Using Insight to Drive Foresight - Breakfast Seminar Presentation

HELLO

Using Insight to Drive ForesightData-Driven-Decisions

Thorsten Engel | Partner | Technology

Belinda Johnson Director

“Today’s business landscape has… changed in ways that puts analytics “have-nots” at a substantial disadvantage relative to the analytics haves”

12

13

The difference between…

Business Intelligence Advanced Analytics

Pre

sent

Looking back Looking forward Slice & dice Discover & simulate

Understand Predict and prescribe What happened? What will happen?

Analyse Optimise

Key Performance Indicators (KPI’s)

Key Performance Predictors (KPP’s)

Pres

ent

14

Big Data and your industry…

FSI

Health*Care

RetailUtilities*(1)

Education Manufacturing*(2)

Government

0

2

4

6

8

0 1 2 3 4 5 6 7 8

Potential)Value)From)Big)Data

Ease)of)Data)Capture)and)Manipulation

Big)Data)Opportunity)by)Key)Verticals

High)Potential,)Low)Adoption)Capability High)Potential,)High)Adoption)Capability

Low)Potential,)Low)Adoption)Capability Low)Potential,)High)Adoption)Capability

High

High

LowLow

**The*verticals*shown*in*the*chart*are*representative*and*not*exhaustive

1. Smart meter adoption 2. GS1 adoption

Potential Barriers Critical Success Factors

Common Barriers to Harvesting Insights…

How can Business Intelligence & Advanced Analytics contribute to the success of your organisation?

➡There is no organisation-wide view of the available information assets.

➡Priorities are confused and / or misaligned with the strategy.

➡There is a lack of business engagement around BI initiatives.

➡BI technology is fragmented and lacks integration.

➡ Investments are not leveraged to extract maximum value.

➡The organisation lacks the right tools and capabilities to deliver.

➡BI initiatives fail to deliver benefits to the bottom line.

• Enterprise performance is dependent on reliable and accessible information.

• Business engagement and governance are critical to managing information as an asset.

• Business Intelligence initiatives require an integrated technology platform.

• Analytical capability is increasingly seen as a competitive advantage.

Strategic ChecklistMany organisations lack a strategic plan or roadmap for how to turn business data into a competitive advantage. Key questions for organisations to consider include:

A/ Do you have a clear strategy and vision for how to leverage Business Intelligence?In many cases the BI landscape has been built by creating individual systems answering to specific business demands. As the organisation grows, the landscape becomes more and more scattered. This eventually drives the need for a more structured approach.

B/ Do you have the right governance model?Often organisations argue about their data, as opposed to what they should do based on the data. The BI Strategy needs to specify and communicate the information model, KPIs and approach to Master Data Management. It should also assign information ownership and responsibilities for managing the requirements for BI.

C/ Do your current BI solutions contribute to business value? Many organisations have fragmented systems or lack key components vital for integration. The BI Strategy should identify the BI systems that contribute the most value. It can help reduce overall system costs and set clear investment priorities.

D/ Do you effectively harness your BI capabilities to deliver a return on investment?A lot of organisations have BI solutions in place, but continue to handle information in spreadsheet tools. This increases manual work and can introduce data quality problems. The BI Strategy should consider your operating model and how you best deliver results.

5 common pain points…

Strategy

Execution

Business IT

What should w

e do? vs. How

should we do it?

Business Leadership vs. IT Leadership

Information Value Map

BI Maturity Assessment

BI Competency Center

BI Stocktake

KPI Definition

18

Operating Margin

Shareholder Value

Revenue Growth Asset Efficiency Risk Management

Acquire New Customer

Retain & Grow Current

Customer

Leverage Income-

Generating Assets

Improve Customer Interaction Efficiency

Improve Corporate /

Shared Service Efficiency

Improve Development &

Production Efficiency

Improve Inventory Efficiency

Strengthen Pricing

Improve Logistics & Service Provision Efficiency

Volume Price Realisation

Selling General &

Administrative

Cost of Goods Sold

Income Taxes

Property, Plant & Equipment Inventory Receivables &

Payables Company Strengths

External Factors

Improve Property, Plant & Equipment

Efficiency

Improve Income Tax Efficiency

Improve Management &

Governance Efficiency

Improve Receivable & Payables Efficiency

Improve Execution

Capabilities

The ability to deliver to the key business priorities is dependent on the availability, accuracy, and consistency of a common range of Enterprise Data

Product Data People Data Supplier Data Customer Data

Location Data Asset Data Hierarchies and Categorisation Data Financial Data


19

What stage of performance management are you at?KPI

Definition

20

KPI Definition

Collect Candidate KPIs

Select Go- Forward KPIs

Develop KPIs

Assess KPI Readiness

Implement KPIs

KPI Collection 1. Think of the metrics you use to do your job:

a. Which are the most important to your responsibilities? b. Which are the most important to the organization’s performance? c. Are there others?

Relevant 2. How meaningful are your metrics? (i.e., do the performance metrics truly drive the

business?) 3. If your current metrics/reporting fall short of your needs, what areas are not covered?

Available 4. How complete is the dataset behind your key metrics? 5. How accessible are all needed data sources? 6. How easily can you create customized reports for ad hoc analysis? 7. What additional information would you like/need to see including information from other

functions?

Timely 8. Are metrics/KPIs delivered with appropriate frequency? 9. Do the metrics/KPIs cover the right amount of time? (i.e., is weekly rather than monthly

data needed?)

Consistent 10. Do metrics/KPIs have universally understood meaning across the organization? (i.e., does

everyone understand what “gross margin” means on all reports?) 11. How confident are you in the calculated metrics/KPIs? What reporting metrics tend to be

the most controversial or least trusted? 12. Are metrics/KPIs consistently calculated across the organization?

Actionable 13. Is enough context provided with key metrics/KPIs so that you fully understand the

situation? (i.e., to review results, what else, if anything, is needed besides a comparison to LY, Plan, and Forecast?)

14. Is each key metric/KPI have clearly assigned to a function that is accountable for its performance? (i.e., is there a group where “the buck ultimately stops” for each metric?)

15. How closely is metric/KPI performance linked to incentives compensation? 16. If all reports arrived simultaneously, which report/KPI would you look at first? Why? 17. Conversely, which reports/KPIs are less useful? Why?

Other 18. In the future, what KPIs would you like to use to manage your business?

Value Map

Existing Reports and Definitions

Selection Criteria Performance Clarity Project Workshop #1 – Activity Placemat

Candidate KPIs

! $/Basket! % of SKUs Buyable

Online! % Site Uptime

! Net Revenue! Demand Sales! Gross Sales! Net Sales

Marketing! Rebuy Rate! Acquisition Spend % of

Sales

! Contribution/Session! Conversion Rate! SessionsMargin

! Product Margin ($ and rate)

! Contribution Margin ($ and rate)

! EBITOps/Fulfillment

! On Time Ship %! Return % of Sales

! Ship Margin! Inbound and Fulfillment

Costs % of SalesInventory

! Forecast Accuracy! Capacity Utilization

! In Stocks! Inventory Turnover! Weeks of SupplyEmerging/Guest Experience

! Contacts/Unit Shipped! Web Driven Store Sales! Invoice/Demand Sales

Revenue! $/Basket! % of SKUs Buyable




Sales











Revenue

Product Margin

($ and Rate)

Shareholder Value

Revenue Growth Operating Margin Asset Efficiency Expectations

Browse Buy Cost of Goods Sold Logistics SG&A

Property, Plant and

EquipmentInventory Receivables

and PayablesBrand

Strength

Sessions

Demand Sales

In Stocks Web driven Store SalesEBIT

Contribution Margin

($ and Rate)

Net Sales

Conversion Rate

$/Basket

% of SKUs Buyable Online

Return % of Sales

% Site Uptime

Contribution/ Session

Ship Margin

Inbound and Fulfill Cost % of Sales

On Time Ship %

Acquisition Spend % of

SalesInventory Turnover

Capacity Utilization

Weeks of Supply

Rebuy Rate

Invoice/ Demand

Sales

Contacts/ Unit

ShippedForecast Accuracy

Net Revenue

Gross Sales

Net Rev: $98038% YOY

CM: $171 17.5%

$691 $5172 $2393 $1844

$ in millions

Illustrative Example of KPI LeverageIllustrative Example of KPI Leverage

Baseline 10% Imprvmnt $ millions % Change $ millions % ChangeRev & Margin Baseline $ 979.9 - $ 171.0 -

Product Margin 39.3% 43.2% $ 0.0 0.0% $ 33.2 19.4%Conversion Rate 1.8% 2.0% $ 98.0 10.0% $ 17.1 10.0%Sessions (millions) 658.9 724.8 $ 98.0 10.0% $ 17.1 10.0%$/Basket $ 82.53 $ 90.78 $ 98.0 10.0% $ 17.1 10.0%Inbound & Fulfillment Costs % of Sales -10.2% -9.2% $ 0.0 0.0% $ 8.6 5.0%

Ship Margin 20.0% 22.0% $ 0.0 0.0% $ 3.5 2.0%Invoice/Demand Sales 90.9% 91.8% $ 9.8 1.0% $ 1.7 1.0%Return % of Sales 3.1% 2.8% $ 3.2 0.3% $ 0.6 0.3%Inventory Turnover 4.3 x 4.7 xIn Stocks 86.0% 87.4%

KPI Performance Incremental Net Revenue Incremental Cont. MarginCandidate KPI

TBD TBDTBD TBD

Target.com’s 2010 goals

! #1 Driver of Store Sales

! $2.5B in Profitable Growth

! Seamless Multi-channel Guest Experience

Merchandise Contribution Report-based P&L-based

Demand Sales to EBITDecember YTD Actuals

$984 $980

$171

$26$-

$200

$400

$600

$800

$1,000

$1,200

Deman

d Sale

s

Cance

llatio

ns

Returns

Order D

isc

Ship & O

ther R

ev (1

)

Free Ship

Disc

Net Rev

enue

Produc

t Cos

t

Vendo

r Inco

me (2)

Ship Exp

Other G

M Exp (3

)

Alloca

ted Var

Exp (4

)

Contrib

ution

Marg

in

Marketi

ng Exp

Other F

ixed E

xp (5

)EBIT

$ m

illio

ns

Note: Percentages are relative to Net Revenue

-9.1%

-2.4%

18.6% -4.7%-52.3%

1.5% -14.2%

-6.9%

-10.7%

-6.1%

-8.7%

-2.8%

Merchandise Contribution Report-based P&L-based

Demand Sales to EBITDemand Sales to EBITDecember YTD Actuals

$984 $980

$171

$26$-

$200

$400

$600

$800

$1,000

$1,200

Deman

d Sale

s

Cance

llatio

ns

Returns

Order D

isc

Ship & O

ther R

ev (1

)

Free Ship

Disc

Net Rev

enue

Produc

t Cos

t

Vendo

r Inco

me (2)

Ship Exp

Other G

M Exp (3

)

Alloca

ted Var

Exp (4

)

Contrib

ution

Marg

in

Marketi

ng Exp

Other F

ixed E

xp (5

)EBIT

$ m

illio

ns

Note: Percentages are relative to Net Revenue

-9.1%

-2.4%

18.6% -4.7%-52.3%

1.5% -14.2%

-6.9%

-10.7%

-6.1%

-8.7%

-2.8%

Performance Clarity Project

Candidate KPI Review Workshop – Activity PlacematPerformance Clarity Project Workshop #1 – Activity Placemat

Candidate KPIs

! $/Basket! % of SKUs Buyable




Sales











Revenue! $/Basket! % of SKUs Buyable




Sales











Revenue

Target.com’s 2010 goals

! #1 Driver of Store Sales

! $2.5B in Profitable Growth

! Seamless Multi-channel Guest Experience

Performance Clarity Project

Workshop Materials

! R – Responsible – Function(s) whose efforts contribute to the KPI; multiple functions can be responsible

! A – Accountable – Function that owns and is ultimately answerable for delivering performance against the KPI. Also approves any changes or updates to the KPI documentation

! S – Supported – Function(s) or resources that may be assigned or needed to do KPI related tasks

! C - Consulted – Function(s) whose input is sought regarding the KPIs; two-way communication

! I - Informed – Function(s) that are kept up-to-date on changes and publication of the KPIs; one-way communication

RASCI Tools

KPI Definition KPI Name: Contribution Margin

Overview Definition Variable product portion of EBIT Margin Functional Group Owner Merchandising

Steward Name & Role

Calculation Please repeat the Business/Assumptions/System sections for each method currently in use

Contribution Margin Dollars Contribution Margin Rate

Business

$ _ $$ $

_ $ $

CM Gross MarginFulfillment TechBank Fee Storage

=

− −

− −

CM$CM%=

Net_Revenue

Assumptions

• Fulfillment, Technology, Bank Fees, and Storage change yearly.

• For 2008, they are: o Fulfillment is based on per unit

charge, based on facility o Technology is 3.66% of Net

Sales o Bank Fees are 2.33% of Gross

Sales o Storage$ is EOH# × Cube dim.

Cost × Wkly Storage Rate ($0.03/cubic foot)

• For reference, Gross Margin includes Product Margin and Ship Margin

• These values are not replaced with actuals

Same as Contribution Margin $

System VRBL_PROD_PRFT_AGR_MRG_A-VRBL_COST_A

= ???

Unit of Measure 000s of dollars Percentage

Thresholds Baseline Green to Yellow Yellow to Red

RYG Dashboard Merchandising Forecast 0% - 5% Other Comparisons

• LY • Plan

Supporting Metrics Supported Metrics • Gross Margin •

• EBIT

Actuals Forecast Plan/Goal LY

R2 Net Sales 4.0 4.0 4.0 4.0 4.0A3 Inventory Turnover 4.0 4.0 4.0 4.0R3 Net Revenue 4.0 3.9 4.0 4.0 4.0M1a Contribution Margin Rate 3.9 3.7 4.0 4.0 4.0R8 Demand Sales 3.9 4.0 3.5 4.0M7 Ship Expense Rate 3.9 3.7 4.0 4.0 4.0M1 Contribution Margin 3.8 3.5 4.0 4.0 4.0R1 Contribution / Session 3.8 4.0 3.0 4.0R7 Average Order Size 3.8 4.0 3.0 4.0R4 Sessions 3.7 3.5 3.5 4.0M4 Ship Margin 3.7 3.5 4.0 4.0 3.5R5 Conversion Rate 3.6 4.0 2.0 4.0E1 Guest Contact Rate 3.4 3.5 3.0 3.5M3 Supply Chain Expense Rate 3.3 3.0 3.5 3.5 3.5M2 EBIT 3.3 3.0 3.3 3.3 3.5R6 Marketing Expense Rate 3.1 3.7 2.5 2.5 3.0

A1 Instocks 3.4 4.0 1.0 4.0M5 Demand Sales Forecast Variance 2.6 3.5 0.0 3.0A2 Capacity Utilization at Peak 2.3 2.7 1.5

R10 SKU Productivity 1.4 1.8 0.0 1.5 1.8R9 Site Monetization 1.3 1.5 1.5 3.5 0.0R11 Rebuy Rate 1.3 1.3 1.3 1.3R12 Active SKU Count 1.2 1.5 0.0 1.5E2 Web Influenced Store Sales 0.6 1.5 0.0 0.0M6 Percent On Time Delivery 0.0 0.0 0.0 0.0

Green: 3.25 Yellow: 2 Red: 0Readiness Rating (Equal to or greater than the following values)

Release 1 — 4 Weeks Out

Release 2 — 8 Weeks Out

Future Release as Available

MetricReadiness

Score

Components Readiness

KPI Readiness and Quality Assessment

Initiative Identification

Implementation Plan

Est

ablis

h th

e Fo

unda

tion

Implement Leadership KPI Dashboard

Roll-out Governance Processes

Develop Incomplete Leadership KPI Definitions

Pro

cess

Im

prov

emen

ts

Embed Performance Clarity within Business Processes

Rationalize and Standardize Reports and Data

Develop Operational Metrics

Tec

hnol

ogic

al

Ena

blem

ent Enhance Data Accessibility

Improve Performance Reporting Infrastructure

Improve Analytic Capabilities

Improve Vendor Reporting Capabilities

Utilize City Center “Dottie” Boards

Pro

gram

and

C

hang

e M

anag

emen

t

Conduct Program-level Planning

Perform Ongoing Program Management

Roll-out Performance Clarity Related Communications

Develop Performance Reporting Training Program

Theme Initiative

Sequencing by MonthSequencing by Month

15141312119876532 10Phase 3

4Phase 2

1Phase 1

15141312119876532 10Phase 3

4Phase 2

1Phase 1

Detail to Follow

21BI Maturity Assessment

Example of the output from a maturity assessment.

Looking at the Initial marks and combining it with the Behaviours it shows progress across each area.

With the Steps Needed the agency can build a plan of action for the short and mid-term future.

22BI Maturity Assessment

An annual evaluation of the Information Management and BI maturity will show the progress that has been made and the focus points for the coming year.

23

BI Stocktake

An assessment is created with gaps highlighted in red (to resolve) and duplicates highlighted in orange (to align or harmonise).

Info

rmat

ion

Del

iver

y

Reporting and Application

Portal and dashboard

Standard

Reports

Perform

ance M

anagement

Intranet /E

xtranet

Spreadsheet

Modeling Tools

Ad hoc query

OLA

P

Analysis

Applications

Data,

Visualization

Metadata&management

Security&management

Data$

Aggregation$&$

Storage

Group$Data$HubMaster'Data

Management'(MDM)

Enterprise'Data'Warehouse'(EDW)'with'aggregated'analytical'data

Operational'Data'Store'(ODS)'with'detailed'transaction'data

Data$Integration

Data$ Extract$ &$Consolidation

zzzzzzzzzzzzzzExtract,(Transform(and(Load((ETL)

Data(Staging(Area(Raw(Data)File(Transfer(Protocol((FTP)

Data$Acquisition

Product Internal$Organisation

Internal(Data(Sources

Vendor/Supplier Customer Finance ContractSubject$Areas

(Illustrative)

Data$ SourcesExternal(Data(Sources

CRM ERP ODS …Divis ion((

Business(Units

Etc…Access%Services

Business%Intelligence OLAP/&

Analytics

Ad&hoc&querying&reporting

Integrated&Operational&reporting

Planning&&&Forecasting

Executive&Information&System&(EIS)& /&Dashboard&

Geographical&Information&System&(GIS)

Social&Media&/&Sentiment&Analysis

A"range" of"applications" and" devices"tap" into" the"underlying" BI"services"to"deliver"and" display" information.

Business' Intelligence' (BI)'capabilities' cover'a'broad' spectrum'of'analytical' capabilities' to'meet'a'variety'of'needs.

Business' Intelligence' (BI)'capabilities' cover'a'broad' spectrum'of'analytical' capabilities' to'meet'a'variety'of'needs.

An#ETL#(Extract,#Transform,#Load)#layer#deals#with# the#movement,#quality# control#and# transportation# of#data.

The$underlying$ source$from$multiple$feeder$ systems$needs$ to$extracted$for$ the$ information$ of$ interest.

24

Number of instances where a particular BI Tool is present in the business.

In addition this shows where there is un-met demand for a particular capability

This can be used to prioritise IT investments and / or harmonise the system landscape to reduce the total cost of ownership.

BI Stocktake

25

BICC

BI project governance

BI organization and people

Service and support

BICC operations

process

BI technology management

Knowledge exchange

BI reference architecture

•  Architecture principals (platforms, SOA)

•  Architecture technology patterns

•  Developers standards and guidelines

•  Design templates •  BI service toolkits •  BI estimation models •  Project lifecycle

process

•  Communication approach

•  Operation model/BICC

•  Internal governance •  Error handling

guidelines

•  Organizational structures •  Roles and responsibilities •  Training approach

•  BI portfolio management •  Governance of architecture •  Governance of BI

standards including tools •  Standard assessment

checklist •  Exception and conflict

resolution process

•  Service level agreement planning

•  Testing strategy and plans

•  Watermarking

•  Tools standardization

•  Technology research and development

•  Vendor management •  BI SOA components

Client experience

Finance and actuarial

Asset management

Individual client

services

HR and corporate services

Institutional client

services

Risk management

Public affairs

Strategy, integration and policy

Law and compliance


The formation of BICC functions is a continuous evolving process.

A successful BICC matures over a time.

BICC can be started with the most important and the most required function.

26


The formation of BICC functions is a continuous evolving process.

A successful BICC matures over a time.

BICC can be started with the most important and the most required function.

BICC

BICC Governance team

BICC Executive Steering Committee

Business Relationship Team Business Intelligence Data Management Planning and

Architecture

Program Management Knowledge and Content Management

Data Exchange Services

Corporate Information Architecture

Business Requirements Analytical Services Data Quality Services Solution Architecture

Change Management/Communications/User

Training

Adhoc Reporting and Prototyping Database Services Solution Architecture

Metadata Services

BI/DW Executive Steering

•  Organize stewards

•  Define standards •  Manage BI/DW

processes

•  Establish priorities

•  Control funding •  Approve BI/DW

vision •  Architecture

review

5 pathways to building your data maturity…

Strategy

Execution

Business IT


BI Maturity Assessment


BI Stocktake

KPI Definition

RISK vs TIME

ANALYTICS LANDSCAPE• In NZ, Business Intelligence analytics will grow

9.3 % to reach NZ$94.2 million in 2015

• “More than half of new investments in business intelligence software are now going to data discovery and self-service”

• “But the other half of the market is still about management reporting, performance management and dashboards.”

REAL LIVE EXAMPLES

In a non-data driven business decisions are made based on perception, often skewed by fallacies like anecdotal fallacy.

“Building trust in the numbers can take a long time, breaking it takes one bad report”

Paul Sieberhagen – Financial Analyst

NZME use overnight processing with daily revenue reporting 6 days a week before 8am.

“Multiple reports spread across my desk”

“We used to have a lot of IP sitting in people’s minds. MindFull was able to extract information from our people and put it into a system.”

Audrey Scheurich - Genesis

1000 spreadsheets > 20

Single source of the truth

3 months > 1 month

ROI - about 2 years

Month end close process

Budget cycle - man hours 480 > 56

120 hours > 21

BLUES

• Reducing Injuries • Optimising performance • Data to drive change

Using Insight to Drive ForesightPANEL DISCUSSION

Thorsten Engel | Partner | Technology [email protected] Direct: +64 4 470 3722 | Mobile: +64 21 844 000

Belinda Johnson Director [email protected] 021 222 3834

mailto:[email protected]


THANK YOU

Contact PointsPlease feel free to reach out to the contacts below:

41

Roger Lee | Senior Manager | Technology [email protected] Direct: +64 4 470 3683 | Mobile: +64 21 025 02523

Aravind Subramanian | Manager | Technology [email protected] Direct: +64 9 306 4336 | Mobile: +64 218 64 054

Blair Patterson | Manager | Technology [email protected] Direct: +64 44703878

Thorsten Engel | Partner | Technology [email protected] Direct: +64 4 470 3722 | Mobile: +64 21 844 000

Advanced Analytics: Overall:

Auckland: Wellington:



