CHEMICAL REACTIONS: Unleashing Your Most Valuable Asset

Transcription

1 Today s chemical companies face extraordinary business challenges, from the massive volatility in raw materials and input costs, to currency fluctuations and a globally competitive marketplace. The selling environment is equally complex. Between the emergence of niche players and increasingly aggressive procurement departments, salespeople can no longer rely on experience and gut instinct to close business at the most profitable prices possible. Many companies have invested in ERP, CRM and other salesforce automation systems to manage their businesses more effectively. Yet, few have turned pricing into a true competitive advantage, even though the data available to them is richer than ever. It goes far beyond traditional transaction data, and now spans customers, products, costs, contracts, rebates, competitors, sales pipelines, inventories and more. It s a huge asset that remains largely hidden and untapped. However, this is changing, as growing pricing complexity has more and more executives leading the charge within their organizations to take their pricing capabilities to the next level of performance to create pricing excellence and salesforce effectiveness. Companies today know they face a choice: capture, store, manipulate and scrutinize this torrent of digital information, or get passed by those that do. This paper looks at the huge opportunity available to chemical companies and the software that can help them reap the benefits of big data to bring big benefits to their bottom line. This whitepaper will be updated as required ensure that you have the latest version.

2 Created February Updated February Microsoft Corporation. All rights reserved. This document is provided "as-is." Information and views expressed in this document, including URL and other Internet website references, may change without notice. You bear the risk of using it. This document does not provide you with any legal rights to any intellectual property in any Microsoft product. You may copy and use this document for your internal, reference purposes. This White Paper is One of a Series of ChemRA White Papers: ChemRA 2013 o Chemical Reactions: Unleashing Your (PROS) Core o Vision of ChemRA (June 2011) o Implementation of ChemRA (September 2011) 2

3 Contents When (Lack of) Process Sabotages Profits... 4 Leveraging PROS Big Data Software to Outperform... 4 Smart Solutions, Long-Term Value... 6 Foundational Principles of ChemRA... 6 Uncover Sales Growth. Compete Effectively. Win Profitably About PROS... 9 About the Microsoft Chemicals Reference Architecture (ChemRA)

4 When (Lack of) Process Sabotages Profits Nothing impacts profitability like pricing. Yet, making smart pricing decisions can be challenging. The difficulty of gathering and organizing data, the lack of interactive analytics, as well as time-consuming, manual updates, impair the ability to price effectively and force chemical companies to limit the number of pricing updates per year. Most of these companies approach pricing as an event, with a clear start and end date. Often, the events begin with a request for data and then days, weeks and potentially months are spent understanding the data, analyzing various actions, soliciting feedback and manually executing changes to customer pricing in their ERP systems. Consistently, companies are challenged with gathering appropriate data and using it to drive meaningful decisions. In most cases, the data is static, and tools they use do not offer real-time analysis, dynamic modeling or automated ERP updates. As a result, they re left wondering how a price move in one direction will affect their volume, revenue and margins. They don t have visibility into costs throughout the entire supply chain, or know how their prices stack up against competitor moves and across global markets. What s more, they often apply blanket increases across their customer base without delving into the value they provide each customer, and, in turn, each customer s willingness-to-pay. It all adds up to a lack of insight, flexibility and agility that risks lost business and suboptimal returns. In other words, the lack of sophisticated pricing tools and processes is sabotaging profitability. Leveraging PROS Big Data Software to Outperform PROS unlocks the insights buried within a company s big data a virtual treasure trove of opportunities to make their business more agile, to answer questions that were previously considered beyond their reach, and to help them outperform. By mining the terabytes of enterprise application data, transactional data and market information inundating companies today, PROS software turns this data into invaluable knowledge to help companies tackle their most critical pricing problems. PROS offers: A Holistic Approach for Analysis, Price Setting and Price Execution By integrating data into a single, centralized pricing solution, PROS frees companies from the constraints of multiple, scattered spreadsheets and time-consuming manual data entry that make it nearly impossible to set optimal prices, let alone consistently and accurately measure performance against business goals. Smarter Pricing Decisions that Grow and Protect Margins 4

5 Intuitive analytics provide information on what other customers are paying for products, what the products cost to manufacture, and what are acceptable as well as ideal profit margins. Through science-based pricing guidance, including forecasting, optimization and segmentation, PROS empowers salespeople to make better deals by understanding the true costs to serve a customer and what each customer is willing to pay. Greater Sales Performance By leveraging big data and incorporating pricing best practices, companies are able to create true apples-to-apples comparisons on how salespeople are pricing and performing. For example, they re able to compare the level of discounting between salespeople and across regions. The results are easily viewed on dashboard analytics, which provide a much better assessment of an individual s contributions to profit performance with clear action areas for improvement. Integration with Other Business Systems PROS leverages existing investments in CRM systems for sales information, and in ERP systems for price updates. This enables a fluid process that shortens pricing and approval cycles, reduces errors and increases the ability to respond rapidly to changes in the marketplace. 5

6 Smart Solutions, Long-Term Value PROS takes full advantage of Microsoft SQL Server 2012 Analysis Services and Microsoft SQL Server 2012 Reporting Services, both providing capabilities available to the customer right out of the box. With the breakthrough performance capabilities of the new x-velocity in-memory technology, the combined solution dramatically improves query performance and enables customers to interact with an unprecedented amount of data at the speed of thought. With PROS and Microsoft, companies everywhere are able to leverage their existing Microsoft Enterprise Applications to realize what pricing optimization can mean for their profitability. Recurring Profits With PROS software built on Microsoft technologies, companies are able to gain higher profits year after year. That s because the improved margin opportunities are embedded into a company s systems to provide real, hard-dollar margin and revenue improvements. High User-Adoption Rates PROS relies on familiar Microsoft interfaces, which makes it easy to use and manage. Customers can continue to use tools such as Microsoft Office and Excel, which they already know, and interact with PROS pricing capabilities, which are embedded into those tools. High Availability PROS on SQL Server 2012 offers greater uptime and performance, enabling IT administrators to provide a smooth operation, as well as continuous access to business-critical data. Outstanding Cost/Performance Ratios Because it is based on SQL Server 2012 and Windows Server 2008 R2, PROS solutions can meet the needs of enterprise customers, while helping them reduce their total cost of ownership. A SQL Server 2012 license includes Analysis Services and Reporting Services, which eliminates the need to buy and integrate additional analysis, reporting or in-memory engines. Foundational Principles of ChemRA ChemRA is based on a set of principles that map to the most common technology use-cases for users in the chemical and oil refining industries (Figure 1). Of these five principles, PROS software solutions provide business insight that leads to pricing and salesforce effectiveness as outlined below. 6

7 Behind the Scenes: Segmentation & Pricing Guidance Studies For PROS pricing effectiveness solutions, our experts determine the most significant product attributes that drive customer purchases. It s not uncommon to end up with tens of thousands of segments that show pricing managers with fine granularity what motivates each of their customers to buy and what prices they re willing to pay. PROS then determines optimal pricing and/or discounting guidelines, so businesses can see how they re segmenting and pricing products now, and where they should be based on insights from their own internal data. Similarly, for PROS sales effectiveness solutions, our experts define and analyze the significance of key customer or transaction attributes that are driving sales, with pricing and discounting guidance for each of these attributes. Dashboards and Charts: Pricing & Sales Insight, Management & Optimization The results of the segmentation and pricing guidance studies are then loaded into an easy-touse dashboard with a set of preconfigured charts and features based on the level of service they choose from a rapid-to-deploy starter solution to scientific optimization capabilities with features such as real-time price updates based on their customer s changing buying patterns. With these tools, pricing managers are able to drill down into their transaction data to identify product price improvement areas; understand and benchmark all elements of profit leakage; and perform what-if analysis to see what pricing changes they need to make. Similarly, sales performance dashboards enable sales managers to see exactly where the hidden opportunities exist to find sales growth, whether by reigning-in over discounting, identifying underperforming accounts, or seizing opportunities to cross sell and up sell. With these tools, PROS quickly guides companies and their salespeople to the opportunities that have the highest probability to drive sales results. 7

8 Figure 1. Main principles of ChemRA Uncover Sales Growth. Compete Effectively. Win Profitably. In today s highly volatile and competitive business world, chemical companies must be smarter, faster and more agile than ever before to compete and win. The companies that understand how to leverage their big data with advanced pricing science are able to turn this tremendous, yet often underperforming asset into real pricing power and sales effectiveness within their organizations. Imagine how this data can be brought together for the first time in new and exciting ways. For example, a company can click on a button and determine the future sales impact of a pricing decision they re about to make. Or quickly generate optimized price recommendations to help them meet their margin and market share goals and then change those goals on the fly while prices automatically regenerate. That s the PROS game-changing technology that empowers companies to become outperformers. 8

9 About PROS PROS is a big data software company that helps customers outperform in their markets by using big data to sell more effectively. We apply 27 years of data science experience to unlock buying patterns and preferences within transaction data to reveal which opportunities are most likely to close, which offers are most likely to sell and which prices are most likely to win. PROS offers big data solutions to optimize sales, pricing, quoting, rebates and revenue management across more than 30 industries. PROS has implemented more than 500 solutions in more than 55 countries. The PROS team comprises more than 650 professionals around the world. To learn more, visit 9

10 About the Microsoft Chemicals Reference Architecture (ChemRA) ChemRA is an IT architecture that serves as a true reference for designing and integrating solid applications that address the complicated business requirements of chemical and oil refining companies. Ultimately, this architecture will helps these companies innovate faster, improve agility, engage customers throughout the idea-to-consumption lifecycle and maximize value from IT. ChemRA is a process industry catalyst and a force for collaboration and integration in the process manufacturing industry. Microsoft is leading an initiative, comprising eleven process manufacturing industry software vendors, systems integrators and standards organizations, as well as chemical and oil refining companies who serve within the ChemRA Council, to build industry consensus and development of ChemRA. The goal of the is to develop and deliver an architecture that drives commonality among industry players; accelerate the delivery of industry solutions built on a common IT reference architecture to meet rapidly changing demands; and lower the total cost of ownership. Each ChemRA participant is responsible for building out its solutions based on the guidelines of this architecture and sharing best practices. They use the reference architecture as a common language to define the functionality, collaboration, integration, visualization and interoperability capabilities expected by their end users. For more information, visit 10