ADVANCED TOPICS IN BUSINESS INTELLIGENCEThe blurring of the line between decision support systems and operational systems because of real-time warehousing, the use of Enterprise Information Integration (EII), and closed- loop business processes

Contents Topic Understanding Business value Case Study

Implications to organizations

Links to and implications for BI projects

Looking ahead

Topic UnderstandingDecision Support Systems (DSS)Class of information systems (including but not limited to computerized systems) that support business and organizational decision-making activities. Categorized by Types:Communication-drivenData-drivenDocument-drivenKnowledge-drivenModel-driven

Operational Systems

Term used in data warehousing to refer to a system that is used to process the day-to-day transactions of an organization.

These systems are designed so processing of day-to-day transactions is performed efficiently and the integrity of the transactional data is preserved.

Topic Understanding

Real-Time Warehousing

Updated every time an operational system performs a transaction (e.g. an order or a delivery or a booking.)

•Data warehouses in this initial stage are developed by simply copying the data off an operational system to another server where the processing load of reporting against the copied data does not impact the operational system's performance.

Off line Operational Database

•Data warehouses at this stage are updated from data in the operational systems on a regular basis and the data warehouse data is stored in a data structure designed to facilitate reporting.

Off line Data Warehouse

•Data warehouses at this stage are updated every time an operational system performs a transaction. The data warehouses then generate transactions that are passed back into the operational systems.

Real Time Data Warehouse

Integrated Data Warehouse

Evolution in organization use

Topic UnderstandingEnterprise Information Integration (Ell)

Refers to software systems that can take data from a variety of internal and external sources and in different formats and treat them as a single data source. Data access technologies:ADO.NETJDBCODBCOLE DBXQueryService Data Objects (SDO) for Java, C++ and .Net clients and any type of data source

Closed- loop business processes

Encompass of enterprise-wide processes.

Business value The most significant trend is the

creation of tools that provide visibility — of both underlying processes and surface issues — to enable decision makers at all levels of the enterprise to “close the loop” and reduce the time it takes to make and act upon decisions.

Demands to implement real-time solutions: Increased access to information Better ways to distribute information to the

systems and individuals who can process it Improved techniques to gain insight from it Better ways of collaborating

Real-time order and fulfillment system resulted in 97%+ customer satisfaction rate and helped to propel Dell to the number one slot in the personal computer industry.

1990s

1970s Original mission statement of empowering the real-time enterprise — the R in SAP/R3 stands for real-time

Average four-day fill rate increased from 96.5% to 98.5%, netting $20 million in savings from reduced safety stock and a $10 million savings in excess transport charges

2000s

Business valueBenefits

Increased productivity due to fewer manual checks for accuracy.

Reduction in the time and effort required to produce reports thanks to data consolidation.

Enhanced ability to comply with regulatory requirements and greater – and more confident – audit readiness.

Enhanced access to highly consistent information, as well as to unstructured data.

Enhanced ability to transform data into usable and actionable information.

Reduced cost and effort required for virtually every IT project.

Reduced IT costs associated with data maintenance.

Elimination of custom programming to build data extraction and manipulation.

Incremental revenue from the ability to cross-sell and up-sell related products and services.

Improved customer service and reduced time required to serve each customer.

Drawbacks

Only senior-level managerial attention will induce cultural change

According to TDWI Research, the average data warehousing project costs $1.1 million and takes 10 months to deliver, while a data mart project costs $544,000 and takes six months to deliver.1

Most BI solutions are used by less than 20 percent of employees (if that) and provide only departmental views of data.

Business are not agile enough to deal with real-time information

Burden the production system by polling it continually.

1 From In Search of a Single Version of Truth: Strategies for Consolidating Analytic Silos by Wayne Eckerson, TDWI Best Practices Report, 2004 (www.tdwi.org/research/reportseries). Technically, the numbers are for consolidating data warehouses, but the common approach for consolidation was starting from scratch.

ALTERNATIVE: Centralized data warehouse as a repository and distribution engine for online transaction processing data.

Case Study The Path Less Taken.

Integration of firm's resource and capability to implement enterprise CRM: A case study of a retail bank in Korea.

The Path Less Taken

WESCO International

Case Study: The Path Less Taken

Company Wesco International FORTUNE 500 COMPANY with $5.3 BILLION in revenue in

2006 Electrical and industrial product distributor Pittsburgh-base More than 6,000 employees 370 full-service branches across the U.S. and Canada Eight high-tech distribution centers More than 100,000 customers worldwide

Case Study: The Path Less Taken

Wesco Business Its strategy has centered on putting inventory;

expertise and services where its customers need them. Customers cross most industries and run the gamut

from Boeing to Dow Chemical to PepsiCo 370 branches fed by eight distribution centers

Distribution center managers are given a high degree of autonomy, including the ability to determine inventory; set prices and negotiate contracts

Case Study: The Path Less Taken

Wesco Situation Did not have real-time access to inventory at the branch level, and could

not as a result easily shift supplies from one location to another to meet demand.

Did not have immediate access to sales information from the field; this data was consolidated at headquarters via nightly uploads to an Informix database.

Management could not quickly drill down to important customer-level information, such as which customers had recorded a dramatic drop in purchases and were perhaps getting their supplies from a competitor.

The Informix system, installed in 1993, couldn‘t be tweaked much further. It was overloaded and underpowered.

A key sales analysis report required 80 hours of processing time

Case Study: The Path Less Taken In 2000 began evaluating an

Enterprise Resource Planning system to move closer to real-time visibility Looked at systems from SAP and

Oracle Cost close to $110 million.

To achieve the integration would have had to scrap WesNet, its distributed point-of-sale system (based on a 20-year-old NCR system called ITEM).

WesNet was completely paid for, incorporated a high degree of customization, and could still be expanded.

In the end decided that Wesco didn't need a new ERP system

Decided to replace its Informix data warehouse with an Oracle data warehouse Construction began 1999

NCR account representative proposed use of an NCR Teradata system

Company agreed to a benchmarking exercise

Case Study: The Path Less Taken

Benchmark

Time required to process key reports

by system.

1312

0.58

INFORMIX LEGACY SYSTEMORACLE WAREHOUSE BENCHMARKSTERADATA DATA WAREHOUSE

Hou

rs

200643

0.25

1999

2000

Month End Sales Analysis

Invoice Detail Loading

Sales & SuppliersSummary

80

28

1.25

Case Study: The Path Less Taken Wesco decided to continue

implementing Oracle for some functions Transactional data such as pricing,

electronic data interchange (EDI) and the company's e-commerce environment.

The Oracle system also feeds information back into Teradata.

Teradata would now serve as the storage hub for sales analysis, accounts receivable and payable, supplier summaries and customer master records.

Although Oracle and Teradata are built on relational database management system (RDBMS) technology, in which data is organized around related tables (rows and columns) of data, the design of Teradata RDBMS has always revolved around

fast analysis and retrieval of data. Incorporates a technology known as massively

parallel processing, in which database lookups are broken into smaller sub-tasks that are assigned to different processors on a multi-processor server

Oracle grew up around online transaction processing (OLTP) applications, in which the most important thing is to record transactions such as purchases and payments quickly and reliably Can also be tuned and configured to support

more analytical applications such as data warehousing.

Case Study: The Path Less TakenTeradata implications to Wesco $5 million more expensive than Oracle Initially it ran parallel to existent Informix

system In 2002 bought new model and reassigned

initial to application development Choose a tool for presenting information

and conducting business intelligence queries Initially Cognos Eventually Webfocus suite

Closer to real-time access to data from field operations, and a way of drilling down into the data.

Tweaked WesNet at the branch level to push inventory updates to head office several times a day

Constructed a number of applications more often associated with ERP suites

Spent about $10 million on the Teradata implementation, including the WebFocus piece, and additional applications written for the Oracle databases

$10 million one-time margin improvement through the use of the system.

$8 million one-time gain through inventory reduction and better distribution of inventory among branches

$4 million savings in the first 24 months through better management of its discount prices

$1 million savings Gained an indefinite extension on its WesNet

system

Case Study: The Path Less Taken Links to and Implications for BI projects

“The strategy we took isn't right for every organization, but it's something they should consider”

"Companies have invested a lot of money in developing applications that run their business really well. Why give that up for the cookie-cutter approach of an ERP system”John Conte

Chief Information OfficerWesco International

Integration of firm's resource and capability to implement enterprise CRM

A case study of a retail bank in Korea

Case Study: Retail Bank in Korea Introduction

Find-Equity Bank (a pseudonym) one of the big players in Korea Intense competition in the retail bank industry Transform from being product- or service-centered into customer-centered As a customer-centered IT-driven strategy, Customer Relationship Management (CRM)

implemented enterprise-wide In 2003

Concerns Decrease of the interest profit rate on deposit and loan Infringing on the banking business by other industries Dichotomized customer management processes caused by the merger and acquisition with

Seoul Bank in 2002 were yielding customer dissatisfaction, consequently resulting in customer defections

Enterprise-wide CRM was deemed to be a mission-critical business strategy to ensure distinguish itself from its competitors, win over new customers, and maintain the loyalty of its existing customers

Case Study: Retail Bank in Korea

Customer Relationship Management (CRM)

Implementation made up of two different phases (not intended from the outset)

They found that they have been missing another critical factor: the peopleCRM is inherently a business strategy driven by not technology but people

Case Study: Retail Bank in Korea

Critical problems Technological

Difficult to synchronize data acquired from various channels

Required plenty of time to do it because every channel has operated by its own subsystems

The integrity and consistency of customer information were rarely guaranteed

Partial and separated analytical functions supported by each subsystem have caused redundant targeting, resulting in ineffectiveness of marketing campaigns

Case Study: Retail Bank in Korea Critical problems

Strategic The systems separated by channels

forced to grade its customers by not their profits but their deposited amount, and manage them according to each product and channel

The responsibilities of CRM planning and execution activities had been left to each branch

Impose excessive workloads on the employees

Redundant and frequent marketing efforts to the same customers

Increased marketing costs Diminished response rate The clerks feel that the CRM was

not effective

Case Study: Retail Bank in KoreaRedesigned integrative data model

The six subject areas, that each includes 15 to 24 detailed entities, are not physical but logical divisions such that they are connected with each other systematically

Case Study: Retail Bank in Korea

Newly designed analysis framework

Every analysis activity would be aligned according to each customer life cycle in banking, spanned from selection/contraction to expiration/termination, and each analytical initiative is guided by systematic procedures consisting of customer understanding, strategy planning and building, execution, and result analysis

Case Study: Retail Bank in Korea Operation Capability

Event-based response system and sales force automation (SFA) were the key drivers Provided a function of real-

time perception of customer needs in terms of customer events, enabling the so-called immediate responsive system

Solved the problem of, regardless of the customer contexts, forwarding a

monotonous message to all customers who brought about an identical event

Expected not only to support making decisions related to customers efficiently, but also to reduce the operational cost through the automation of preparing the responses to customers' ordinary demands

Case Study: Retail Bank in Korea

Before only gathered naive events (e.g., customer's birthday) daily by a batch processing at the end of the daily tasks, and delivered the prepared massages to the customers the next day

28 events had significant influences on profits, many of them had been prepared with no strategic response schemes or inappropriate responsive activities at that time

Now when system perceives an important event from a customer, it first derives the most appropriate response strategy for the customer and the event automatically, and delivers the derived response strategy to the customer through every channel, department, or branch consistently

Considered as a tool for leveraging the event-based marketing strategy

Efforts began to customize Siebel's solution to integrate it with the event-based marketing capability

Was designed to provide high-degree customer knowledge and insights for the effective and efficient sales activity

Provided learning opportunities for the internal resources and capabilities by feeding the voices of customers such as complaints, praises, and suggestions collected through various channels back to the internal resources and capabilities

Event-based response system

Sales force automation (SFA)

Case Study: Retail Bank in Korea

Performance Indexes

Case Study: Retail Bank in KoreaImplications Development of proper

employees compensation schemes Improving its incentive and

reward system Make a more customer-

oriented organizational structure Reorganizing roles and

responsibilities related to CRM jobs

Establish a series of CRM education and training programs Providing systematic

education and training program

Best in profitability per customer in Korea

Awarded by Euromoney as the best private bank for four consecutive years from 2005 to 2008

Case Study: Retail Bank in Korea Links to and Implications for BI projects

CRM is a continuous learning process rather than an information technology or analytical method2, it should evolve permanently to respond to quickly and continuously changing customer needs

CRM would hardly be implemented successfully when it is considered as a technology, and even its successful implementation does not necessarily mean the success of the strategy

People play the role of interface between a firm's internal service quality and its external service quality, which is vital for managing customer relationship

Companies should satisfy their employees first as internal customers 2 A. Osarenkhoe and A. Bennani, An exploratory study of implementation of customer relationship management strategy, Business Process Management Journal 13 (1) (2007), pp. 139–164.

Where do we go from here?

Looking Ahead

Looking ahead

Putting inventory, expertise and services where its customers need them

Secure present level of competency

Wesco International Retail Bank in Korea

Always have clear the primary aim goal

Looking ahead

Decided did not need an Enterprise Resource Planning (ERP) system

Phase I unsatisfactory: Integration of Functional Resources & Capabilities Diagnosis of CRM

Wesco International Retail Bank in Korea

Initial assessment is a key for efficient success

The Outcome could not satisfied even spending lots of money and time Need to evaluate each package carefully on its own merit

Looking ahead

Teradata Data Warehouse reduced the report process time 80% in the last seven years

Event-based response system and sales force automation (SFA) Real time perception

of customer needs

Wesco International Retail Bank in Korea

Technology will keep uninterrupted grow Adoption is not trivial and requires a different organization, human integration and process

adaptation

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