Business intelligence in a changing world

Robin Bew, Chief Economist

Special Libraries Association Conference, June 7th, 2005

Session roadmap

How is the world changing? short term issues, long term challenges

How are businesses responding? winning in a world of change

What does this mean for business intelligence?

staying relevant as business needs evolve

How is the world changing?

Short-term economic outlook

Key points for 2005-06

Exceptional times don’t last 2004 the best year for quarter of a century

but will not be repeated

Struggle between cash and debt interest rates rising, but still low debt levels worryingly high

Growth performance reasonable but cyclical divergence? Refocusing on domestic opportunities

Downside risks remain significant

US personal debt

60

70

80

90

100

110

12090

Q1

90 Q

491

Q3

92 Q

2

93 Q

193

Q4

94 Q

395

Q2

96 Q

196

Q4

97 Q

398

Q2

99 Q

1

99 Q

400

Q3

01 Q

202

Q1

02 Q

403

Q3

04 Q

2

1011111212131314141515

Debt:income

Debt service:income

US outlook

Problems are in the personal sector corporate sector in reasonable shape

What will stop the consumer? debt service payments wealth

housing, equity valuations

Rising debt burden is unsustainable saving will stabilise (or rise)

Gradual softening of economic growth

Japan - blowing hot and cold

The cold In and out of recession

Export led Capex & consumption follow

Strong yen Fiscal mess Demographics

The hot Monetary policy Banking sector Domestic restructuring Inflation outlook

GDP growth, %

Y on Y

-4

-3

-2

-1

0

1

2

3

4

5

1999

Q1

Q4

Q3

Q2

2002

Q1

Q4

Q3

Q2

2005

Q1

Q4

Q3

Euro zonePoor acceleration, good brakes

Export main growth driver Only growth driver in Germany & Italy

Domestic demand revival in France, smaller markets Growth under threat in 2005 and 2006

US, Asian slowdown Strong euro Little policy stimulus Structural rigidities

Credit data

The meaning of ‘no’

Emerging market focusAsia

the rise of domestic demand, currency pressures

East Europe & the CIS productivity, trade, oil

the significance of tax rate differentialsLatin America

policy orthodoxy, but still vulnerable

Middle East awash with liquidity, but security issues

Africa institutional failure in the second tier countries

China and IndiaChina surging ahead

oversupply in many sectors

Risks to leaving investment unchecked Bad debts, margin squeeze, corporate failure

short-term outlook, also long-term hangover

India has slowed but no need for despondency

Sector successes services, manufacturing

But Chinese style performance unlikely

Short-term worries

Global pressure points

The US dollar America choking on its own debt

Liquidity withdrawal risk assets vulnerable

China slowdown slowing, slowing, gone?

Oil prices any relief?

Physical security

The changing shape of the global economy

Changing global demand

0

10

20

30

40

50

60

70

2005 2030

W Europe N America Asia Lat AmE Europe Middle East Africa

GDP at mkt exchange rates

US$ trn

Dynamic markets

90

140

190

240

290

340

2005 2008 2011 2014 2017 2020 2023 2026 2029

G7E7Rest of world

Real output, 2005=100

E7 = China, Brazil, Korea, India, Russia, Mexico, Taiwan

US dominance threatened?

0

10

20

30

40

50

60

70

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

USJapanChinaIndia

US$ trn

GDP at PPP conversion rates

The changing growth league

Azerbaijan 10.8 India 5.6Kazakhstan 8.9 Pakistan 5.1China 8.3 Malaysia 4.8Ukraine 7.3 China 4.7Vietnam 7.0 Algeria 4.7India 6.2 Egypt 4.7Russia 5.9 Indonesia 4.5Ireland 5.4 Philippines 4.5Pakistan 5.3 Vietnam 4.3Iran 5.3 Israel 4.3

2000-09 2020-29

Annual average real GDP growth, %

How are businesses responding?

Changing business

Business 2010 EIU study in conjunction with SAP

Survey of 4,000 executives and senior managers

Key findings Changing strategic priorities Changing business models Innovating to stay ahead Improving the customer experience Changing role of IT

Changing strategic priorities

Specialisation to counter threats industry giants & emerging mkt start-ups

Speed and flexibility becoming core competencies

People over technology finding and keeping the best

Corporate governance global regulatory reach, so global application

Partnership adding value via suppliers

Changing business models

Need to be adaptable more important than product innovation

cope with changes in the marketplace often more important than product

development

Technology reinventing the business internal processes

greatest efficiency gains e-business

demand driven

Innovating to stay ahead

Understanding the customer need the greatest challenge

more important than time to market, predicting future trends

Using your data more efficiently internal systems, mobile technology

Maintaining intellectual capital preventing brain-drain building a knowledge base

The customer experience

Quality of product and delivery

Customisation one size fits all will no longer suffice

Availability opening the company to the customer

on line access to products, information

Changing role of IT

IT as a competitive tool not just a way to cut costs

IT as a tool of the people technology useless without skilled staff

What should IT allow companies to do? get the right information at the right time access to information anywhere instant alerts as things go wrong

What does this mean for business intelligence?

A more demanding market What does the EIU see?

granularity increased demand for emerging and pre-

emerging market information demand for industry information demand for risk analysis

understanding the customer need need for customisation

flexible delivery mechanisms demand for ever higher quality

relevance, accuracy and speed

How has the EIU responded?Increased our country coverage

201 markets, 150 with numerical forecasts

Built a strategic industry capability integrated with our macroeconomic view

Increased on focus on risk launched an operational risk service upgrading our financial risk service

Hugely boosted our custom business market studies, political reviews, industry

benchmarking, modelling and forecasting

Flexible delivery mechanisms

Executive peer groups

Corporate NetworkCountry Analysis

Electronic services and publications

Business meetings and government roundtables

Economist ConferencesExecutive Services

Custom research and presentations

Economist Intelligence Unit

Maintain our tradition of quality

130 in-house country analysts 600 contributing analysts based in-country quantitative and qualitative approach reliable sources of local data in 201 countries sensitivity to geopolitical dynamics independent view ongoing assessment of global trends and

events almost 60 years of experience

Gather dependable information• Use in-country analysts• Select most timely, reliable data• Conduct primary research

Qualitative and quantitative approach• Apply global assumptions• Use a variety of models• Provide qualitative insight

Ensure quality• Review of analysis by country experts• Automated checks• Final approval by regional heads

Quality centered methodology

What does all this mean for you?

Your reality more demanding internal clients evolving offering from your suppliers

The challenges (as we see them) match information to the need

ever greater understanding of your clients needs

ever greater understanding of the strengths and weaknesses of your sources

The result a significant source of value to your business