APPA 38 – Business Intelligence Solutions for the Workplace

APPA 38 – Business Intelligence Solutions for the Workplace

Page 2

Agenda

What is EPM?

What is BI?

Why is it important?

How to do it?

– Pitfalls

What’s coming next?

Q & A

Page 3

What is Enterprise Performance Management (EPM)? Corporate Performance Management (Gartner):

– Methodologies, metrics, processes and systems used to monitor and manage the business performance of an enterprise.

Business Performance Management (Forrester):

– It is not simply a reporting system — it is a tool for implementing business strategy, but it is of little value without the organizational commitment and cultural transformation to make it work.

Enterprise Performance Management (AMR):

– It is an emerging superset of applications and processes that cross the traditional department boundaries to manage the full lifecycle of business decision-making.

Common Themes:

Business Intelligence, Analytic Applications, Methodology

Page 4

What is EPM?

Not a single product

BI applications, methodologies, and change management

Linking strategy to action

– Metrics (KPIs)

– Information delivery, right person, right time

– Process automation and optimization

Page 5

Gartner CPM Magic Quadrant Chart (2005)

Source: Gartner

Page 7

What Is Business Intelligence?

Business Intelligence is…

A term invented by Gartner in 1992

An integrated suite of tools that provides organization-wide reporting and analysis via role-based dashboards, delivering the right information to the right people at the right time.

Cross-functional data, both structured and unstructured data and operational systems, comes together to provide sharply focused views.

Users can navigate smoothly from alerts to interactive analysis down to detailed reports and even to the transactions all while maintaining the context that’s critical to root cause analysis.

Page 8

Definition: What is Business Intelligence?

BI transforms raw transactional data collected within business applications into actionable information

BI delivers the right information to the right people at the right time

BI focuses on improving decision making processes

BI improves the ability of the business to manage performance versus targets at all levels

BI provides visibility to the root drivers of financial performance

BI links strategy to action

BI links people, processes, and information

Page 9

Challenges with BI Solutions

1. What are my most profitable areas of improvement?

2. Where is the data, is it relevant?

3. How often is the data updated, is it current?

4. Who should get this information?

5. Is this Information good or bad?

6. What should users do with this information? ACTION!

Page 10

Business Requirements:

Statutory, Operational Reports

– Monthly, quarterly, vs. budget, benchmarks…

– View, print, archive,…

– Secure delivery with low administration

Exception Alerts

– Nearing budget, out of stock, overdue..

– Get further info (guided/root cause analysis), take action,…

Analytical Views

– Transform data to optimize analysis

– Interactive analysis (slice & dice), find trends, find opportunities

Work Lists / workflow

– Filtered lists of records that need your attention

– Knowledge capture

Page 11

Business Intelligence – Hierarchy of Needs

Operating:Operating:Departmental Metrics, Spreadsheets, Functional Driven, Tools based approach

Optimizing:Optimizing:Closed loop processes, business planning, application integration, collaboration, continuous improvement

Innovating:Innovating:Performance culture, Tiered objectives, Senior executive driven

John Hagerty, AMR Research: Performance Management Maturity Model

Integrating:Integrating:Executive/Manager Accountability, Bottom Line Performance, Integrated Metrics

Page 12

A Portfolio of Solutions is Required

* Conceptual diagram based on Business Intelligence: Key Trends and Evolving Markets, Bill Hostmann, Gartner Mid-Sized Enterprise Summit West 9/20/04

Event

Interactive

Scheduled

What happened?

Why did ithappen?

What willwe do about?

Proactive Notification

Reporting

Root CauseAnalysis

Link to Transactions

InternalControls

Operational Decisions

Closed Loop Budgeting & Planning

Page 13

Business Intelligence Crosses Organizational Disciplines

*Conceptual diagram based on Business Intelligence: Key Trends and Evolving Markets,

Bill Hostmann, Gartner Mid-Sized Enterprise Summit West 9/20/04

Analytic SkillsAnalytic Skills

Summarizeand analyze

Discover and explore

Interpret results

Business SkillsBusiness Skills

Link to corpstrategy

Alter processes

Set & prioritize expectations

Monitor results

IT SkillsIT Skills

Implement change

Store, maintain, & Integrate data

Extract data

Page 14

Market: BI is a top Priority Among CIOs

2005 2006

Business Intelligence (BI) 1 2 + 4.8%

Security enhancement tools 2 1 + 4.5%

Mobile workforce applications 3 3 + 3.9%

Collaboration technologies 4 * + 3.6%

Customer sales and service technologies 5 8 + 3.4%

Service-oriented applications and architecture (SOA, SOBA) 6 11 + 3.2%

Workflow management 7 4 + 3.2%

Networking, voice and data communications 8 7 + 3.0%

Virtualization (storage, computing, data center) 9 10 + 2.9%

Legacy application modernization and upgrade 10 5 + 2.5%

To what extent will your investment in each of the following technologies change in 2006?

Ranking

*New question for 2006

Spending Increase

2006 CIO Technology Priorities

Source: Gartner EXP 2006 CIO Survey

Page 15

Gartner BI Magic Quadrant Chart (2005)

Source: Gartner

Page 16

Market: Global Business Intelligence Market Size

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2004 2005* 2006 2007 2008 2009

Consulting - 5%CAGR

Software - 7%CAGR

$10.2 billion in 2009 — 5% Compound Annual Growth Rate (CAGR)

Millions of U.S. $

*2005 market sizes are preliminary

Source: Gartner

Page 17

Macro BI Market: Trends in Buying BI Software

0

500

1,000

1,500

2,000

2,500

3,000

2003 2004 2005* 2006 2007 2008 2009

Pure-Play BI - 4%CAGR

DBMS - 18% CAGR

EnterpriseApplications - 21%CAGR

Worldwide License Revenue By Vendor Type

Millions of U.S. $

*2005 market sizes are preliminary

Source: Gartner

Page 18

EPM/BI – Benefits

Makes things happen faster.

Helps instill discipline, predictability, and certainty into business processes.

Ensures the right people are always aware of the right information at the right time – and take action!

Relieves people from having to monitor information manually.

Makes multiple applications and data sources work as one.

– Knowledge capture around roles

– Speeds learning

BI Examples

Page 20

ACTS Retirement-Life Communities, Inc.

Page 21

HealthPartners

Page 22

State of Michigan Screenshot.

Test Data for Demonstration Use Only

State of Michigan

Factors in BI Failures

Page 24

What are the barriers to a successful BI implementation?

Core systems take precedence (e.g. go-live)

Executive support & funding

No champion, ongoing EPM ownership

Unclear business model / metrics

Operational issues push to back burner

Data access challenges

Lack of understanding of value

Unfamiliarity with tools, training skills

Organizational resistance to change

Expectations of cost and development effort

Page 25

Goals and Methodology

Companies struggle to define goals for business intelligence

– How should you be performing as an organization?

– What are the best practices that will get you there?

Page 26

Struggling to assemble the right ingredients to deliver cost-effective BI results

– Outside consulting

– BI tools

– Enterprise application integration

– Report creation

– Training

– Role-based personalization

– Etc….

If You’re Missing the Yeast, You Can’t Bake Bread

Page 27

Irrelevance

How to do irrelevant BI:

– Ask questions that can’t be answered.

– Provide intelligence based on bad data.

– Overwhelm users with “FYI” data.

– Take data out of context so it doesn’t make sense.

Page 28

Seven ‘Fatal Flaws’ of CPM/BI

“If we build it, they will come”

“Managers need to work the numbers”

“We don’t have a data quality problem”

“Our applications vendor will deliver the best solution”

“We can get it right the first time”

“We can outsource BI/CPM”

“Just give me a dashboard”

Gartner June, 2005

Bill Hostmann, Frank Buytendijk, Ted Friedman

Factors in BI Success!

Page 30

Excellence is no accident… World-class organizations operate and perform very differently than their median peers

ITITProcurementProcurementFinanceFinanceHuman ResourcesHuman Resources

Overall Finance costas a % of revenue

Median WC

42%

Overall Procurement cost as a % of spending

Median WC

20%

Hackett 2005 Functional Performance Data

Overall IT costper end user

Median WC

-10%0.85%

Overall HR costper employee

Median WC

25%

Median benchmark client identifies $4.8 Million in potential HR cost savings per 10,000 employees

Median benchmark client identifies $5.3 Million in potential finance cost savings per $1 Billion of revenue

Median benchmark client identifies $1.7 Million in potential procurement cost savings per $1 Billion of spend

Median benchmark client spends $9.0 Million less per 10,000 end-users; less adept at leveraging IT to reduce labor costs

0.68%

8,7159,6171.26%

0.73%

1,895

1,422

Source: The Hackett Group

Page 31

World-class organizations are far more efficient

Length of plan and forecast development

Strategic plan Forecast120

79

Median 1st Quartile

26%

13%

Median World-class

Planning and performance management cost as a percent of revenue

22

15

3

Median 1st Quartile Top Performer


Page 32

World-class companies focus on limited measures to reduce cycle time and improve content

Best Practice Profile

Exception-based reporting

Use proportionately more leading, operational, external indicators

Budget fewer line items and budget driven by tactical plans

Forecast only major variables

Vary forecast detail with time horizon

Number of budget line itemsNumber of budget line items

200

127

MedianMedian World-classWorld-class


Page 33

Information Access – World-Class performers enable efficient access to information

Best Practice Profile

Consistent and pervasive use of key technologies

Common definitions

Common delivery infrastructure

Personalized delivery

Filtered content

Percent of business performance reports Percent of business performance reports generated from a central data repositorygenerated from a central data repository

48%48%

62%62%

MedianMedian World-ClassWorld-Class


Page 34

More complexity results in less time to focus on value-added activities

Commitment of Time by Reporting Activity

21% 11%

16%

17%15%

14%

6%

Ad hoc analysisForecastingAction planning

Data collectionData validation Report preparationVariance analysis

BusinesspartnerAccounting

Specialist

HistoricalReporter

InsightfulAnalyst

LeaderTransactionProcessor

Concentration of Skills


Page 35

World-class companies spend twice as much time analyzing data as they do collecting and compiling data

Allocation of analysts’ time for standard reports

0% 20% 40% 60% 80% 100%

World Class

Median

Collecting / compiling data Analyzing information

35% 65%

46%54%


Page 36

Average companies are internally and historically biased…

Measurement Source

49.8%

4.4%External operating

12.9%

External financial

32.9%

Internal operating

Internal financial

24.0%

Leading or predictive

Measurement Perspective

76.0%

Lagging or historical


Page 37

Average companies still rely heavily on spreadsheets


Percent of companies using spreadsheets as a stand-alone budgeting application

33%

44%

54%

Median World-Class World-Class Efficiency

Page 38

So which Business Intelligence best practices really matter?

Top BI Best Practice Themes:

– Metrics and Measurement Linked to Strategy

– Simplification & Standardization

– Effective Governance

– Consistent & Available Reporting

– Self Service for Information Access

Hackett studies show strong correlation between use of best practices, lower BI costs and greater business value.


Page 39

Top differences between Peer Group (median) and World-class performers

Commitment to strong performance

Widespread use of best practices

Constant measurement

No end to the improvement process

Strong culture of superior performance

Execute, execute, execute


Page 40

Keys to successful EPM Implementations

Sponsorship at C-level

– Visioning with CFO and operational VPs

– Inclusion of multiple functional areas

– Peer success / case studies (been done before)

Momentum

– Need to attack significant pain point for pilot

– Deliver value at every phase

Change management strategies

– Understanding of cultural barriers

– Identifying and empowering champions

Page 41

Change Management Strategy

Understand and plan for it

What is the history of the organization?

– Steady vs. Dynamic change

– Average tenure

– Known silos

Are any areas anticipating cuts?

Number of changes planned?

Size of changes planned?

Communication plan, rumor control

Page 42

How does Lawson-Hackett EPM solution work?

C-Level Vision Session

• Create performance management strategy based on Scorecard results

• Develop a “blueprint” of prioritized business opportunities and performance improvement initiatives

Best Practices

Configuration guides that map Hackett-certified best practices down to Lawson applications

Lawson EPM / BI solutions

• Predefined Key PerformanceIndicators and proactive notifications speed delivery of role-based dashboards

Hackett Scorecard

• Benchmark against peer organizations and WC

• Identify performance gaps

• Scorecard annually to monitor performanceWorld-Class

Defined

QuantifyOpportunity

Identify Proven

Practices

Prioritize

Execute

EvaluateProgress

Lawson Professional Services Methodology

• Trusted Lawson advisors— together with Hackett transformational consultants deliver the solution

Page 43

Lawson Solution

DataWarehouse

Business IntelligencePlatform

Analytic Applications

Ben

chm

arks

& B

est

Pra

ctic

es

EPM Implementation Services

The Future of BI

Page 45

What do we hear today About BI?

Pervasive – moving to operational

Support for agility

Support for speed

“Competing on Analytics” – Davenport, Harvard Business Review, January 2006

Massive volumes

BI reaching customers and partners

Have we really come this far?

Page 46

The People Who Use It Don’t Think So

02

468

1012

141618

BI Tool Excel Access Data Admin

Avg. Hours/Week - Mktg Analyst

Suitability of BI Tool

Indispenable

Very useful

Could work without it

Not useful

<1% 1-5% 6-10% 11-15% 16-20% >20 %

Training % Total Budget

% Reporting Favorable

Traing Spend % Budget

Training Spend vs Outcome

0

20

40

60

80

Shortcomings Cited

% Citing (n=251) 61 55 49 35 22 21

Relevance

Integration

Understanding

Work flow

Ease of Use

Performance

Source: Hired Brains, Inc. research 2003-2004

Page 47

Future of BI

Today

Reactive, historical facts are gathered

Time lagged, Analysis happens after the fact

Elitist, power users only

Disparate, departmental solutions

Tomorrow

Predictive, forward planning and modeling

Near-Time / Real-Time - alerts trigger analysis during events

Ubiquitous, users throughout org.

Unified, integrated BI platforms, standards

Page 48

In the future BI will:

Go beyond your organization: e.g. supplier’s inventory of parts has dropped below safety stock level

And will have business logic: Risk of part shortage on production quantified

And be able to respond proactively: Automatically order from alternate supplier

Questions?

Documents

APPA 38 – Business Intelligence Solutions for the Workplace