BUILT-IN BUSINESS INTELLIGENCE

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1 BUILT-IN BUSINESS INTELLIGENCE A study conducted by IFS North America JULY 2014

2 CURRENT STATE OF BUSINESS INTELLIGENCE BASED ON A SURVEY OF 174 EXECUTIVES METHODOLOGY IFS North America and Advantage Business Media conducted an online study among executives at manufacturing companies to determine to what extent middle-market-to-large organizations have adopted a Business Intelligence (BI) strategy and to understand how they are currently using BI with their ERP solution. The 174 survey respondents had some involvement with enterprise software selection and were from companies with more than $50 million in revenue.

3 BUSINESS INTELLIGENCE INTEREST GROWING THE BIG DATA LANDSCAPE The ongoing explosion of Big Data has created a growing interest for companies to analyze volumes of information from their enterprise and extract business intelligence (BI) from it to provide a snapshot of how the business is doing at a certain period in time. This intelligence becomes the basis for developing and measuring key performance indicators (KPIs) to help the company become more efficient and competitive moving forward. Most of the industrial companies that IFS surveyed indicated they either already have a BI program in place or are in the process of implementing it. Executives see tremendous value in using BI from an historical perspective as a way to affect changes in operational processes so that that their company can be more profitable and competitive moving forward. They are most interested in analytics for traditional areas, such as sales and operations.

4 BI ANALYSIS IS EXTERNAL TO PROCESSES WHAT BUSINESSES ARE DOING The vast majority of companies surveyed indicated they are using either a data warehouse or their ERP solution to pull data into an external BI tool for analysis. They are creating their BI analytics from spreadsheets and reports using one application to process transactions and another disconnected BI application for additional information. This scenario, however, can be problematic because accessing the intelligence and getting it to where you need to apply it becomes a cumbersome process. Users must log into one (or more) applications to retrieve data, then log into their BI tool to perform analysis and reporting. Then they must log into another application for where they want to apply the new-found intelligence to impact a decision they need to make. When the information that users need is too disconnected from where they need to use it, or it is too frustrating to obtain, most won't bother with the process, and then businesses miss the payback opportunity to use BI to support realtime, bottom-line decisions.

5 BI USE IS REACTIVE VS. PROACTIVE WHAT BUSINESS ARE DOING The results of the survey also found that companies are still predominantly using their BI reactively to determine what occurred in the past and why. This insight is certainly valuable for making improvements or adjustments to processes after the fact, but it isn t an agile business approach for today s fast moving, competitive landscape. It is a rear-view mirror approach to running a business. Applying BI insight proactively, at the point when decisions are being made, is when it is most useful and can lead to improved results. Today, the real benefit of BI, especially for manufacturing businesses that are increasingly using Engineer-to-Order and Design-Build-Facilitate processes, is having analytic capabilities readily available and built-in to one enterprise tool. This way, users can quickly access timely intelligence that is in-context with their immediate needs so they can make better bottom-line decisions.

6 THE TAKE-AWAY: Combining historical warehouse data with real-time operational data offers the ability to gather analytics that are in-context with the decisions you need to make, at the time you need to make them. When this capability is easily accessible to users on an as-needed basis, it is much more useful to the bottom line. IFS suggests that this process is most accessible to the user when the BI tool is built-in to a single-sign-on ERP application. The IFS survey found: Most manufacturers (76 percent) are either not set up for, or are not using, in-context analytics. Only a minority (24 percent) of respondents have their BI functionality built-in to their ERP system.

7 KEY SURVEY FINDINGS In the IFS study, more than half (64 percent) of respondents stated that they either already have a BI strategy in place or are currently in the planning or implementation stage. More than one-third (36 percent) of the study respondents reported that they do not have a BI program. The top reasons cited were because it was too expensive and too complicated. Those companies that have implemented a BI program (57 percent) unanimously said that it has significantly improved their business operations. Very large companies ($2.5B or more) were most likely to have a built-in BI program already in place.

8 MOST COMPANIES HAVE A BI SOLUTION Have you already implemented a Business Intelligence strategy and program? 7.0% Yes 36.0% 57.0% No In progress

9 VERY LARGE CO S LEAD WITH BUILT-IN BI 35% 33% 30% 25% $2.5 B or more 20% $1B - $2.49B $500M - $999.9M 15% 14% 14% 14% $250M - $499.9M $150M - $249.9M 10% 10% 10% $100M - $149.9M $50 M - $99.9M 5% 5% 0% Business Intelligence functionality built into your ERP system

10 KEY SURVEY FINDINGS Among the survey s current BI adopters: Almost half (42 percent) are using a data warehouse to pull data from their ERP solution for BI purposes with analytic tools not integrated with their ERP solution. This suggests that the full value of real-time BI insight may not be fully achieved. More than one-third (34 percent) are using their ERP solution to pull data into an external BI tool for analysis. This may provide the most up-to-date information to the BI tool, but not necessarily in-context with the ERP solution. Only one-fourth (24 percent) have their BI functionality built-in to their ERP solution, providing in-context BI with operational processes. Most companies (74 percent) are using Excel and operational reports for data. This can create problems with data security and synchronization.

11 MOST USE AN EXTERNAL BI TOOL When you think of your Business Intelligence program, which of the following are you using? 24.4% 41.9% 33.7% ERP integrated with external Business Intelligence tools A data warehouse pulling data from ERP for use in a Business Intelligence tool Business Intelligence functionality built into your ERP system

12 KEY SURVEY FINDINGS Those companies that already have a BI solution in place, or have plans to in the very near future, ranked the same top three departments in which they are measuring, or want to measure, BI performance: 1. Operations 65 percent 2. Sales 50 percent 3. Finance - 43 percent Since ERP systems are designed to automate these transactions, most companies would benefit from in-context analytics capability that is built-in to an ERP solution.

13 AREAS WHERE BI IS MOST USEFUL OPERATIONS, SALES & FINANCE RANK HIGHEST 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% In what departments are you currently (or are most interested in) measuring Business Intelligence performance? (check all that apply) 43.0% 38.4% 50.0% 30.2% 65.1% 20.9% 31.4%

14 CONCLUSIONS IN-CONTEXT BI IS STILL EMERGING Manufacturers find great value in BI and are making strides to implement it in their decision-making processes. However, many organizations are using data from outside their operational system with external tools, which does not provide access to the most current data. Although large manufacturers in the IFS survey appear to be moving toward an integrated BI solution, the majority of manufacturers surveyed are still missing out on the ability to generate in-context analytics for immediate bottom-line impact. To derive the most benefit from BI, users need the most current data at their fingertips at the point it is needed. A single-sign-on ERP environment with built-in BI capability gives users immediate access to analytics that are in-context with their needs, which can be used to drive improved, real-time business decisions.

15 THIS DOCUMENT MAY CONTAIN STATEMENTS OF POSSIBLE FUTURE FUNCTIONALITY FOR IFS S SOFTWARE PRODUCTS AND TECHNOLOGY. SUCH STATEMENTS OF FUTURE FUNCTIONALITY ARE FOR INFORMATION PURPOSES ONLY AND SHOULD NOT BE INTERPRETED AS ANY COMMITMENT OR REPRESENTATION. IFS AND ALL IFS PRODUCT NAMES ARE TRADEMARKS OF IFS. THE NAMES OF ACTUAL COMPANIES AND PRODUCTS MENTIONED HEREIN MAY BE THE TRADEMARKS OF THEIR RESPECTIVE OWNERS.

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