Business Intelligence: Today's Competitive Weapon

It was about this time last year.... The stockings were hung by the chimney with care - in hopes that Saint Nicholas soon would be there. But for many, jolly ol' Nick never came. He was out of stock, and it resulted in a public relations fiasco. This year, many companies have learned their lessons. They've adopted business intelligence (BI) tools, and they now know what to expect. Jeff Bezos, founder and CEO of Amazon.com, told e-Commerce Times that his company is ready for the upcoming holiday season, noting it is "better prepared than ever." Retailers have been forced to look at their business processes and the data they collect...and so have their financial institutions, warehouses, manufacturers, telecommunication companies, and carriers.

CRM's Other Half: The Intimate BI
"The Internet has caused a substantial loss in terms of intimacy," explains Eric Apps, president of Angos (Toronto). "The once face-to-face personal relationships are being replaced by Internet interactions." For example, let's look at banks. There once was a time when customers could walk into banks and tellers would know their names. Today, with credit cards and ATM machines, customers don't walk into banks, and tellers don't know Joe Smith from John Smith. These financial institutions have only digital representations of customers, based on transactions. In order to really 'get to know' the customers of today's e-world, companies need to pay closer attention to their transactional data and customer histories. It's an integral part of any company's CRM (customer relationship management) strategy. "If you don't have BI, you don't have CRM - because CRM is the ability to look at all customer data, and then to use it to drive the business," illustrates Srikant Gokulnatha, product manager at Microstrategy (Vienna, VA). "We see companies (that want to do CRM) buying a BI system and then molding it to fit their needs. We also see companies buying a CRM system that's predicated on a good BI solution on the back end."

As companies start paying closer attention to the data they collect, many have begun to suffer from information overload. For example, in addition to customer profiles and histories, e-retailers can track customers' purchases as well as the online products they click on, but don't buy. These online businesses sometimes find it difficult to sort through all the data. BI can help analyze it and allow for better business decisions. BI tools can analyze the inventory levels, look at the products consumers have been purchasing, and then give the probability that the retailer will run out of stock. "BI systems can also automatically reorder items - or even give retailers (or suppliers) the ability to check inventory and ship the necessary levels so that they don't run out," explains Gokulnatha. With BI, retailers can evaluate customers' purchasing habits and use the data for marketing promotions, as well as loyalty programs.

Let's face it, we live in a competitive world. The traditional barriers separating industries are collapsing. There are companies, traditionally in the retail business, that now have banking operations. There are companies, traditionally in one financial services sector, that now compete across all sectors in financial services. Ultimately, the company that has the best relationship with its customers, the best brand recognition, and/or the best loyalty program is going to stand out from the competition. What makes it difficult is, as technology advances and businesses embrace it, consumers are setting higher expectations when it comes to service. "If you're competing with businesses that have sophisticated technology infrastructures in place, they're probably leveraging heavily to poach your customers," says Apps. As the barriers collapse, everyone is thrown into the mix. Gord Watts, director of solutions at Cognos says, "Any organization serious about competing in today's hyper-competitive environment, needs to look at business intelligence." Sami Hero director of product marketing at Hummingbird (Toronto) agrees. "It's a must-have for virtually every company today."

A Starting Point For Enhancing Supply Chain Relationships
While we agree BI is beneficial, we haven't discussed which forms of BI are most beneficial for whom. There are many flavors. "As a starting point, organizations might best benefit from static HTML reporting," explains Hero. With this, end users can familiarize themselves with a new interface and a new concept of reporting. It can be done with a thin client deployment, either as a stand-alone tool or integrated with a portal solution (enabling indexing and searching capabilities).

There are also integrated, function-specific analytic applications available. Another common entry point, for companies starting to use BI, is analyzing sales data. "It's a very easy piece to start with," adds Gokulnatha. By gaining insight into functional processes, businesses can enhance their supply chain relationships and improve customer acquisition and retention. "There are analytic applications that operate as their own end-to-end analytic solution for specific functional areas," explains Hero. "At the same time, these applications can provide cross-functional integration for enterprise-wide views of the business." Depending on a company's needs, there are applications with predefined business metrics, performance indicators, and numerous reporting options.

Choosing Advanced BI Options
One of the most common misconceptions regarding BI is that the technology simply offers reporting capabilities. BI can help companies do much more - if companies know what they want. "Technology vendors tend to be fairly glib in terms of what it is that they deliver," says Apps. "So I think there's skepticism out there to begin with. In addition to that, companies think BI is simply software solutions that can deliver magic bullet results. That's not the case." Businesses need to have an understanding of what it is they want to get out of a solution before they start searching for it. "Business intelligence can be complex," says Gokulnatha. "It's important for companies to know exactly what they want." Today, there are solutions that can take data from different sources and then build one central data warehouse on one central data store - on which you can run BI tools and analyze all the data. Additionally, as the economy changes, data is coming from a lot more sources than before. Web sites and wireless phones are generating data as well.

To further complicate matters, there is OLAP (online analytical processing). "OLAP requires an IT staff that's experienced in this area," adds Hero. "Training from the vendor should be an option, as well - to reduce the learning curve." In defining terms, OLAP is multidimensional analysis of consolidated enterprise data. In other words, it's a software technology that allows users to view (in a number of different ways) information that has been transformed from raw data to data that affects the enterprise. Companies need to know how they want to view their data, though. Do you want calculation and modeling, trend analysis, or slicing subsets (for on-screen viewing)? With OLAP, users can also use the drill-down function (for viewing deeper levels of consolidation), the reach-through function (for viewing underlying data), and the rotation function (for comparing different sets of data). OLAP can also combine historical and projected data for "what-if" scenarios. For instance, what if a competitor launches an attack on your customers? Will you know which ones to hang on to, versus which of those you should let go? And, what if holiday sales soar to record heights this year? Will your warehouse have the inventory to fulfill those orders?