management strategies for the agile...
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M A N A G E M E N T S T R A T E G I E S F O R T H E A G I L E B U S I N E S S
A quarterly management update.
Using key performance indicators to really understand your business
Know Thy CustomerIntegrating CRM and analytics for a competitive edge
Knowledge seekersThe bottom line on business intelligence:Turning data into usable knowledge
A stepbeyond
contents
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issuefive
4 A step beyondBuilding a data warehouse isn’t enough
10 Know thy customerThe counter intelligence of the silo syndrome
14 Knowledge seekers Naysayers and skeptics won over by wisdom
18 Unlock information, unleash the future Steve Ballmer’s vision of customer centricity
20 Language of intelligenceA glossary in terms of knowing
22 Interactive insightsFirms need to measure performance indicators
24 The rise of data to knowledgeThe dawn of data-driven decision-making
26 Biz QuizSee if you’ve got the right smarts
28 No business neglecting intelligenceMany BI approaches have been unsuccessful
30 Elusive data is everywhereUnderstanding strategy comes first
32 Five on fiveOur panel of experts shares its views
34 The business caseIt requires hard numbers about market share and ROI
readerfeedbackThank you for your invaluable contribu-tions to our own business intelligence.Last fall a sample of Ideas recipientsreceived an e-mail inviting them to takepart in a questionnaire for a chance towin 5,000 Air Miles or one of three CasioPDAs.
We found that readership of Ideas wasmost prevalent among business decisionmakers and line of business leaders.
All sections of Ideas received better-than-average ratings. The expectation is thatthe usefulness of ratings will increase as Ideas becomes more familiar and more widely read.
4In this edition of Ideas we focus on a theme
that is prevalent in Canadian organizations
today – business intelligence. According to
a recent IDC study, business intelligence tech-
nologies are estimated to grow to over $1.4B
by 2004. That kind of growth indicates that
organizations are going to need to empower
decision-makers at every level with real-time
intelligence about business performance, in-
store promotions, online sales results, market
shifts, competitors' gains and partners’ sup-
plies. This provides the agility to evaluate com-
plex trends, patterns and relationships, which is
what an intelligent business is all about.
Read on, and you will learn how smart companies
such as Inco, Nygård, Harvey’s Restaurants,
Delta Hotels and more have used business intel-
ligence solutions to gain valuable insights and
turn that insight into action and competitive
advantage. We explore all facets of business
intelligence including how to integrate key per-
formance indicators with business strategies,
use customer analytics to better anticipate,
understand and respond to, as well as analyze,
customer behaviour, and leverage real-time
access to information anywhere and on any
device to make faster, better-informed decisions.
I hope you find this issue of Ideas beneficial to
you and your business. If you have any comments
or feedback about this publication, please feel
free to send email to the address below.
Frank Clegg
President
Microsoft Canada Co.
Email: [email protected]
4
Ideas Magazine is published for Microsoft Canada Co. by Plesman Communications, 25 Sheppard Ave. West, Suite 100, Toronto, ON M2N 6S7. Published February, 2002
For Advertising and Publishing Inquiries: Joe Tersigni 416-733-7600 E-mail, [email protected] Mailing Inquiries: [email protected]
The views expressed in this magazine are those of the contributors for which Microsoft Canada Co. and Plesman Communications accept no responsibility. Readers should take appropriateprofessional advice before acting on any issue raised. Reproduction in or part without written consent is strictly prohibited. * Copyright rests jointly with Microsoft Canada Co. and PlesmanCommunications and is shared with respective contributors to Ideas.
©2002 Microsoft and the Microsoft Logo are either registered trademarks or trademarks of the Microsoft Corporation in the US and/or other countries.
And the winners are:Casio PDA Winners:Dean St. Amour, Royal Bank of Canada,Senior Technical Auditor
Bill Levis, Standards BC AssessmentManager
Andrew Macleod, NRC Operations Manager
5,000 Air Mile Points Winner:Aloysius MacNeil, Bell Canada,Associate Director - Financial Results
Congratulations to all and keep reading for more Ideas.
14
26
Simply building adata warehouseisn’t enough tounderstand yourbusiness.
Key performanceindicators help analyze whatmakes it tick.
Richard Williams, director of
sustainable development,
West Coast Energy.
A stepbeyond
by Peter Wolchak
When it comes to analyzing your corporate data, a ware-
house is a stepping stone, not an end goal. On top of the ware-
house must be added business intelligence (BI) tools, which in
turn must be used within a formal framework of predefined
business goals.
These goals, called key performance indicators (KPIs),
highlight business trends that exist in raw BI data.
In function, a KPI is similar to traditional BI queries. For
example, retail chains tracked revenue by store years before
KPIs entered the scene. But adopting a KPI methodology
extends the range of financial and non-financial functions
tracked. It also formalizes the analysis process, in order to
encourage managers to regularly examine corporate data.
This is critical because, while many companies have
access to a wealth of information, most do very little with it,
according to Tom Kavouras, vice-president of business intelli-
gence at GHI Technologies in Toronto.
“People are really good at spending millions of dollars to
capture data and then they resort to standard black-and-white
reporting,” he said. “Companies think that, because they’ve
built a data warehouse, now they’re ready. They seem to think
the be-all and end-all is simply to have the warehouse and only
pull out traditional reports.
“This is a complete waste of time and money. If you’re
going to spend millions of dollars on a data warehouse and
then use only five per cent of it, why didn’t you just spend five
per cent in the first place?”
Companies typically don’t make full use of data simply
because there is no formal process for doing so, Kavouras said.
This is often because senior management has not reached con-
sensus on the most basic of business questions: What factors
are critical to our success?
Without an accepted list of success factors — or key performance
indicators — different managers look at different data in different ways,
and that’s only if they bother to look at all.
“If you don’t have people getting together and identifying
what’s important then you’re never going to have standardiza-
tion, because different departments are going to make different
decisions,” Kavouras said.
This lack of standards can even rear its head on issues as
straightforward as revenue reporting, according to Jonathan
Wu, chairman and co-founder of BASE Consulting Group in
Oakland, Calif.
One BASE client found that its 12 divisional comptrollers
were interpreting revenue in different ways that boosted their
own figures. “If you added up the revenue reported by all the
divisional comptrollers, it was greater than the total for the
organization,” Wu said. “So the question was: What was every-
one’s definition of revenue? We took a look and found four or
five different definitions.” Two weeks of meetings and negoti-
ation were required to establish a company-wide format for
revenue reporting.
But if standardization is important, it’s also difficult to
achieve, according to GHI’s Kavouras. “Just trying to get peo-
ple together is the biggest hurdle, because they don’t usually
understand that the value of the information they have is 100
times more than they think.”
Peter Waldvogel experienced this first hand. As senior
vice-president of Centre du Rasoir/Personal Edge in Lachine,
Que., he was uninterested when first introduced to KPIs and BI
in general.
“When our MIS director explained it to me my reaction
was ‘Yeah, fine.’ It wasn’t until a consultant showed me what
this is capable of doing that I was sold on it.”
It wasn’t long after that first demonstration that
Waldvogel began to see real potential in KPIs, and he can now
point to many instances in which in-depth analysis has helped
his company.
The first Centre du Rasoir store opened in 1959 in
Montreal and the chain grew in Quebec before expanding into15
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The data warehouse is not the end goal. Business intelligence tools must be added to the mix, used in a formal
framework of business goals — key performance indicators — to get the full picture.
The analysts touted the benefits, maga-
zines published case studies, and the
competition was building one, so your
company decided it too needed a data warehouse.
Two years and $2 million later, you’ve amassed a
huge, centralized data repository. Congratulations,
you’ve taken the first step towards really under-
standing your business. But what do you really get for
your time and money?
suppliers who aren’t performing or whose items aren’t gener-
ating good gross margins. We didn’t know before which sup-
pliers overall provided the best gross margins. Now I do, and
we can sit down with a supplier and say, ‘How are you going
to help us produce better gross margins?’”
One win from this analysis was the decision to introduce
private-label knives as competition to the name-brand
Henckels offering.
Centre du Rasoir also shares its KPI analysis with suppli-
ers to help them fine-tune production. “We can pull out sales
by supplier or by product very easily and dump it into an Excel
spreadsheet. We e-mail that to the suppliers each month. They
love to get that information because it helps them run their
business, and we like to give it to them because it helps them
manage their supply.
“By giving this information to the supplier and reworking
our sales targets quickly, we may be more proactive than other
retailers in picking up items that are selling faster.”
That type of analysis can prevent companies from making
costly mistakes, according to Wu.
“Look at Cisco. They had a huge downturn in the first quar-
ter of this year, and they ended up with huge stockpiles of inven-
tory and had to take a huge write-off. Could they have prevent-
ed that? Maybe, if they had looked at which products were sell-
ing and which were becoming obsolete. That information was
available but it was up to a person to interpret the data.”
KPIs also allow a company to benchmark performance
against competitors, with predefined measures providing
an apples-to-apples comparison.
Comparing accounts receivable results, for example,
against relevant industry averages can highlight cash flow
issues, according to BASE’s Wu.
“If you have a day’s sales outstanding figure of 145 days
and the industry standard is 100, then you’re holding on
to a lot of receivables a lot longer than are your competitors.
That impacts cash flow and you need to understand why
it’s happening.”
Comparative information is plentiful in some industries,
unavailable in others, according to GHI’s Kavouras.
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Ontario in the mid-1980s. The chain currently stands at 57
stores, with seven opening in the last two years alone.
Financial growth in recent years also has been steady, with the
company’s revenue climbing five to 10 per cent per year.
“We've experienced managed growth. Some retailers grow
really rapidly and then go out of business,” Waldvogel said. “We
like to grow in a way that keeps our bankers happy.”
Centre du Rasoir is involved in many business relation-
ships: with store owners, with franchisees, with mall managers
and with numerous product suppliers. Previously, Waldvogel’s
business intelligence came from static and infrequent paper
reports. It is a past he does not miss.
“I could never go back to getting my reports on a piece of
paper. Now I can really figure out where we can do better. I can
find areas where there are problems, areas where we can
improve, areas we should celebrate.”
For example, he now analyzes supplier performance in a
way that was previously impossible. “We can apply pressure on
“When our MIS director explained it to me my reaction was “yeah, fine.” It wasn’t
until a consultant showed me what this is capable of doing that I was sold on it.”
Benchmark against your competitors. Key performance indicators common to all businesses within an industry allow apples-to-
apples comparisons with the competition. For example, comparing accounts receivables results can highlight cash flow problems.
businessmetrics
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Key performance indicators did not recently spring forth as a
brand new concept. Businesses have always tracked basic mea-
sures such as inventory and profit. But the method by which the
information was gathered and analyzed and the basic assump-
tions underlying that analysis have evolved over the last 20 years
or so, according to Bill Murphy, a national partner in the risk and
advisory services practice at KPMG LLP in Toronto.
Twenty years ago: The mantra was quality management, in
which basic financial statements such as income, balance and
cash flow were analyzed with an eye towards process control. This
evolved into ISO standards and later Six Sigma — a statistical
approach to quality management. “You mapped the output of a
process on a bell curve and measured the standard deviations.
Each deviation is a sigma and by putting controls over those
processes you can reduce the variability of those changes.”
Ten years ago: The age of business process reengineering
was ushered in by the recession of the early 1990s. The focus
was on core competencies, and advanced information systems
allowed management to efficiently monitor business metrics.
“Rather than management rolling up their sleeves and super-
vising each process, we wanted to have a dashboard in front of
them where key indicators measured how well processes were
functioning, and as long as those indicators were within certain
thresholds no management response was required. As soon as an
indicator moved outside the threshold then management inter-
vention was required.”
The last five years: Risk management came into vogue with
the introduction of strategic, financial and operational risk indic-
tors. Financial risks, for example, included currency and interest
rate fluctuation, commodity markets, and energy prices.
“These are market-driven factors, and if tracking key indica-
tors gives you some visibility into future trends you can react and
put hedging mechanisms in place.”
These epochs each left their mark on current management
thinking. “The three drivers — quality management, business
process reengineering and risk management — have all con-
tributed to where we are today. Now we’re formalizing it, looking
at data on a corporate-wide basis, and incorporating that into
managing the business on a day-to-day basis,” Murphy said.
A S H O R T H I S T O R Y“In the pharmaceutical industry there’s a
monitoring company that collects information
on behalf of almost everyone — they know
what products are being sold, what products are
being prescribed by doctors, by pharmacy, by
territory, by postal code, you name it. Where
there is third-party data available it effectively
becomes another KPI. But not all industries
have access to that information — either the
information doesn’t exist or it does exist but
you can’t afford to buy it.”
Such benchmarks can also play a role out-
side of the standard business arena, according
to Richard Williams, director of sustainable
development at natural gas company West
Coast Energy in Vancouver. KPIs can also be
used to compare less tangible corporate perfor-
mance metrics.
“Tracking KPIs can have an impact on how
you are perceived by the public. We’re a capital
intensive industry — we’re always knocking on
people’s doors saying we want to build a power
plant or a pipeline, and when we knock on your
door, how are you going to perceive us?
“People ask themselves what they’ve heard
about West Coast Energy, and that will affect the
degree to which we’re welcome. So our KPIs are
one way of communicating who we are.”
This factor is becoming more critical as the
public becomes increasingly skeptical about
energy companies, Williams said. “Companies
have to be more directly communicating the
degree to which they are addressing those con-
cerns, and we communicate with our KPIs.”
Sometimes lost in KPI discussions is the fact
that applying indicators to business numbers
means also applying them to the people who gen-
erate those results. And that can cause anxiety.
“You manage what you measure, so when
you introduce KPIs it increases the number of
activities that are measured and, accordingly,
more employees are going to be held account-
able,” said Bill Murphy, a national partner in
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the risk and advisory services practice at KPMG
LLP in Toronto.
“That increased accountability can lead to
increased anxiety. The way to counter that is to
ensure your rewards are tied to the key perfor-
mance indicators, so improved performance
will improve compensation and recognition
within the organization.”
Another human reality is people will some-
times try to work around a system, rather than
working with it.
“Anytime you set a quantitative target I
can manipulate it to achieve that target,” said
West Coast’s Williams. “You could have man-
agers who find ways to exceed the targets but
screw up everything else.”
For example, Williams said, budgetary tar-
gets can be slippery in a company that relies on
research and development.
“If someone fails to invest in R&D, he may
look like a hero when he meets his budget
every quarter, but did he do any R&D that was
central to the purpose of the firm? So you need
to track a parallel R&D target.”
And if benchmarking and improved busi-
ness analysis are not sufficient arguments in
favour of KPI systems, consider that poor eco-
nomic conditions make solid business intelli-
gence even more important.
“The events of this past fall, in which there
were clear risks to business continuity planning,
insurance coverage and exposure to more
volatile markets, have significantly expanded
the number of discussions we’ve been having
with clients about formal risk management
processes and indicators,” said KPMG’s Murphy.
That caution is echoed by Wu at BASE
Consulting.
“KPIs are extremely important especially in
the current economic conditions. If you don’t
have this type of information available it’s very
difficult to make decisions in a timely manner,
and that can damage your business.”
And if you do, you can really put that
$2-million data warehouse to work. ■
The following list of key performance indicators apply to almost any business. Specific industries would addappropriate metrics to this list.
Revenue by customer: the average income generated per customer.
Revenue, percentage change: The rise ordecline of revenue within a defined group over a period of time.
Income by product/service: the performance of each product or service category, typically trendedover a period of time.
Percentage on-time deliveries: the proportionof deliveries that were completed on schedule. May be compared to statistics for late and early deliveries.
Revenue per sales rep: a comparative perfor-mance analysis of the sales professionals.
Vendor performance, price: cost comparisonacross the organization’s vendor relationships per specific items.
Collection period: the average amount of time an account remains unpaid. May include a trendinganalysis.
Credit performance by customer: the paymentpattern of specific customers over time.
Average days to pay: tracking timeliness of organizations’ debt payments.
Stock-level tolerances: the amount of inventoryheld, and whether this amount satisfies regionaldemand.
kpisS A M P L E
by Peter Wolchak
Finding the performers Key performance indicators can give insight into how individual products and
services are performing, and counter false assumptions about product performance.
by Sheldon GordonKnow thycustomer
Jane Osler, executive director
of market development, and
Steve Park, director of
customer insight and
analysis, IntraWest.
That limits the usefulness of the applications. Without
integrating them, a company can’t mine the full value of CRM
through customer analytics — the storage and analysis of cus-
tomer data that provides a full view of each customer’s behav-
iour across all business units and product lines.
That big picture can be useful. It can help assess a
customer’s long-term value and vulnerability to churn. It can
predict what other products they’re inclined to buy. It
can identify the customer’s preferred channel for purchases
and communications.
It can show a company how and when to offer what to
whom. It makes a company more agile in a competitive busi-
ness environment.
“When companies coined the term CRM in the late 90s, it
was largely about sales force automation,” says Ray Lui, senior
manager at KPMG Consulting. Early implementations were
about improving the efficiency of the sales force. As firms have
installed later versions of CRM, they’ve begun to understand
that it’s not just about automating processes: the focus is on
the customer.
“Canadian companies are just starting to leverage this
source of valuable customer information,” says Lui.
At Harvey’s Restaurants, they’re now serving up customer
analytics with their burgers. Three years ago, Harvey’s decided
to upgrade its cash-register technology to get access to data
streams that would give insight into the buying habits of its 50
million yearly customers. In partnership with ThinkNet Inc.,
the fast-food chain developed a Microsoft-based multi-task
solution that does food costing, inventory reporting, sales
reporting, franchise fee calculations and general analysis.
The chain had installed the new technology in 69 of its
outlets by the end of November and will have it in 200 outlets
— 80 per cent of its locations — by June. The application reads
every customer transaction, aggregating data on which items
the customers bought, what time of day they bought them
and whether the purchase was in a drive-through or front-
counter outlet.
Harvey’s wants to track each customer order to better
manage inventory control and to understand regional test
preferences to develop successful marketing campaigns. The
pressident at the head office in Toronto and the location man-
agement in, say, Hanover, Ont., should be able to look at the
same data, with real-time access to sales numbers and purchase
patterns as they are happening at any time of day.
“Once we capture a transaction in the local outlet, that
sale makes it back to our head office and central server, and we
could read that sale, do analysis on it, and respond appropri-
ately, closing the loop,” says John Thompson, manager of
information technology.
Customer buying patterns may dictate advertising tactics.
If Harvey’s allocates $100,000 to promote its Swiss Mushroom
Melt, should the product be pictured in the drive-through
advertising space? Or would it be better to picture a regular
hamburger there (since drive-through consumers may prefer a
simpler burger to hold in the car)? The database analysis
provides the answer. It reveals that, when Harvey’s originally
promoted Swiss mushroom melt to drive-through traffic, sales
didn’t increase in line with in-store results.
The database helps Harvey’s target some types of business,
such as late-night or breakfast sales. It does not, however,
permit segmentation of the customer base on demographic
lines to determine, say, what appeals to customers between the
ages of 18 and 24. Thompson expects that, once it’s fully
deployed, the new system will shave half a point off its overall
margins. The technology, a $5-million investment, should pay
for itself within six months says Thompson.
Sears Canada, the country’s largest full-line retailer, has
reaped significant benefits from customer analytics. “The long-
term objective is to understand how the company is generat-
ing value for the customer and, in turn, how the customer is
providing value to the company,” says Bruce Clarkson, gener-9
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Nobody’s arguing that customer rela-
tionship management — CRM — isn’t
an important strategic focus for the
progressive company. CRM programs are often intro-
duced in conjunction with sales force automation, cus-
tomer service centres and e-commerce enabled Web
site projects. But frequently, they operate in silos — as
independent, standalone, non-integrated solutions.
al manager of relationship marketing.
It gathers data from 120 full-
line stores, a home services
business, a catalogue busi-
ness and its Internet
channel — hundreds of
millions of transac-
tions with two-thirds
of Canadian house-
holds every year.
Sears has had a
“single view of the
customer” — across
multiple channels —
since the mid-nineties,
says Clarkson. “We were
able to have all our data in
one location, with one tool to
be able to understand all of the
Sears activity that was coming from a
given household or group of households.”
Sears develops its customer analytics from a datamart of
consumer information pulled from its Microsoft-based corpo-
rate data warehouse.
The analytics revealed something Sears hadn’t expected:
Customers who shop in multiple channels generate more rev-
enue in each channel than customers who shop in only one
channel. The extra customer touchpoints didn’t cannibalize
sales, they enhanced sales. That’s fostered a cultural shift in
customer service.
If, for example, a customer at a Sears store asks for a
product that’s not in stock, a sales associate finds out if it’s
available in the Sears catalogue and orders it online through
a point-of-sale terminal. Ten years ago, the company not only
lacked the technology to do that, but its different sales
channels viewed themselves as competitors for the same
customer’s dollar.
Sears has also used customer analytics to do a limited
amount of target marketing, often aimed at attracting its most
loyal customers to special store events. A Sears store may have
a base of 40,000 customers, but typically about five per cent
account for 25 to 40 per cent of the sales. Rather than sending
direct mail promotions to the top 25 per cent of customers, Sears
can limit its effort to a cost-effective number.
Analytics are also useful to win
back lapsed customers. Sears uses
its data to rebuild circulation
among customers who
stopped receiving its cata-
logue. The company
also highlights the
numbers of active,
new and lapsed cus-
tomers at its retail
outlets.
“It’s to get peo-
ple thinking about the
fact that there is signif-
icant churn,” says
Clarkson. After all, it’s
much less expensive to keep
an existing customer than to
win a new one.
Customer retention is also a key
goal of the analytics program developed by
Delta Hotels, the country’s largest hotel chain.
The chain began assembling a datamart in late 1999, and
now has demographics on 160,000 active customers. In 2001,
it added an interactive Web-based tool that allows customers
to provide information on what they’re seeking and allows the
chain to market back to them.
Delta grasped, earlier than many of its competitors, what
CRM is ultimately about: the need to identify who a firm’s
most valuable customers are, and the need to personalize its
interaction with those customers across sales channels.
Delta’s reporting system tracks who stays where with the
chain, for how long, and how much they spend — not only on
rooms, but on telephone calls and food and beverage service.
The data then guides Delta’s promotional efforts on its Web
site and through e-mail messages.
Delta tracks problems that guests encounter at the hotel,
so management can avoid a repetition during the guests’ next
stay. If a room attendant discovers, say, that a guest has asked
for extra pillows, this detail is entered into the hotel’s proper-
ty management system and downloaded into the client’s pro-
file by the chain as a whole.
Delta does a quarterly analysis to identify customers at
risk of attrition.
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Churn, churn, churn. A key goal of a customer analytics program is customer retention. Plotting customers according to their
value, potential and vulnerability to churn is a valuable guide to how to spend marketing dollars and keep customers.
“This churn analysis generates promotional activity to
turn an occasional customer into a frequent one,” says Ken
Lambert, vice-president of marketing and sales.
The chain sends a friendly e-mail or even direct mail to
those customers, offering a loyalty program reward (say, a room
upgrade or a free weekend) if they reserve rooms more often.
Delta then tracks the results of its customer retention
campaign over the following three months. It has managed to
“reactivate” as many as eight per cent of lapsing customers,
providing a solid return on the investment.
Vancouver-based IntraWest is another resort operator that
is sold on the value of customer analytics. IntraWest generates
its analytics from a marketing database built four years ago. It
consists of four million names and addresses — people who
have either visited one of IntraWest’s resorts or asked for infor-
mation on them. The company is implementing a CRM appli-
cation that will both interact with the customer and integrate
with the marketing database.
Like many businesses, the vacation resort industry is
becoming commoditized — customers shop for the best deal
and show little brand loyalty.
“What can we do to differentiate ourselves [from the
competition] or build a relationship with the customer?” asks
Steve Park, director of customer insight and analysis. Since only
five percent of the population is interested in skiing or snow-
boarding, mass-market advertising would be costly and ineffi-
cient. IntraWest has turned to target marketing, which
demands analytics.
The company has almost too much data right now: It
tracks, for example, where clientele stay, how often they stay
and what kind of lift tickets they buy. But the data hasn’t yet
been made available to the frontline and applied to marketing
initiatives. Thus, the resort manager at Whistler doesn’t neces-
sarily know that a guest is scheduled to have a private ski lesson
the next day, examining equipment before buying and dis-
cussing the purchase of a vacation home.
“Those types of customer interactions aren’t recorded in
the system and presented back in a meaningful way to front
line personnel,” says Jane Osler, executive director of market
development in the resort operations group.
“That’s the process we’re embarking on now.”
And it’s not just about the front line. A more mature ana-
lytics system will have an impact on IntraWest’s channel man-
agers and marketing managers.
For all customers, the company wants to know their
value, their potential and their vulnerability to churn. “If you
plot all of your customers using those three dimensions,” says
Park, “it becomes very easy to decide where to invest your mar-
keting dollars.”
Sizing up a customer’s value, vulnerability and potential
shows how the company should market to him, based on
those factors. Customers are assigned a channel preference —
how they would prefer to deal with IntraWest — and what
IntraWest can afford to spend to deal with them. Low-value,
low-potential customers receive e-mail messages. The higher-
value, higher-vulnerability group is contacted through direct
mail or even telesales.
In the first year, IntraWest’s marketing personnel worked
closely with some of the resorts to ensure they used the
datamart effectively.
One resort’s promotional campaign was so successful that,
in only one season, it paid for the cost of developing the data-
base. Another resort, which believed there weren’t enough
customers in the surrounding area to justify a regional pass,
discovered otherwise from the analytics. It has had three
successful years with the product.
Clearly, even companies in the early stages of developing
and utilizing customer analytics can increase their ability to
understand and respond to, as well as anticipate, customer
behaviour. If they can leverage the data they’ve collected and
analysed, they should be able to serve their current and poten-
tial customers more effectively and gain a competitive edge. In
the coming years, integrated CRM and customer analytics may
be crucial to their success. ■
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“If we truly do understand our customer base and are able to predict things such
as value, vulnerability and potential, the next question is, how do we deliver our market-
ing message based on those variables?”
by John ShoesmithKnowledgeseekers
Bill Steenburgh was expecting some mis-
givings when he presented his plan for a
new information system to the board at
Inco Co. He wouldn’t be disappointed. Inco is one
of the world’s premier mining and metals compa-
nies and the world’s second largest producer of
nickel. Although the benefits of the system he was
proposing seemed like no-brainer stuff — it would
allow key employees to have quicker and
improved access to vital information about orders,
shipments, invoices and inventories; in short, just
about everything – there were skeptics. “We’re a
very conservative mining company,” says
Steenburgh, the director of corporate planning at
Inco. “So this sort of stuff, guys don’t really catch
on too quickly. It’s not really their thing.” There
were also concerns from some of the regions — 80
per cent of Inco’s business is outside North
America — about having their information trans-
parent for the entire company to see. Worse still
was that Inco’s IT department had a less-than stel-
lar reputation. “There were a few blown projects,”
he says. So, naturally, the first question out of the
mouth of Inco’s president was: “What makes you
think you can pull this off?”
The most obvious difference is that
Steenburgh is not from the bowels of the IT depart-
ment. He’s an old marketing and business hand —
in other words, he understands the business imper-
atives for having improved access to critical com-
pany information. That experience helped
Steenburgh make his case, especially when he laid
out the considerable project costs. He won the
mind of Inco’s chairman, who banged his hands on
the table and said, “We’ve got to do this, we have
to move ahead.” Although the company had a
great deal of capital tied up in other projects, the
chairman recognized the importance of the new
system. “Not everybody knew what it was, but they
knew instinctively they had to do it,” says
Steenburgh. Thus began Inco’s business intelli-
gence project.
Is there a more precise-sounding IT solution
than business intelligence (BI)? But what’s in a
name? After all, such a simple phrase is burdened
with decidedly complex technologies —take your
pick among databases, data extraction tools, data
“scrubbing” technology, end-user query software.
But understanding the business needs behind BI
need not be so complex. Business intelligence,
according to Graham Hislop, managing director of
GHI Technologies in Toronto, “is about finding
knowledge. It’s as simple as that.” Hislop cites a
typical organizational problem to trace BI’s histo-
ry. “The whole concept (of BI) evolves from the
fact that a lot of companies over the years as they
grew, they just basically threw in a database wher-
ever it was needed.” The result: a slew of disparate
systems housing different company information.
“But all the information pertains to the same com-
pany,” says Hislop. “To be able to analyze your
company effectively, you need to have all the
information from these different systems into one
workable system.” Data capture is one thing, he
adds, but it’s the insight coming out that provides
the real value.
At one time, business intelligence was syn-
onymous with data warehousing, an unfortunate
and undesirable association. Stories about failed
warehousing projects were de rigueur in the IT
trade press. A typical news hook: a company
spending millions of dollars on a system that
either didn’t work or wasn’t used. Fortunately, few
of those stories made it past the IT press and into
the mainstream business pages. As a result, BI
doesn’t carry excess baggage — it’s been given a
fresh start.
Still, BI hasn’t been an easy sell. In an IDC
Canada report published late last year, BI did not
fare well as a top-selling technology. Few organiza-
tions were actively building or using a BI solution.
The news wasn’t all bad, however. BI’s projected
market growth — BI technologies represent a mar-
ket that’s expected to grow to over $1.4 billion
worldwide by 2004, according to IDC estimates —
is proof that business intelligence is big business.
The report also found that the leading areas
for new BI and data warehousing solutions were
Internet-enabled data access and data mining. In
other words, organizations implementing BI solu-
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15
issuefive
tions are going beyond its staid warehousing beginnings and
evolving to the next generation. It’s not your mother’s data
warehouse anymore.
That’s certainly true at female apparel manufacturer and
retailer Nygård. Its BI system, which it implemented two years
ago, is entirely Web-based. “That means you can be on the
road, at your hotel or at home, and you can connect and get
yourself the information that you need,” says Len Nicolas,
director of IT at Nygård.
What’s more, sales reports that use to take a week to gen-
erate now take about 10 minutes.
The company has always had some serious ambitions
when it comes to technology. Founder and chairman Peter
Nygård’s vision — where fashion meets technology — has
made the company a high-tech leader in its industry. “We’re
No. 1 in e-commerce in fashion and retail, ahead of everybody
else,” he says. The company has backed that vision with an
ongoing investment in technology, earmarking $60 million
over three years in 2000.
“We realized we wanted to change the way we did busi-
ness, and change the way our retailers did business with us,”
says Nicolas. The company uses a very simple axiom to explain
its BI system: Show Me. “Show me how well we’re performing
in the store,” say Nicolas. It uses business intelligence to track
the order histories and, based on certain trends, to better fore-
cast its designs for the future.
It works this way: When a customer buys a garment at
one of Nygård’s stores or at one of its other retailers (such as
the Bay and Sears in Canada), that information is fed into
the system.
As a result, says Nicolas, “we know what we’ve shipped to
the customer and we know how well it’s selling on the floor.”
When that information is reviewed, it allows the company to
put out more stock immediately and helps them design the
lines for next year based on the sale of current designs. This is
particularly important in the fashion trade, says Nicolas, “since
we’re always working 12 months ahead.”
Initially, it was to be an internal tool used solely by
Nygård’s own retail operations, which num-
ber around 200 stores across Canada.
It’s evolved to the point where its retail-
ers (approximately 20 major retailers in North
America, as well as 500 independent retailers)
are requesting access to the system. Because
the system allows Nygård to compare the
same products within its own stores and its
other retailers, it can better understand why
popular garments may not be selling as
strongly in other stores.
“We can find out that maybe it’s not dis-
played properly, or maybe it’s not even dis-
played at all but is in the back room,” says
Nicolas.
Down the road, Nicolas says, the infor-
mation from the BI system will generate
greater sales for the company —especially as
the system evolves to the point where it can
drill down even deeper into the data to get
more information about what garments are
selling the best within regions, even within
individual stores.
“Has it increased our sales from the get
go?” asks Nicolas aloud. “Maybe not, but
what it’s done is allow us to put the product
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Show me. That should be the maxim of the business intelligence project from an executive perspective. A business intelligence
system should transparently and intuitively help determine processes and strategies that maximize efficiency.
feature
in the right place. I’m sure it will increase our sales in the
future because the more you put out the right product, the
more sales you’ll get in the future.”
The focus of BI is changing — away from the pure nuts-
and-bolts technology that excites an IT department, to the
more practical discussions on how the technology solves busi-
ness problems.
This is particularly true of the executives who sign the
cheques on new IT systems: they want to understand why it is
they need a BI system, and the business value they’ll derive
from it.
The good news is that as BI continues to mature, the talk
is moving beyond the technology. As in the case at Inco and
companies like it, BI projects are spurred by those outside IT
and inside the business —in other words, the people who rec-
ognize the value of being armed with improved information to
make better and more-informed decisions.
As a result, senior-level personnel are spearheading BI
projects. “Nothing happens unless somebody in the company
believes that it will provide some value,” says Hislop. The peo-
ple in IT —“The ones that deal in zeroes and ones,” says Hislop
—are not true decision makers.
“The true decision makers are the business owners, the
departmental owners, the CEO who’s tired of making deci-
sions based on gut feel. Those are the people you target
because they’re the ones that need to know what’s going on.”
Take Inco, for example. Steenburgh says that pre-BI, it did-
n’t have a strong handle on its profitability.
“We didn’t know which products were the most prof-
itable, or what area was most profitable,” he says. With its BI
system — it went live in October 1999 — it can now look at
profitability in greater and granular detail.
“We can look at products by region and customer,” he
says. That helps determine which orders and customers are
unprofitable. It has also altered perceptions of certain products.
“We took a product that was known to be profitable, but
using the system we demonstrated that there’s a significant
portion of the material that was being sold at a loss. Everyone
was shocked at that.”
It’s changed the way the company does its planning as
well. Previously, planning processes at Inco were crude.
“The data was all there, but there was so much of it that
unless you tediously analyzed it order by order, you just could-
n’t keep up with it,” says Steenburgh.
For example, Inco has four sources of nickel: from its
mines in Ontario, Manitoba and Indonesia, and it buys nickel
from the London Metal Exchange. A key success factor is to get
the nickel from the best source and maximize profit on it.
“We really didn’t have any kind of clean way of under-
standing of who should get the nickel and from where,” says
Steenburgh.
He says the BI system has made profound changes to that
process, and to how the company distributes the nickel from
its different sources.
It’s also made an indelible impression in the company’s
corner offices. Steenburgh says one of Inco’s vice-presidents
recently pointed out that this is the first year the company has
been able to look at information in such detail and make
decisions about where to best distribute product for the sake
of profitability.
Making life easier for senior executives is one of BI’s most
obvious advantages.
“Executives are busy people,” says Ludwig Melok,
vice-president of sales and marketing at Montreal-based
Tenrox, which implements BI solutions in the project man-
agement sector.
“They just want you to come in and say, ‘Show me.’ They
want graphics and colours. Red, yellow, green.”
Some have referred to this concept as a “digital dash-
board.” Solutions have got to the point where the typical users
don’t need to have strong computing skills — they just need
to understand how to use a mouse and know where to click.
No need for skepticism. ■
17
issuefive
... BI projects are spurred by those outside IT and inside the business – in other words, the
people whose jobs will be directly affected by having improved access to more
information, to be armed with information to make better and informed decisions.
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IDEAS: What is in the way of businesses using technology
to become more customer-centric?
BALLMER: Over the past few years, companies have been
trying to take advantage of information technology to
improve the way they do business.
But it’s proven to be a bigger challenge than they
expected, because technology alone isn’t the key to doing
better business.
It’s the information that counts, and right now that is
often locked away in different applications and legacy sys-
tems-from sales and marketing, to inventory, to customer
service. It’s still hard to build Web sites that bring all this
information together seamlessly.
And it’s just as difficult for employees to get access to
the information they need from all these systems and to
work collaboratively with it in a way that enables them to
offer their customers a better experience.
informationunlock
the future
To achieve the kind of rich, customized expe-
riences and personalized service customers
demand, businesses must integrate informa-
tion from a wide range of sources throughout
their organizations and empower employees
with this information wherever they are and
whenever they need it. Microsoft CEO Steve
Ballmer discusses how the company's .NET
vision helps businesses achieve customer
centricity through powerful Web services that
simplify and streamline the way they gather,
process and act on information.
unleash
Part of the challenge is that employees don’t have
enough control over the technology around them. Take
salespeople, for example: They have a customer’s contact
information programmed into their phone, but that cus-
tomer’s sales records are likely on their office PC, and their ser-
vice data is in another department’s database.
But to the customer, that doesn’t matter. The customer’s
relationship isn’t just with the sales department, or the service
department, or the finance department.
They have a relationship with the company. And they’d
get a much better experience if the person they were talking
to —or the Web site they were visiting — had access to all
the relevant information, regardless of whether it’s sales, ser-
vice, or finance.
Right now, technology for the most part isn’t able to
make that happen.
IDEAS: What is Microsoft’s vision for overcoming these
barriers?
BALLMER: With Microsoft .NET, we’re building a platform
around the idea that computing is moving away from the
era of isolated PCs and servers, packaged software, and dis-
connected “islands” of data in databases and on Web sites.
We envision an era — in the not very distant future —
of powerful Web services that make it easy to share and
manipulate all kinds of information across a wide range of
devices, from PCs and PC-based servers to handheld devices
and smart phones.
The Microsoft .NET roadmap consists of the develop-
ment tools, Web services, and compelling new user experi-
ences that will empower users with the information they
need and give them a rich, integrated, and personalized
experience-any time, any place, and on any device.
We also see .NET as an important platform for third-
party developers to create compelling new technologies for
customers.
IDEAS: How will Microsoft’s .NET strategy transform the
way businesses and their customers work with information?
BALLMER: By bringing information together and making
it easier to access, manipulate, and share, Microsoft .NET
will help businesses, large or small, to collaborate and work
more efficiently, make better decisions, and fine-tune their
business around what customers need. Again, consider the
salesperson. If all the information they needed about their
customers and their business was securely and simultane-
ously available on their PC, handheld device, cell phone,
and anywhere else they needed it, they’d be able to make
smarter decisions and better serve their customers, whether
they were in their office or on the road.
IDEAS: How might these Web services work?
BALLMER: Business systems across a company, from
inventory databases to customer records, would be available
as Web services that communicate and share data using
common Internet standards such as XML (extensible
markup language, an advanced Web design language) and
SOAP (simple object access protocol, an XML-based protocol
for exchanging information).
These can then be combined with a partner, supplier, or
customer’s own Web services to offer far richer features and
services than are available on the static Web sites of today.
Applications hosted internally, as well as on remote systems,
can be connected, allowing businesses to program the Web
quickly and economically, creating specialized solutions
that meet unique business needs. The result is that people
will be able to accomplish tasks based on what they want
and need to do, rather than what specific devices or appli-
cations can do.
Right now we’re working on a set of building-block
Web services that handle fundamental services such as iden-
tity, notification, storage, calendaring, location, and contact
information.
These will form the core of .NET, and as the platform
starts to take off, you’ll see more and more software compa-
nies roll out .NET services that perform more specialized
functions and cater to specific industries. And they will all
work together to create a single, customized experience for
the user on whatever device they’re using.
By making all these services available in a standard,
programmable way and giving businesses the opportunity to
expose their own business processes as Web services, we’re
helping companies spend less time and money “reinventing
the wheel” and more energy focusing on building new solu-
tions for their business and customers. ■
feature
19
issuefive
glos
sary
20
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Agent An application that searches the dataand sends an alert when a particularpattern is found.
Aggregations Information stored in a data ware-house in a summarized form.
Attribute Additional information included witha dimension, that is not used indefining the levels of the dimension.
Calculated Member A member that calculated from one or more other members using an MDX formula. Calculatedmembers are often measures,but can be members of levels from other dimensions.
101businessintelligence
Cell A cell is a single point in a cube.Cubes have cells for all of the possi-ble combinations of points from all ofthe cube's dimensions.
Cellset A set of data returned from a cubewith an MDX query. A cellset in themultidimensional world is equivalentto a rowset in the relational databaseworld.
Changed Data Capture In a database replication, changeddata capture occurs when only thedata that has changed since the pre-vious replication is copied.
Changing Dimensions A dimension that has levelor attribute data that needsto be updated.
Clickstream Data Data regarding web brows-ing. Web servers capture a
large amount of data in the processof receiving requests for web pages.
Conformed Dimension A dimension that is used in morethan one cube. The use of conformeddimensions and shared measures isthe primary way a set of data martscan be united into one consolidateddata warehouse.
Cube A cube contains dimensions, hierar-chies, levels, and measures. Eachindividual point in a cube is referredto as a cell.
Data Cleansing The removal of errors and inconsis-tencies from the data that is beingimported into a data warehouse.
Data Mart A database that has the same charac-teristics as a data warehouse, but isusually smaller and is focused on thedata for one division or one work-group within an enterprise.
Data Mining The process of finding hidden patternsand relationships in the data.Specialized data mining tools are able to find patternsin large amounts of data.
Data Warehouse A data warehouse collects, organizes,and makes data available for the pur-pose of analysis — to give manage-
What’s in a name? Despite the technological jargon attached to it — data mining, data warehousing, data scrubbing end-user query
languages — business intelligence is largely about turning data into knowledge.
glossary
21
issuefive
ment the ability to access and ana-lyze information about its business.
ETL The process of getting data out of one data store (Extract), modifying it (Transform), and inserting it into adifferent data store (Load).
GranularityThe level of detail of the facts storedin a data warehouse.
Hybrid OLAP (HOLAP)A combined use of relational OLAP(ROLAP) and multidimensional OLAP(MOLAP). Source data is usuallystored using ROLAP and aggregationsstored using MOLAP. This usuallyresults in the least amount of storagespace and fastest cube processing.
Local CubeA cube contained in a file. MicrosoftAnalysis Services (OLAP Services) pro-vides the ability to take all or a subsetof a server cube and create a localcube file. The local cube can be usedto analyze OLAP data while the useris disconnected from the network.
Multidimensional processing Or, on-line analytical processing.Analysis involving organizing andsummarizing data in a multiple num-ber of dimensions. People can com-prehend more information if thatinformation is organized into dimen-sions and hierarchies.
Multidimensional DatabaseManagement SystemA system that organizes data multidi-mensionally. A multidimensionaldatabase management system orga-nizes data specifically so it can beviewed with a multidimensionalanalysis (OLAP) tool.
Non-Volatile Data Data that does not change. Data isstable in a data warehouse. Moredata is added, but data is never
removed. This enables managementto gain a consistent picture of thebusiness.
Normalization The process of organizing data inaccordance with the rules of a rela-tional database. In a completely de-normalized database the customername and address information wouldbe stored every time a customermade a purchase.
OLAP On-line analytical processing. Themost widely used term for multidi-mensional analysis software devel-oped to distinguish data warehousingactivities from On-Line TransactionProcessing (OLTP).
Private DimensionIn Microsoft Analysis Services, adimension that is restricted in use to one particular cube.
Private Dimension ProcessingIn Microsoft Analysis Services, thebuilding of cube and dimension structures and cube aggregations.
Slice, Slicer, SlicingThe limiting of a cellset to data for asingle member from a particulardimension.
Slice and DiceThe ability to move between differentcombinations of dimensions whenviewing data with an OLAP browser.
Slowly Changing DimensionsA dimension that has levels or attrib-utes that are changing on an occa-sional basis.
SnowflakingNormalization applied to the dimen-sion tables of a star schema.
SOAP Simple Object Access Protocol is a
way for a program running in onekind of operating system to commu-nicate with a progam in the same oranother kind of an operating system(such as Linux) by using HypertextTransfer Protocol (HTTP) and XML(see XML) as the mechanisms forinformation exchange.
Sparsity and DensityThe degree to which the cells of a cube are filled with data. One of the primary challenges of storing multidimensional data is the degree of sparsity that is often encountered.
Star SchemaA method of organizing informationin a data warehouse that allows thebusiness information to be viewedfrom many perspectives. The star is a picture of the way the data is beingstored. The basic factual informationis in the middle of the star. Thepoints represent perspectives fromwhich factual information is viewed.
Time-Variant DataData that is identified with a particu-lar time period. Time-variant is one ofthe original defining characteristics ofa data warehouse.
Virtual CubeThe term used in Microsoft's AnalysisServices (OLAP Services) for a cubethat is created from portions of oneor more base cubes.
Virtual DimensionThe term used in Microsoft's Analysis Services (OLAP Services) for a dimension that is created fromone or more member properties inanother dimension.
XMLExtensible Markup Language. Amethod of sharing data between dis-parate data systems, without a directconnection between them. ■
Most organizations use less than 10 per cent of all
the data they collect and provide only five to
seven per cent of the people who could use it
with access to this data (source Giga Information Group). For
organizations with large data warehouses, the percentages get
even smaller.
Why is so little information being used by so few?
Information often hasn’t been easy to get to, and it hasn’t
been easy to use. Business cannot afford such waste, especial-
ly now that the economy is dipping downward and managers
are being asked to hold the bottom line. The "silos of data"
present in most enterprises today makes information difficult
to get to. The approaches of the past have made information
difficult to use beyond a few, select individuals.
The key to profitability and sustainable competitive advan-
tage is immediate, broad, real-time delivery of information to
everyone who affects the business — employees, managers, exec-
utives, partners, suppliers, customers, citizens and constituents —
at a rapid time-to-value with a low cost-of-ownership.
Increases in demand for information, the mainstream
adoption of the Internet, and hands-on users, are proving the
traditional model of informational applications, where infor-
mation is available to only a few, to be both inefficient and
ineffective. Now organizations seek enterprise-wide solutions
that can immediately deliver real-time information in the
most usable and familiar formats (like Outlook or Exchange for
e-mail receipt, HTML or PDF in Internet Explorer, or spread-
sheets in Excel) to very large, even unlimited, numbers of users
with tangible, measurable results.
Firms today want solutions that offer informational capa-
bilities that enable them to effectively measure key perfor-
mance indicators, identify trends, and spot new relationships
in their data — whether this data is financial, sales, human
resource, ERP (Enterprise Resource Planning), CRM (Customer
Relationship Management) or legacy-based.
Technologies such as Web-based reporting and analytics,
portals, e-mail delivery, and handheld devices will play a
critical role. But it’s how the technology is applied, towards
achieving a business objective, that will be most important.
As an example, at BP Energy in Calgary business users
have better analysis capabilities, are able to produce reports
in any format they choose and can easily combine the
information with other pertinent content via Microsoft’s
Content Management Server, all with maximum personaliza-
tion and security.
That’s the advantage of real-time information delivery. By
providing decision-makers with information at their fingertips,
leading organizations around the world are achieving results
similar to BP Energy, cutting costs and growing revenues in
three major ways:
1) Increasing performance efficiency.
2) Improving processes.
3) Providing sustainable competitive advantage.
part
ner
22
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by Brian Joynt
intelligentinteractive insightsFirms need to effectively measure key performance indicators
Advantage Real-Time Information. By providing decision makers with information at their fingertips, leading organizations
are cutting costs and growing revenues by increasing performance efficiency, improving processes and providing a sustainable
competitive advantage.
Let’s explore the types of applications that achieve these
results in closer detail.
Manufacturers like Ford Canada are rapidly detecting war-
ranty trends, quickly controlling warranty expenses and allowing
500 dealers across Canada to monitor performance through a
web-based extranet. A Ford dealer in Halifax and one in Toronto
will sell a different mix of vehicles and experience different types
of warranty claims – so merely comparing warranty claims pro-
vides no insight. Instead, Ford dealers can compare their perfor-
mance with dealers in their region and identify troublesome
trends. Delivering this information directly to their dealer part-
ners establishes both a self-monitoring mechanism and a higher
level of performance. Wholesalers and distributors like Sony
Electronics are lowering inventory, increasing inventory turns
and margins and providing an up-to-the-second global view of
inventory to 2,000 business users in North America, Japan and
Europe. Property Management services firms like Oxford
Properties in Toronto allow 1,200 business staff to have an
instantaneous bird’s eye view of their business.
By providing real-time information about business process-
es, organizations can improve or entirely change these processes
to cut costs and improve results. Banks, government agencies
and other organizations are improving processes simply by mov-
ing from paper to online, electronic processes. At the City of
Richmond, B.C., Engineering and Public Works field staff use
handheld devices for instantaneous mobile receipt of trouble
alarm alerts and analysis of information on pump usage and
water pressure. Delivery services companies like FedEx are man-
aging logistics and expanding into new markets globally by part-
nering with agents around the world. To operate seamlessly and
ensure FedEx quality of service, these agents are provided with
up-to-the-minute logistics information. FedEx reports an ROI of
over 400% for this solution.
Credit card companies, staffing agencies and insurance
firms, among others, are distinguishing themselves from their
competitors by offering their customers more information
online. In some cases, firms are providing information as a new
value-added, chargeable service.
Professional staffing firms like Administaff are improving
customer service by making it easier for tens of thousands of
employees and clients to access more information faster and eas-
ier while saving IT enormous amounts of time and money. At
Royal & Sun Alliance Canada in Toronto, for example, they start-
ed with a web-based, self-service informational application to
reduce costs and ended up with a new service offering based sole-
ly on radical improvements in information content and delivery
to their corporate clients.
A competitive advantage is within the grasp of those who
can capture and refine information that will be used in decisions
about what customers want. ■
Brian Joynt is general manager,Information Builders, [email protected]
partner
23
issuefive
Financial Manufacturing Sales/ CustomerMarketing Service
Profit & Loss Inventory Quota Call CenterAnalysis Control Achievement Resolution
Expense Warranty Cost Cost per Sales Pareto Analysis*Control Lead
Financial Manufacturing Sales/ CustomerMarketing Service
Cash Plant Quota Online SupportManagement Production Assignment
Budget Logistics Territory CustomerManagement Analysis Management Notification
Financial Manufacturing Sales/ CustomerMarketing Service
Risk Supply Chain Customer Loyalty RewardManagement Management Relationship Program
Management
Fraud Defect Promotion AccountDetection Analysis Effectiveness Management
P E R F O R M A N C E
P R O C E S S
S U S TA I N A B L E C O M P E T I T I V E A D VA N TA G E*Vilfredo Pareto, Itailian economist, (1848-1923).
datatoknowledgethe rise of
Thanks to technology, businesses can now collect and
store more data than ever before. Yet as corporate com-
puting networks grow and data volumes increase, an
old problem persists — how can people avoid drowning in all
that information? How can they make sense of it all to run the
business better?
Over the last dozen years, the software industry has tack-
led this issue and developed a host of applications designed to
collect, manage and understand data associated with specific
business processes. Today, Enterprise Resource Planning (ERP),
Customer Relationship Management (CRM),
Supply Chain Management (SCM) and
other applications are helping
countless enterprises streamline
operations, cut costs and
boost profits.
Such function-spe-
cific systems are more
important than ever,
especially for large com-
panies operating in a
global marketplace.
Because of the Internet
and e-commerce tech-
nology, that marketplace
functions as an organic
whole.
Everything is con-
nected. Transactions
happen in milliseconds,
and can take place
between parties on oppo-
site sides of the world.
Service expectations have increased too. Customers, suppliers,
and partners demand more from the companies they deal
with, and they’ll take their business elsewhere if they don’t
get it.
Survival in this competitive environment requires not
only accurate business data from all operational and transac-
tional sources, but the capacity to transform that data into spe-
cific knowledge that can be used for timely, well-informed
decision making. Moreover, that knowledge must be shared.
Everyone from CEOs to warehouse supervisors must be able to
easily access the information they need, whenever they
need it, and in the format that suits them best.
Fulfilling these requirements is what busi-
ness intelligence (BI) is all about. BI solu-
tions enable businesses to make the most
of their data by endowing them with
the ability to perform tasks such as
reporting, ad hoc querying, analysis,
visualization, scorecarding
and event notification.
Together, BI applications
form the data-discovery
foundation for business per-
formance management
(BPM), which enables com-
panies to measure, analyze,
plan and manage the perfor-
mance of enterprise business
functions and processes.
One company that has
successfully adopted BI as
part of its success strategy is
Brayton International.
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by Rupert Bonham-CarterIllumination heralds the dawn of data-driven decision-making
Knowledge is only valuable when it is shared. Everyone from CEOs to warehouse supervisors must be able to easily access the
information they need, whenever they need it and in the format that suits them best. Fulfilling these requirements is what
business intelligence is all about.
A manufacturer of fine office furniture, for years Brayton
used a mainframe legacy computer system that stored and sup-
plied data for employees within particular business units. But the
system became outdated as the company expanded. Employees
were limited in the amount of detailed information they
could extract, and obtaining data was often a difficult, time-con-
suming process.
Company president Joseph Erba realized that data had to be
centralized, and managers required tools to help them quickly
understand it.
After careful research and planning, Brayton deployed ERP
software to gather and consolidate corporate data, initially from
the sales and marketing departments.
To access, analyze and report on that information, the com-
pany invested in a business intelligence solution that integrated
perfectly with the technologies that comprised the data ware-
house.
Today, Brayton managers can easily call up information
from department-specific data stores and analyze it to their
heart’s content. Information drawn from several departments
can be analyzed simultaneously.
This allows managers to gain a big-picture view of the busi-
ness or to zero in on an isolated part of it — whatever knowledge
they need at the moment.
“We can extract data from our sales and marketing data and
transform it into information about where our products are sell-
ing, who’s buying them, and whether we’re focussing our energies
on the appropriate parts of the business,” says Erba.
The BI solution has also dramatically improved Brayton’s
reporting capabilities. Staff can generate detailed year-to-date
sales bookings’ reports used by sales representatives in two min-
utes. The same reports used to take two to four hours to generate.
As well, salespeople can provide customers with exact infor-
mation about sales, discounts, product mixes and other factors
simply by phoning Brayton’s customer service department, whose
staff can access the pertinent data in seconds.
It’s a powerful tool that helps create a more unified, respon-
sive, creative and profitable business. ■
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Rupert Bonham-Carter is director,data warehousing alliances,Cognos, Inc. [email protected]
Trimac Corp. BI systemrolls to $1 million ROIin first 12 months
Trimac Corp., a North American provider of
bulk materials transportation and logistics ser-
vices with a fleet of over 3000 vehicles, need-
ed a technology solution to help achieve con-
tinuous process improvement to offset industry
cost increases and strengthen customer rela-
tionships by providing a unique, value-add to
their service offerings.
Trimac has recognized a $1 million return-
on-investment by being able to compare actual
trip data to engineered trip standards to disover
process improvements that reduce costs and
enhance service.
Trip standards recorded within the system
examine factors such as equipment utilization
based on equipment or customer, by reviewing
variables such as load/unload times, distance
traveled and gross vehicle weight.
"We can drill down and compare the actual
trip information to what we have committed to
our customers, which improves the value of the
total logistics chain," said Ted Barnicoat, chief
information officer, Trimac. "It has allowed us to
provide complete 'order to fulfillment' to our
customers and the trip standards will yield
about $2 million in reduced costs this year."
In Trimac's 130 terminals across North
America, branch managers use business intelli-
gence to measure key performance indicators
(KPI's), such as determining whether Trimac is
meeting revenue per mile estimates. By the
end of 2002 Trimac intends to provide cus-
tomers access to online reports via a secure
extranet so they may perform their own multi-
dimensional analysis on their logistics data.
1. The data that's being collected about your customers' buying preferences:
a. Helps you improve your product and serviceofferings to meet customer needs.
b. Helps you justify purchasing more disk storage.
c. Helps marketing decide what to pitch when theyphone people at dinner time.
2. The data that people in different parts of yourorganization work with:
a. Is pretty accurate, except that everyone measures things a little differently.
b. Is completely consistent and accurate.
c. Almost always gets the company name right.
3. Management wants every data element integrat-ed into the business intelligence engine. You're feelingsmug, knowing that your data is of acceptable quality because:
a. It's been checked and checked again.
b. Data's data. Entering the right data is between theseat and the keyboard so it's not my problem.
c. Management is only ever pleased with the "right" data, so we've only entered data that management will like.
4. You're creating a business intelligence system and theselection committee wants to include desktop level datafrom PCs running Access and Excel. You decide to:
a. Support the committee. Since we gave up mainframes,the best data is on desktops anyway.
b. Move to eliminate the requirement. The only data worth analyzing is running on servers controlled by the IT department.
c. Suggest desktop level BI analysis tools for users who want to analyze their own data but keep the analysis of desktop data separate from corporate server-stored data.
5. The boss is looking for a victim to explain businessintelligence to the board of directors, and you werestanding in the wrong place at the wrong time. How will you define the term?
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1. The aim is to understand what customers want, not fine-tune telemarketing pitches. As for (b), in too many orga-nizations all the data does is take up disk space.
2. Consistent and accurate data throughout your organizationis what you need to get business intelligence working prop-erly. But (a) is the real state of affairs in many organizations.
3. There's no point integrating data through common analysisunless it is relevant and qualified. Otherwise there could bedramatic negative effects including loss of performance,excessive effort in maintenance and skewed results.
4. When you include desktop level data, you lose control overquality controls. Either eliminate this requirement or providea desktop solution to users who can make a good case forwhy their desktop data would be beneficial when analyzed.
5. Call off the spies! External data can play a part, but BIhelps you look at your own company's performance.
6. Balanced scorecarding looks at performance indicators tohelp quantify how a company is performing against its vision.
7. BI sounds trendy, but look past the hype and overturn everyrock in pursuit of improved business performance.
8. You’re a a forward thinker with strong business sense, notdistracted by gimmicks nor too proud to copy a good idea.
If you scored:Six to Eight correct: You know the difference between buzz wordsand valuable strategies. Now you must recommit to your courseand stay ahead of the curve.
Three to Five correct: You've got some and maybe even most of theright instincts. You must make a commitment to really implementBI or risk letting that solid foundation crumble.
One to Two correct: The good news is you're reading this magazine.
answersa. An oxymoron — there's no intelligence inbusiness today.
b. A slice 'em, dice 'em, drill down dive intoyour own corporate data to help under-stand what's driving or dragging down thebusiness.
c. A cloak and dagger look at the competition.Call in 007 and break out the secretdecoder ring.
6. It's sleepy time in the monthly productionmeeting, and suddenly you're jolted awakeby a request from the v.p. of marketing for a balanced scorecard. What on earth is he after?
a. An evaluation of your staff's skill levels.
b. A framework for evaluating an organiza-tion's performance against its vision.
c. A surefire way to win the department hockey pool.
7. When you hear the words business intelligence, you:
a. Cringe because it sounds like all thoseother worn-out business catch phrases.
b. Hope all the inflated hype won't overly stimulate your sometimes-too-trendy executive team.
c. Know this approach can both improve customer service and fatten your bonus.
8. When did you first show interest in business intelligence?
a. After watching a competitor's stock price zoom as they walked off with a CIPA award for their BI applications.
b. Following a complicated conversation with a mesmerizing marketing wiz duringthe wind-up luau at a user conference.
c. After ABC software's sales representativedropped off three plastic key chains. Andwhat a coincidence, you have three children.
a
b
a
c
b
b
c
a
There are many reasons for this, including the cost of
constructing the BI solutions, complexity of operating
them in conjunction with real-time transactional
applications, and the relative priority of investing in an appli-
cation to run your business immediately versus building a
solution that will support better decision making in the future.
In a contest for resources, the immediate urgency wins every
time. The result of this is the unfortunate reality that BI solu-
tions tend to get neglected on project priority lists. What’s
required is another perspective that does not pit these two
approaches against each other. Properly constructed BI solu-
tions offer a return-on-investment (ROI) that can often be
measured in months, not years. The solutions, in effect, pay
for themselves.
The practice of business intelligence lacks a straightfor-
ward and standard definition. A more accurate approach is to
accept a definition that consists of multiple components or
dimensions. Commonly accepted components include
Executive Information Systems (EIS), Executive Support
Systems (ESS), and Decision Support Systems (DSS). Together,
these components examine summary data in the form of dif-
ferent dimensions (type of product and units sold each day) to
identify trends, gain information and provide insight to busi-
ness owners. The EIS/ESS pieces of the solution collect data for
executive use in a variety of imaginative and easy-to-interpret
formats. The DSS component allows users to do ‘what if’ analy-
sis and then make business decisions based on their findings.
BI examines hidden relationships and patterns between
data elements to find new opportunities for the organization.
The data elements can consist of transaction data (e.g. daily
invoices, payment patterns, AR), organizational data (e.g. HR),
legislative data, forecasting data, industry data, competitive
information, and external organizational data. The process of
data mining can pull out small data relationships between large
volumes of data that can turn into nuggets of competitive gold
for an organization.
Historically, there have been many approaches for build-
ing BI solutions, yet most attempts proved to be unsuccessful.
There are many reasons for this, most of them pretty funda-
mental to the principles of sound project management. For
example, a general lack of technology horsepower or bad appli-
cation architectures have resulted in poor query response
times, applications that don’t scale, poor system manageabili-
ty, and a high total cost of ownership. Development strategy
has also been a big problem area. While many of us may enjoy
complex solutions and ‘big bang’ approaches, these have not
been very successful in this space. BI development plans have
often been too grandiose, trying to achieve too much, for too
many stakeholders to succeed in a reasonable period of time -
if at all.
A better approach is to initially focus on the ROI compo-
nent and use it to drive incremental BI solutions. You can do
this by identifying a handful of strategic questions (see Square
One, next page) which, if answered, can generate substantial
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by Sanjiv Purbaintelligencebusiness neglecting
There is a better way. Initially focus on the ROI component and use it to drive incremental BI solutions. Do this by identifying a
handful of strategic questions which, if answered, can generate substantial positive bottom line results for your organization. These
questions will vary by the precise nature of the business.
There have been many approaches to buildingBI solutions, most of them unsuccessful
no
positive bottom-line results for your organization. These
questions will vary by the precise nature of your business.
An ROI exercise will show the net benefit to the organi-
zation for each query. This could be in the form of new rev-
enue opportunities or expense reductions. Either approach
provides justification for the BI initiative. Two or three queries
that maximize ROI can then be used to drive out the parame-
ters of the rest of the project. This includes identifying the
most passionate project sponsor, source of revenue, timeline,
affected systems, and the resource skill requirements. A gener-
ic infrastructure can then be built in a relatively short period
of time. This success can then be used to get sponsorship for
further BI initiatives in the organization.
Any BI solution involves four steps: planning, data
retrieval, efficient storing of data, and reporting on the data.
The ROI approach shifts a lot of attention to the planning
piece. Current development approaches tend to focus a lot of
time on the ‘data retrieval’ activity by trying to make sense of
tens of thousands of data fields in hundreds of different appli-
cations – many of which may not even be used in the initial
reporting. By contrast, the ROI focused approach shifts your
attention on the ‘On-Line Analytical processing’ (OLAP) cube
component of the solution and maximizing the payoff in the
shortest period of time.
The current economic climate offers a good environ-
ment for implementing business intelligence solutions.
Every business is interested in achieving profitability and
survivability, while minimizing risks to the organization as
a whole. Answers to carefully constructed business intelli-
gence queries can satisfy these requirements. ■
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An ROI exercise will show the net benefit to the organizaton for each query. This could be in the
form of new revenue opportunitites or expense reductions. Either approach
provides justification.
Sanjiv Purba is practice director for Microsoft Services – E-Solutions, [email protected]
focusonROITarget ROI by identifying strategic questions:
Which product categories are the most likely to be returned by customers?
What is the profile of a website visitor that is most likely to make an onlinepurchase?
Which products are most likely to bepurchased over the Internet?
Which “product B” is purchased by a customer who bought ‘product A’ within onemonth of the original purchase date?
Which customers are most likely to berepeat clients?
What time of day generates the most profits for the business?
What is the employee profile formaximum retention? Maximum project?Maximum success?
Which products are most likely to bestolen? At what time of day? In which stores?
Which websites are most likely to experience security breaches?
How long does it take a new product tobecome profitable?
Which geographical areas are mostlikely to adopt new products?
Which products need to be replen-ished everyday? Every week? Every month?
Data, data everywhere, but ne’er the time to think.
That’s the state of most companies’ knowledge of
their customers today, as transaction systems cap-
ture data faster than managers are able to glean insights on
how to win more customers and better serve existing ones.
Though the business world is witnessing an explosion of inter-
est and investment in CRM software and other analytic tech-
nologies, many firms fail to exploit those technologies effec-
tively, and so customer satisfaction ratings remain largely
unchanged.
W H Y C A R E A B O U T C U S T O M E R K N OW L E D G E ?
Every company realizes that it must know its customers,
but many neglect improving their customer knowledge. Often
companies have been discouraged by previous efforts, such as
failed data warehousing projects, or unsuccessful attempts to
persuade sales personnel to document customer interests.
Many companies that do seek to improve their customer
understanding take limited measures, such as conducting a
study of customer profitability or implementing new "CRM"
software, which may provide improved efficiencies but yield
little in customer insight.
A recent Accenture research study suggests that the best
companies in an industry derive as much as six percent of
additional operating margin simply by having a better under-
standing of their customers.
Knowledge can lead to insight, and insights, if properly
nurtured and applied, can enable employees to improve
their customer relationships in every interaction with the
customer. It is this increased "customer equity" that leads to
improved margins.
C U S T O M E R I N S I G H T L E A D E R S
In our research of 22 leading firms, we identified the multi-
pronged approaches that enabled these firms to develop supe-
rior customer understanding. While specific tactics differed in
many respects, the leaders excelled in three areas—strategic
focus, knowledge creation, and organization integration.
S T R AT E G I C F O C U S
A company’s market position and corporate strategy must
be defined and understood before pursuing a knowledge cre-
ation initiative. Leading firms focus their resources on the
most valuable customer segments. Microsoft, for example,
shifted its emphasis to understand the needs of CIOs, antici-
pating a future where its dollars would come more from cor-
porate than individual purchases. Proctor & Gamble, in the
1980s, shifted some of its marketing research resources away
from end-consumers to Wal-Mart and other trade customers.
K N OW L E D G E C R E AT I O N
Leading firms use transaction-driven and human-based
information to build a complete customer picture. They use
transaction-driven data—obtained through systems and data
warehouses/marts that include information from past purchas-
es, postal codes, or income data—to improve direct marketing,
enable cross-selling, and identify unprofitable customers. But
they do not forego knowledge gathered through personal
interactions. Proctor & Gamble, long considered one of the
world’s leading marketers, has been a heavy user of statistical
data from point-of-sale transactions. But it has also retained
and expanded its human-based approach to consumer and
retailer knowledge. P&G constructs highly detailed "mental
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by Thomas H. DavenportJeanne G. Harris
Know your customer better every day. Every company realizes that it must know its customers, but many neglect improving their
customer knowledge. Many companies that do seek to improve their customer understanding take limited measures, such as a
study of customer profitability or implementing a CRM system which may provide internal efficiencies but little customer insight.
everywhereelusive data is
Understanding of position and strategycomes before knowledge creation
maps" of consumers thinking about
products based on extended discussions
with typical consumers. P&G mar-
keting people walk the floors of
stores with shoppers, observing
what they do and say. With
thorough mapping, a great
deal of insight can be
extrapolated from the think-
ing of a few consumers.
O R G A N I Z AT I O N
I N T E G R AT I O N
Leading firms recognize
that the success of customer
knowledge initiatives depends on the
broader context of roles and responsibil-
ities, the culture of the workplace, and orga-
nization structure. Hewlett-Packard, for example,
undertook a reorganization in order to become more customer-
focused. HP managers realized that technical leadership was
not sufficient to retain its market share in laser printers, and
therefore shifted its organization by product segments to one
by customer segments, focusing now on the full customer
experience. This got its development engineers to think more
broadly about their products. For example, because of the new
focus on customers and customer knowledge, they reacted to
customer surveys suggesting that the "Low Toner" message be
replaced by a "Pages Remaining" indicator by developing one.
Some caution is warranted, however. Firms that organize
around types of customers tend to develop marketing and
knowledge approaches for each segment in isolation, thereby
missing opportunities for broader, shared approaches.
M A K I N G K N OW L E D G E U S E F U L
The executives we spoke to told us that while they are
investing heavily in transaction-based analytic capabilities,
they give most of the credit for their success to improvements
in the collection, distribution, and use of human-based knowl-
edge. We found many examples of companies turning data of
both kinds into knowledge, and that knowledge into improved
business results. For example, American Express used its trans-
action data on past purchases to distribute the one of its four
catalogs that best fit the customer profile. Marriott uses its
heavy investment in customer relation-
ship management systems to alert
desk clerks to the special interests
or needs that guests have
expressed in the past. First
Union expects its massive
(27-terabyte) enterprise-
wide, customer-centric
data warehouse to con-
tribute $100(USD) million
in revenues annually, by
doing everything from
improving the accura-
cy of direct mar-
keting to alerting
staff of major con-
sumer events, such
as a major withdrawal or
deposit, or the purchase of a home.
While Harley-Davidson is also devel-
oping a customer-data warehouse, its manage-
ment stays in contact with its customers by attending rallies,
participating in owner meetings, and taking part in cross-
country rides. Like Harley, Daimler Chrysler hires marketing
professors to observe customer behavior at rallies and turn it
into explicit knowledge. Harley and Daimler Chrysler aim to
glean information but also to encourage customer identifica-
tion with brand and company. General Electric records and
monitors customer calls on its inbound toll-free number to
feed researchers, engineers, and developers information on
how to improve product design. ■
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Thomas H. Davenport,Accenture Institute for Strategic [email protected]
Jeanne G. Harris,Accenture Institute for Strategic Change [email protected]
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1
RupertBonham-CarterCognos
Jan DuffyGroup vice-president, solutionsresearch IDCCanada
Dr. Matthew Dunn,Senior VicePresident,BusinessSystems & ChiefInformation Officer.Intrawest
John ComacchioConsumer andIndustrial MarketsKPMG Consulting,Inc.
2How do you embrace business analytics on an enterprise levelwithin an organization?
fiveonfive
What are the typical challengesinherent in an organization’s busi-ness intelligence implementation?
First, ERP and other operational systemscontain a wealth of data that needs to beharnessed and funneled into an enterpriseinformation environment that supportsbusiness analytics. Second, your analyticsneed to be integrated. Analytics on anenterprise level means having a cross-functional, rather than a stovepipe view of your organization.
Aligning technology to effectively addressthe business requirements. IT staff andbusiness users need to work in partnershipto make sure that the right information isgetting into the hands of the right peopleacross the enterprise. You need consistentdata. And you need clearly defined busi-ness challenges for the data to solve. The two go hand in hand.
If analytics is associated with an enter-prise business application, the issue is toredesign processes to accommodate theactivity and change performance expecta-tion to require results based on use ofanalytics tools. If the aim is to encourageuse of analytics tools in a less structuredway, the issue is to prove added value.
Research conducted by IDC suggest thatcollecting accurate data in the volumesnecessary is one of the biggest chal-lenges. Following closely is ensuring secu-rity and privacy.
Our pro forma approach to real estatedevelopment has every project reportingthe same data the same way, building an‘institutional memory’ with rigid accuracy.The value lies in the refined practice andapplication of standards. Our ski resortshave refined analytic practices. The chal-lenge is harnessing data for a global view.
Agreement! We have many niche businesses,with niche systems. Agreeing on what shouldbe measured is difficult; defining how it has tomeasured to be meaningful, and then makingthe attendant systems and practices changes,are very detailed. Our most successful BI ini-tiatives have been 'technologizing' existingalready-coherent practices.
Define a vision and strategy for all thatdata, so once it becomes information itcan be turned into actions that convertinto profit. Make business analytics partof the business infrastructure of the com-pany, not the technology infrastructure.Technology is the enabler, not the driver.Ownership rests with the business.
Data availability and data analysis output:An organization must determine what dataand information they require, and ensurethat it is available either within the organi-zation or from external sources. It mustalso realize that the output from these sys-tems is only one part of the equation – thequantitative analysis piece.
Sandra PalmaroDirector of Strategic PlanningMicrosoft Canada
Organizations have implemented businessintelligence solutions to meet general-pur-pose reporting and analysis requirements,but most have been departmental. Thesesolutions can provide value to users; maxi-mum value is achieved through analyticsolutions that integrate data from all enterprise systems such as financials,human resources, supply chain, sales and marketing applications.
Many BI implementations have proclaimedsuccess prematurely, accomplishingimproved information access, but notimproved business performance or deci-sion making. Current solutions merelycontribute to the glut of data heaped onbusiness users. A BI solution that reportson predefined business goals or key perfor-mance indicators provides users with theinformation they need to make decisions.
3 4 5How do you know if your businessintelligence implementation issuccessful?
How is business intelligence different today from what we weretalking about 10 or 15 years ago?
In today’s challenging economic climate and the overall upheaval inthe information technology industry,what does the future of business intelligence solutions hold?
The ultimate measure of success is aquantifiable return on investment. BI givespeople throughout the company visibilityinto what’s driving their part of the busi-ness. So they can really get to the bottomof what’s causing issues, make more effec-tive decisions, and adjust courses of actionto reduce costs and improve performance.
BI technology can handle exponentiallymore data than it could 10 years ago. Easeof use has improved, so everyone in anorganization is empowered to do BI report-ing and analysis. The Internet puts BI intothe hands of people across the enterpriseand beyond to customers, partners, andsuppliers.
Business intelligence is a strategicimperative for organizations today. Itprovides the foundation for performancemanagement. The best way to maximizereturn on investment in BI software isto work with a leading vendor thatunderstands complex enterprise issuesand can deliver a complete solution.
Success is demonstrated by increasedquality and/or timeliness of decisions as aresult of having access to (and using)improved information.
A data warehouse integrated with a Website allows deployment of analytic function-ality to a broad end-user audience withinand outside the organization. Query andreporting software vendors are selling Web-enabled tools that deliver information to abase of hundreds or thousands who aregiven options to interact with the reports.
Recent IDC research indicates that organi-zations are increasingly embracing theWeb-based software architecture. As thistrend continues, data warehousing andbusiness intelligence-related software toolvendors have responded by Web enablingtheir existing products or introducing newWeb-enabled products.
If your business is more successful with itthan without it. Our mantra is "goodanswers beget better questions." If youcan't keep up with the demand for more BI, then you're probably on the right track.
Generally we're worse off. We capturemore digits but didn't design parts to worktogether. Do we have a better view of ourbusiness now than then? We certainlyhave the potential for a better view, butwe’ve introduced considerable data pollu-tion and data saturation to the decisionprocess. "Not waving . . . drowning!"
More of our internal systems will looklike 'web services' that we hook up inunanticipated ways. The other frontieris the cognitive boundary. We haven'ttapped our capability to comprehendvisually, or reexamined our assump-tions about those things. Research will come from unexpected places.
Survey the users. Feedback indicates howthe application is perceived, as well as fos-ters debate on functionality and content.Ask real questions; are we saving time; arewe utilizing fewer resources; are we makingfaster, more effective time-to-market deci-sions. Ask about the "aha" moments, andanecdotal ROI stories.
The attention is on customer processesversus production processes. Informationis gathered from enterprise systems, orderentry through fulfillment, and customer con-tact points. From transaction based legacysilos viewed through host terminals to busi-ness infrastructure connected via theInternet and viewed via browser interface.
Business intelligence solutions deliv-ered through Internet based serviceswill provide cost savings over tradition-al internal systems. This approachoffers opportunities for collaboration.Imagine sharing intelligence for a feewith a circle of suppliers, allowing youto optimize the product supply chain tobetter match customer demand.
A successful business intelligence applica-tion is one that is actively used. A systemcan be successfully developed anddeployed, but if it is not used by the knowl-edge workers, its success will be limited.Users want a system that lets them be incontrol, is intuitive to use, and provides com-prehensive information that helps themmake informed business decisions.
There has been a major shift over 10 to 15years from a product-centric to a customer-centric focus. Organizations have embracedcustomer relationship management (CRM)solutions to understand and respond tocustomers’ needs. A sound BI framework isthe foundation for analytical CRM solutionsthat will enable organizations to betterunderstand and serve their customers.
Today’s climate is driving a focus backto the basics – increase revenues,decrease costs, acquire new customersand improve existing customer rela-tions. Information needs to be availableto every employee, anytime, anywhereand on any device they need to helpthem make smarter decisions.
The business case for businesses intelligence (BI) pro-
jects is putting executives to sleep. There’s glowing
talk of improving quality and a better understanding
of customer needs but those fuzzy themes won’t generate
interest. The BI business case needs hard numbers about
increasing market share and/or reducing costs.
BI can reduce the probability of a confineable problem
growing into a monstrous calamity. Take the Ford Explorer-
Firestone Inc. defective tire case. The incidents began in hot
southern hemespheric countries but no one at Ford or
Firestone had heard about these events or made the connec-
tion due in part to the absence of BI systems to track accidents
caused by tire problems.
BI can make a significant contribution to cost reduction.
Financial services organizations are able to justify huge invest-
ments in BI based on reducing fraud losses. In manufacturing,
BI is used to rank suppliers in terms of their reliability in meet-
ing delivery and quality targets. Terminating relationships
with poor performers improves quality while reducing costs.
A disciplined approach to quality improvement can
unleash a torrent of related data. Without a BI application in
place, such improved quality data can paradoxically lead to
lower quality intelligence. "Our quality assurance group had
difficulties analyzing data needed to address engineering, man-
ufacturing and field quality issues," says Harris Microwave
Communications Quality Engineer, Paul Leopold. "We have
nearly thirty manufacturing business units operating individu-
ally, and using multiple data collection systems. Generating
reports based on these databases was very cumbersome.
Important information, including defects, yields, cycle time,
field failures, and reliability were difficult to analyze."
Harris invested in business intelligence software and as a
result, quality assurance, supplier relations, and customer
service have benefited. Using BI to complement a quality ini-
tiative can be a compelling story in most businesses.
A BI application can point out that a product is not doing
well in the market place in time to minimize losses. For exam-
ple, a toothpaste was introduced in an aerosol container.
While the vanilla mint flavored product was easy to use and
sanitary, many parents questioned the thought of letting their
kids loose with an aerosol toothpaste.
Conversely, a BI application can help a business become
more agile in ramping up production or revising distribution
of a product that’s selling well. Either way, these business
benefits can help sell a BI project.
Some BI projects have high benefits but are perceived to be
high risk due to the large volumes of data that must be integrat-
ed and due to the complexity of the software that must be used.
For example, a common feature of BI projects is the need
to integrate sales, manufacturing and financial data from
disparate data stores with unique database schemas and differ-
ing technologies.
Such risks can be reduced through EAI software such as
Microsoft BizTalk Server. Vendors can also provide business
intelligence applications to speed the implementation,
integration and ongoing maintenance. The availability of a
wide range of sophisticated software products can minimize
the risks associated with a BI project.
The advent of e-commerce on the Web is allowing busi-
nesses to collect extensive data about their customer interac-
tions but while collecting data is easy, mining useful business
insights from a mountain of information is another matter. ■
Yogi Schulz is president of Corvelle Consulting Inc., Calgary. [email protected]
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businessbusiness casethe
for intelligence
Disciplined approach. Without a business intelligence application in place, even improved quality
data can lead paradoxically to lower quality intelligence.
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