Why your business benefits from a common business language

Why your business benefits from a common business language

Do your teams speak the same language when sharing results and plans or are you separated by an invisible divide?

Rather than allowing fragmented teams to operate in silos full of conflicting calculations and disjointed terminology there’s a lot to be said for defining all your business logic, terminology, and calculations in advance.

Creating a single business library ensures consistency, efficiency, and alignment across all departments. rather than allowing fragmented teams to operate in silos full of redundant reporting and figures that don’t match.

A common business example

Imagine this situation in a large retail company. 4 business unit heads are preparing for the quarterly performance report, and the CEO has a simple request; “What was our total profit last quarter?”

It’s a straightforward question but when the numbers come in, confusion abounds.

The Sales Department reports a profit figure based on gross sales minus discounts but doesn’t account for returns or marketing costs.

The Finance Department calculates profit by subtracting all operational expenses, including logistics and overheads, but uses a different method to account for returns.

The Marketing Team presents a profit number that only considers revenue from campaigns they ran, using their own definition of “successful sale.”

The E-commerce Team includes only online sales and even uses a different exchange rate for international orders.

As a result, the CEO receives four different “profit” numbers - all supposedly for the same period, but none of them matching. Meetings are called, emails fly back and forth, and valuable time is wasted just trying to figure out which number is correct.

Behind the scenes we have several different scenarios playing out, leading to the confusion. For example.

Different maths/formula have been used to calculate gross profit - perhaps not all costs of sales have been included

One report is presented by a Calendar Year where Jan, Feb and Mar belong to Q1, but others are using the Financial Year, where April, May, Jun belong to Q1

One report is sorted by company and the others are sorted by business unit

Each report may have filters set differently which exclude or include different records

What is the solution?

This scenario highlights the chaos and inefficiency that can arise when different departments use their own definitions, calculations, and terminology. It’s a common problem in organisations that don’t have a centralised, enterprise-wide business model.

What’s needed is a common set of terms that yields only one definition of gross profit across the whole organisation. Likewise, there should be an obvious distinction between calendar year reporting and financial year reporting. You can split your business library out into several different broad areas.

Business Terms

A business glossary which defines business terms in an unambiguous way which everyone can understand. For example, making sure that a customer is defined the same way every time, using the same word - rather than; customer, client, account, contact, etc

Data dictionary

A centralised, technical reference that defines and describes the structure, properties, and relationships of data elements. For example, following on from the example above, a data dictionary would specify that a "Customer ID" is a numeric field with a certain length.

Mathematical calculations

A clearly defined set of rules for each calculation formula (e.g., profit margin, net income) and the required inputs.

Trust your figures and rule out errors

In conclusion we would advise that when you are preparing your data for analytics, don’t overlook the crucial step of defining your business semantics, calculations, and key definitions. Taking the time to standardise these elements means you can truly trust your numbers across every department, ensuring everyone is on the same page.

While analytics can’t always guarantee the business outcomes you desire, a solid foundation of clear, consistent definitions and calculations ensures you’re making decisions based on the right figures bringing certainty, clarity, and confidence to your entire organisation.