appa 38 – business intelligence solutions for the workplace
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APPA 38 – Business Intelligence Solutions for the Workplace. Agenda. What is EPM? What is BI? Why is it important? How to do it? Pitfalls What’s coming next? Q & A. What is Enterprise Performance Management (EPM)?. Corporate Performance Management (Gartner): - PowerPoint PPT PresentationTRANSCRIPT
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
Source: The Hackett Group
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
Source: The Hackett Group
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
Source: The Hackett Group
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
Source: The Hackett Group
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%
Source: The Hackett Group
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
Source: The Hackett Group
Page 37
Average companies still rely heavily on spreadsheets
Source: The Hackett Group
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.
Source: The Hackett Group
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
Source: The Hackett Group
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?