)

To evaluate the efficiency of the invested capital;

Return on Equity (ROE)

To measure companys profitability, estimating how

much profit the company generates with the money
shareholders have invested;

Operating Income

To monitor the company's ability to continue

producing profit on its operations;

Balanced Scorecard (BSC)

To compare the financial performance along with the

Cash Flow

strategic objectives of the company;

To provide the liquidity demands of the firms at all

Budgeting

times;
To prepare the companys budget and compare actual
vs. budgeted in a monthly period;

Economic Value
Added (EVA)

To monitor appreciation (or depreciation) in the

the value of the firms capital;

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VP MANUFACTURING
Metric

Justification

Labor productivity

To operate strictly within budgetary constraints;

Delivery performance

To maintain manufacturings ability to

Total cycle time

meet customer requirements3;

To control and improve production efficiency;

Manufacturing Cost

To summarize the money spent on manufacturing

Product Quality

and to compare to the previous period;

To draw conclusions from customer returns or
warranty claims so as to meet customer quality

Revenue per Employee

requirements;
To trail labor efficiency ratio;

Safety issues

To set standards to avoid incidents and accidents

with regards to health and safety issues in the
production areas (Osei, 2013);

VP SALES
Metric

Justification

Sales Cycle

To track average duration for the team to win a deal;

Customer Satisfaction

To follow customers needs and expectations;

Sales Revenue

To provide adequate reporting on sales

Return on Marketing Investment (ROMI)

revenue per product, per segment, etc.;

to compare historically and against forecast, in
relation to the money spent on marketing campaigns;

B. Waddel (2006). Manufacturing's Five Golden Metrics.

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Customer Retention Ratio

To infiltrate into the salespersons tenure and

stability with the customer base.

Sales expenses

To highlight performance against budgeted expenses

and help the organization eliminate costs when
needed and illustrate how well the salesperson
manages his budgets.

Cross-buying and up-buying metrics

To classify the type of customers that the firm

acquires into categories based on their spending
pattern (Petersen, et al. (2009);

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10

References
Bose, S. & Thomas, K. (2007). Applying the balanced scorecard for better performance of intellectual
capital. Journal of Intellectual Capital, 8(4), pp.653 665
Bourne, M. (2008), Performance measurement: learning from the past and projecting the future, Measuring
Business Excellence, 12(4), pp. 67-72.
Carter, J. (2013). Natural Language Processing (NLP) in the self-service Business Intelligence (BI) world.
Retrieved on 6 th March, 2013: http://daxdude.blogspot.gr/2013/11/natural-language-processing-nlp-inself.html
Eckerson, W. W. (2005), Performance Dashboards: Measuring, Monitoring, and Managing Your Business.
New York: John Wiley
Foley, M.(2013). Microsoft's reorg memo: InfoNav, Moorea and new meeting technologies still on the
horizon. Retrieved on 6th March, 2013: http://www.zdnet.com/microsofts-reorg-memo-infonavmoorea-and-new-meeting-technologies-still-on-the-horizon-7000018056/
Fritzen, S. A., (2007). Crafting performance measurement systems to reduce corruption risks in complex
organizations: the case of the World Bank, Measuring Business Excellence, 11, 23-32
Hauser, J. R. & Katz, G. (1998). Metrics: you are what you measure!. European Management Journal, 16,
(5), 516-528.
Khan, R. A., & Quadri, S. K. (2012). Dovetailing of Business Intelligence and Knowledge Management:An
Integrative Framework. Information and Knowledge Management, 2(4), 1-6.
Laurent, W, (2010), The Further Emergence of Natural Language Processing, Dashboard Insight, 27th
December 2010; available at: http://www.dashboardinsight.com/articles/newconcepts- in-businessintelligence/the-further-e
Moss, L. and Atre, S. (2003). Business intelligence roadmap: the complete project lifecycle for decisionsupport applications. Boston: Addison-Wesley.
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11

Osei-Owusu, M. (2013). Should Dashboards Be Designed from the Bottom Up or Top Down? Available at
SSRN: http://ssrn.com/abstract=2240901 or http://dx.doi.org/10.2139/ssrn.2240901
Petersen, A, McAlister, L, Reibstein, D, Winer, R, Kumar, V, Atkinson, G, (2009), Choosing the Right
Metrics to Maximize Profitability and Shareholder Value, Journal of Retailing, 1, p 95-111;
Sammut, J. (2012). How Will Natural Language Processing (NLP) Systems Change the Business Intelligence
Arena and Enhance Measurement Systems? What Metrics (Up to Eight for Each Position) Do You
Think Would Be Appropriate for the Following Positions: CEO, CFO, VP Manufacturing, VP Sales?
Why? Available at SSRN: http://ssrn.com/abstract=2129708 or http://dx.doi.org/10.2139/ssrn.2129708
Waddel, B., (2006). Manufacturing's Five Golden Metrics. Retrieved 6th March on:
http://www.pcb.org.za/upload/files/manufacturings-five-golden-metrics-waddell-2006.pdf

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12

Appendices
Appendix 14 - Benefits of business intelligence

Source: (Eckerson, 2005)

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Dimitrios V. Siskos