“The survivors of the world recession will be those that know what is going on.”
This was typical of the opening remarks from speakers at a recent Business Intelligence Summit in Auckland this month.
The successful will make good decisions using foresight, not hindsight, Vaughan Meneses, Auckland business development manager at BI consultants Cortell told those attending the summit. Questions to ask regarding BI include:
Are the companies making the right moves? Are they adding value, looking at where the high costs are and considering the low-value customers?
And do the BI tools fit? Do they help, are they intuitive and are they up to date and nimble?
Business intelligence, Meneses adds, is what brings all these things together.
Such commentary echoes a 2009 Gartner report on the future of business intelligence.
Gartner suggests that due to the lack of information, processes and tools, until 2012, more that 35 percent of the top 5000 global companies will regularly fail to make insightful decisions about significant changes to their businesses and markets.
The current economic problems will also drive firms to renew their focus on information transparency covering finances, operations and decisions.
The Aberdeen Group says the need for transparency and a troubled economy will create “the perfect storm, igniting improved performance and visibility” for BI to be “married” with ERP.
However, Wherescape CEO Michael Whitehead warns of many BI failures, because projects “underwhelm” or are not utilised.
The industry had not lived to its potential, he says, with real-time information in systems still three years away. But there is “lots of cool stuff out there” with an evolving market of vendors allowing customers “every chance of success”.
Yet, Aberdeen says best-in-class BI projects can give users a 17 percent reduction in operating costs, an 18 percent reduction in administrative costs, staff savings, monthly reports done in 3.7 days — with it taking 19 months to achieve these benefits.
As well, Peter Hanley, chief executive of Oracle distributor Indigo, says ERP systems are now more automated and BI allows more “exceptional reporting”.
He says the data is becoming more up to date and firms can drill down on who their best or most profitable customers are and who are their worst; the ones that cost money.
Wayne Kedzlie of Christchurch-based Montage says the BI market has changed, with big ERP vendors snapping up BI specialists. Appliance-based offerings are more commonplace and sophisticated ERP design now allows for more out-of-the-box analytics.
Typically, BI works like middleware between ERP and CRM for many Montage customers.
“This seamless integration between ERP and Data Warehouse, expressed as a business intelligence enabled CRM, is the real key to becoming a customer analytics driven organisation. And only in achieving this, is the measurement of customer profitability and actionable intelligence possible. In short, BI unlocks the value of investment in ERP and CRM solutions,” Kedzlie says.
At the core, ERP systems are designed for processing transactions, not sophisticated analysis, but BI helps bridge the gap between data and decision making.
Oracle’s Peter Hanley says as well as links to financial data, BI can also link to sales ordering systems, or HR, or an ERP, which for example, would tell a business what were the cheapest things to make.
Such information can be presented in a single view, such as in a dashboard, which will bring together six to eight KPIs for CEOs, for example, to look at Hanley says. These dashboard KPIs can change, so the financial crisis might give CEOs more financial data than usual, or a CFO would receive drill-down capabilities for his financial data on their dashboard. A sales manager would likewise have sales data.
“Almost without exception our clients have found a contribution to the bottom line from BI. It has helped reduce costs, increased sales, or improved margins,” Hanley says.
For Montage’s Kedzlie what is most significant is the move away from traditional analytics — financials, assets, sales analysis and so on to a real focus on the customer.
“Organisations are recognising the need to understand their customers — segmenting and targeting, improving customer satisfaction, and improving share of wallet — as critical keys for success in this tough global climate.
“As business advisors we speak less about business intelligence and data warehousing, and much more about customer-driven analytics and innovative ways to understand and better serve our customers,” he says.
However, Stephen Usmar, BI practice manager for Gen-i, reports a shift away from BI. He says there is now a move towards a more “real-time view” of a business, with information coming from many more sources.
Telecom, for example, might look at customer churn, or other customer details to help staff upsell a product.
Usmar says Gen-i will get the CRM and ERP systems in place to extract the data and create prototype systems, which will show the customer what it can do with the data. Such a task can take just a few days and if the project fails through not securing enough information, at least the customer will soon know.
Increasingly, customers take such BI projects in “bit-sized pieces” with dashboards the preferred outcome for presenting information. Customers sometimes misunderstand the requirements in terms of servers, applications, time and staff. They also seek more margin improvement, rather than revenue generation capability.
Usmar adds the trend is towards more planning, operational and forecast reporting. There is also a shift towards such information being delivered on mobile devices.