Who are our most profitable customers? Which products deliver the best margins? How successful was our first-quarter marketing campaign? What is our current quarter-to-date sales total?
At most businesses, the answers to these and other questions are buried in a variety of disconnected enterprise applications, web sites and databases.
It is the job of query, analysis and reporting tools from companies such as Hyperion, Cognos, Business Objects and Brio to extract and organise that data in a way that makes it relevant and actionable to frontline employees. As such, these tools play an integral role in business performance management initiatives, says Rob Ashe, chief operating officer of business intelligence tools company Cognos.
“Without meaningful information that people can easily use to make better and timelier business decisions in their everyday activities, you cannot even start to manage business performance,” he says.
However, query, analysis and reporting tools have traditionally been deployed on a departmental, project-by-project basis – meaning that most organisations own a proliferation of
business intelligence tools. “It is not uncommon in a large company to find 20 or more business intelligence, reporting and OLAP [online analytical processing] tools all over the organisation, says David Folger, an analyst with IT market research company the Meta Group.
The traditional ‘project’ focus of analysis and reporting means that one department may build, say, a sales forecasting system using Crystal Reports, while another group in manufacturing decides that Business Objects is the perfect tool for its own application. “Without any central IT oversight, [the company] ends up with different tools in each project,” explains Folger.
The goal of business performance management – with its emphasis on the close integration of business intelligence tools with planning and scorecarding applications – demands that organisations take a new approach to the way they purchase and implement these tools.
In future, claim the business performance management software vendors, forward-looking companies will increasingly choose to standardise on a suite of tools from a single vendor. In addition, they will more closely link the use of these tools to overall strategic (as opposed to departmental) goals.
Finally, they will develop business intelligence environments that are able to monitor the business in as close to real-time as possible. These systems will alert business managers to unexpected events and enable them to respond accordingly.
In a recent survey conducted by IT industry analysis company Forrester Research, 80% of interviewees indicated that they have multiple business intelligence tools today, although most want to consolidate those investments to cut costs. “We are running Cognos, OutlookSoft, Business Objects and Crystal Decisions. We have let each department do their own thing, but now we are cracking down,” one respondent told Forrester analysts.
Pharmaceuticals giant AstraZeneca is taking that approach. In April 2003, the company announced its decision to make Business Objects’ business performance management software the ‘de facto standard’ across its 55,000-strong workforce, says Steve Atkinson, AstraZeneca’s enterprise software manager. Already, more than 5,000 research and development staff at the company use Business Objects to analyse clinical trial data and to track the status of product development projects.
With its additional £1 million investment in Business Objects software, AstraZeneca will extend the use of these tools to other areas of its business – in particular, marketing, manufacturing and global financial reporting. “There are so many more uses we can find for Business Objects’ tools, and this wider deal was driven by an awareness of the benefits it will bring,” says Atkinson.
In future, marketing employees will be able to analyse sales data more accurately and the manufacturing arm of AstraZeneca will be able to pull together data from a variety of transactional systems, including SAP, in order to optimise manufacturing processes and better forecast demand.
By standardising on a single toolset across its operations, Atkinson adds, AstraZeneca will ultimately be able to combine information from different operations to give it more visibility into cross-departmental processes.
Intelligence and intent
When fragmented business intelligence environments have been consolidated, businesses are better able to link their analytic strategies to strategic intent. This ensures that they define, capture and calculate answers to the questions executives will ask, says Laurie Orlov, an analyst with Forrester Research.
“Pick three goals to propel business intelligence efforts – for example, drop unprofitable products, shorten closing cycles and grabbing market share,” she advises.
In 2001, for example, ceramics manufacturer Royal Doulton used Cognos’s Impromptu tool to identify unprofitable products and reduce product lines from 31,000 to fewer than 6,000. “Royal Doulton saw a $26 million saving in its working capital requirement between 1999 and 2001,
which it used to offset the cash outflow from trading,” says Ad Voogt, Cognos’s senior vice president of European operations.
Similarly, when fragrance company Coty decided to switch from a geographic orientation to measuring the performance of brands and product categories, it used software from Hyperion to help it reorganise its view of its data. The company expects this shift to save it more than $2 million over a three-year period.
Query, reporting and analysis tools are of little use if they do not provide information that leads to action. Forrester calls this business velocity management: “assembling leading indicators to detect and manage business direction and speed”. Moreover, it adds, business intelligence tools need to be configured to alert a network of employees with the ability to act on the results.
Most software companies that position themselves as business performance management suppliers are incorporating some kind of real or near-real time alerting into their products. “Most companies need to implement business performance management tools that enable them to sense and interpret problems or opportunities in their business and respond accordingly,” says Brian Gentile, executive vice president and chief marketing officer at Brio Software.
London Buses (a network of 30 bus operators in the UK capital), for example, is using Brio’s reporting and analysis capabilities to improve the performance of bus services. Each bus is fitted with an Automatic Vehicle Location system, from which information is downloaded each time the bus refuels. London Buses uses the Brio Performance Suite to analyse that information to identify which routes, for example, might benefit from the introduction of bus lanes.
In particular, one report enables managers at London Buses to select any two of the 4,000 roadside beacons that transmit information to the AVL, on any route, at any time of day, and compare a bus’s actual running time against the published schedule.
Business intelligence and integration tools company Information Builders refers to this process as ‘business activity monitoring’, or BAM – but stress that it relies as much on the integration of data from disparate, disconnected systems as it does business intelligence tools, a stance that plays to the company’s key strengths.
“We find that managers increasingly want business intelligence systems that tell them when there is a problem, not just when all is well. Optimising corporate performance is about catching issues before they get too big, by preventing exceptions from becoming problems or crises,” says Kevin Magee, sales director at Information Builders. By deploying a mix of business intelligence technology and application integration technology to create a BAM system, then incorporating alerting technology, an organisation has a full-blown corporate performance management system, he claims.
This stage is some way off for the vast majority of organisations, say analysts. But the importance of moving in that direction is clear, they say. “Those that can reap the rewards of business intelligence will remain competitive, while protecting revenue. Those that can’t risk fading slowly into oblivion,” says Howard Dresner of the Gartner Group.
And while it may be painful to be confronted with a business’s failings, that is where the real benefits are to be gained, adds Nigel Montgomery, an analyst with IT market research company AMR Research. “Do not shy away from addressing sore points – they are the ones that will give the best payback,” he says.