1 Make the right decisions with Distribution Intelligence Bengt Jensfelt, Business Product Manager, Distribution Intelligence, April 2010 Introduction It is not so very long ago that most companies made decisions based on analyzing traditional reports from their ERP applications and making experienced guesses. These decisions had to be continually reviewed, developed and optimized to keep in line with predicted requirements and, as with any inexact science, errors of judgment would often occur. These errors could have a devastating effect on a business but, as this white paper will explain, can now be easily avoided. The addition of modern Key Performance Indicator (KPI) analysis tools and integration of data warehouses containing ERP information have allowed companies to create Business Intelligence (BI) environments that provide greater insight for better and more accurate decision making. Integrating this information with companies strategic value processes, which include reviewing and analyzing strategic goals and KPIs for business re-engineering, delivers a powerful solution for increasing operational efficiency, competitive advantage and overall profitability. Information overload How many times have we seen a road where every day there is a traffic jam? There is simply too much traffic for the space available and the result is a long wait every day. Then the council decides to widen the road and for many months the situation is almost unbearable. Finally there is a new, wider road, capable of holding many more cars, surely now the journey will be much smoother. Of course, all that happens is more people that didn t previously use this road jump on. Before you know it, an even worse traffic jam is created further down the road when all those extra lanes are forced to squeeze back into the old road. Business data is rather like all those cars. The better and faster the systems that have been put in place, the more data is created to fill the pipes. As a result, organizations are feeling the pain of too much data and inconsistent information. With the growing volumes of data and data sources, companies need to unlock the data held in various operational applications and transform it into useful, relevant information. The data to enable an accurate, real-time view of the business is there, companies just need the right tools to gather, manipulate and present it. With this information, everyone in the organization can better collaborate to make sound, strategic business decisions. It is often said that Knowledge is Power. But you can t have knowledge without information. And you can t have information without data. Managing performance Performance management has become strategically very important to many organizations. Companies have to contend many internal and external influences that effect business performance and need to rapidly gain the insights necessary to deal with them efficiently and effectively. Distribution Intelligence is key to gaining these insights and is a central component in a distribution company s objective to gain competitive advantage and higher profitability. Optimal business performance is possible when decision makers understand what is happening, why it is happening, and what they should do about it. Ideally, users want to make sound, data-driven decisions at every level and across every function of the business. Within a performance management framework, midsize organizations can efficiently deliver the right reports, the right dashboards, and the right information to suit the needs of the business. Challenges facing businesses In a 2007 Gartner Dataquest Insight report on the top BI needs cited by mid-size organizations, the research identified that - Midsize businesses have set their sights on the need to provide more accurate and timely information to decision makers.
2 Most organizations have the same business challenges. It is those that are more agile, faster, and smarter to react to competitive pressures, within limited budgets and resources, which will ultimately be the most successful. To achieve this, business users need to be empowered with immediate insight into how the business is performing. Without the right information, users are unable to make the best revenue-generating decisions, the best cost-saving decisions, and decisions that make the most of their business assets. Many organizations still rely extensively on spreadsheets, not only in finance departments for planning, budgeting and forecasting, but also for reporting across the organization. This pervasive practice carries significant risks. Spreadsheets are highly error-prone, and it is often impossible to trace the logic of their creators, requiring constant checking and re-creation of the same data. Spreadsheets are also difficult to consolidate, making it slow, unreliable, and inefficient to glean meaningful insights. No longer can strategic decisions be left to trial and error. Organizations need solutions to address the enormous competitive pressures they are facing. BI and performance management software are the solutions that can deliver this, but are all too often perceived as too expensive and complex, suitable only for the budgets and resources of larger organizations. This is no longer the case! Challenges facing IT Information technology leaders recognize the value of Performance Management, but they are faced with countless challenges: Lack of staff and skill resources IT professionals have to wear many hats and juggle multiple priorities. With lean staffs, they often lack the experience to deploy and maintain Performance Management and performance management solutions. Lack of budget IT needs solutions that are predictable to their budgets with no hidden costs. They must also deliver the shortest possible time to value, demonstrating the advantage of BI and performance management by delivering a quick win for the business. Importantly, the solution also needs to be able to grow and scale as their business needs grow. With the number of data sources as well as the volume of data growing exponentially, IT struggles with the challenge of harnessing data and turning it into useful information. Faced with these pressures, IT remains ill equipped to respond to the increasing demands of the business. Benefiting from pre-built BI solutions To address the challenges of improving performance and driving competitive advantage, BI solutions require multiple capabilities to address a variety of needs and issues. For example, dashboard and scorecard capabilities measure business performance and answer the How are you doing? question. Reporting and analysis capabilities answer the Why behind critical issues, trends, and opportunities. Planning capabilities answer, What should we be doing? To minimize implementation time and cost, the most common of these capabilities should be pre-configured to the specific back-office systems and must also be integrated and modular, allowing businesses to implement incrementally. Companies should be able to start anywhere, for example with planning, analysis or reporting, and then extend the solution to where the need is greatest as business needs dictate. This pre-configuration gives organizations the ability to deploy tactically across departments and then connect initiatives together as they evolve. With limited IT budgets and resource constraints, IT managers are looking beyond the initial price tag. BI solutions must not only fit your budget, but also place minimal ongoing demand on IT resources, with low maintenance and as little downtime as possible, so business users can focus on growing the business. Out-of-the-box vertical and horizontal solutions, such as IBS Performance Manager and IBS Activity Monitor, come with the pre-built functionality needed to accelerate success. Service and support are also a critical requirement. Organizations can benefit from the experience companies like IBS has of its own ERP and Distribution Intelligence solutions and can deliver additional skilled resources wherever needed. Six strategies for Distribution Intelligence success 1. Make the most of the help that is there Wherever possible, take advantage of BI software that comes pre-loaded with several business applications that are ready-to-use and dedicated to your specific ERP system or other back office applications. For instance, with IBS Distribution Intelligence solutions, purchase and sales statistics solutions allow reports to be generated of these critical processes, moments after the system has been installed.
3 These applications use a pre-defined default data warehouse that contains detailed information for analysis. The data is sourced from the core business systems and gathered on order line detail level. For example, purchase statistics data would include all relevant information regarding purchase values, discounts, dates, etc. In addition, external data can also be smoothly incorporated. Wide ranges of dimensions (or parameters, such as item, business partner, etc.) can be included in the creation of the pre-defined business applications. Client applications can also be reconfigured to best suit specific planning and reporting needs, providing timely access to required information. The benefits of taking this approach are many: project rollout can match resource capacity and budget; your organization realizes business benefit quickly; a successful implementation provides justification for further investment; and it allows rapid adjustments in response to changes in business objectives. Good BI solutions are designed to be modular, allowing you to implement and expand BI capabilities as your needs dictate or as your company grows. Equally important is the ability to connect all the initiatives together for successful BI deployment across your organization, reducing the need for multiple tools from multiple vendors and therefore minimizing complexity, resources, and costs. Having as much of this functionality preconfigured and pre-loaded at the time of implementation will save huge amounts of time and cost and will help to ensure the overall success, value and benefit realization of the project. 2. Ensure all reporting types are supported. Reporting is repeatedly identified as the highest BI requirement. However, it is important to remember that different categories of business users have distinct reporting needs: Managed reporting is needed to distribute pre-built reports across an organization on a daily, weekly or monthly basis, often providing flexible prompting so users can run variations of reports themselves without the need to recreate the reports. Ad-hoc reporting is a critical aspect of enabling end-user self service, giving business users instant access and interactivity with information to create their own ad-hoc reports. This type of reporting should be simple to use, with a drag-and-drop interface, and information should be presented in the context that users can understand. Analytical reporting allows business users to slice and dice information so they can easily understand the why behind critical issues, trends, and opportunities, with the ability to drill down further for detailed information. Dashboards help measure business performance and quickly communicate complex information to business users in compelling visual formats, so they have a clear picture of how the business is doing. Production reports provide high-quality detailed information such as invoices or statements, and these reports are highly formatted. Operational or transactional reports typically have detailed information from transactional systems, so ensuring secure and controlled data access is key. Not all companies have all these needs at once. However, as organizations grow and reporting needs change, the right BI solution will answer all the reporting needs both today and in the future. Business and IT leaders can have greater peace of mind, knowing they don t have to deploy multiple reporting products from multiple vendors which, in turn, adds complexity to systems, demands more IT resources and creates silos of information that hinder the ability to leverage success from one initiative to another across other functions. 3. Enable access anywhere, anytime. Organizations want to put information in the hands of a broad range of users and bring it into familiar working environments they use each day. This helps to increase the adoption of business intelligence across the organization. It is also important to ensure no duplication of work is needed to leverage the many delivery models. The right BI tools deliver the ability for users to see the information they want, how they want it, when they want it. Reports should be authored once, but published anywhere, to save enormous resource time and duplication. They should also be able to be viewed in multiple formats on the Web, as PDF files or in Microsoft Office applications. 4. Open access to all data. A company s data is one of its biggest assets second only to its people. The challenge lies in extracting that data from multiple sources and transforming it into useful and relevant information that puts it in context for the business user. Core data required to produce evaluation and performance metrics come from companies main
4 back-office operations. Financial information from sales, purchase and general ledgers are all essential. Similarly data from the warehouse, HR and other external benchmark data all comprise the information that is the lifeblood of organizations. In addition, cross-company consolidation also provides key data that can affect the overall operations and need to be included in any KPI analysis. Once this information is gathered, it needs to be combined into a common data structure so it can be held in a central Data Warehouse. This provides the main source for all reporting procedures. Before updating the data warehouse you need adequate tools for cleansing the information and converting it where needed. A critical factor for BI success is ensuring that easy and open access is supported for all types of data sources from the BI solution. An open architecture is required to ensure access to all sources, as well as any combination of sources, so reports can access data wherever it resides. 5. Optimize information delivery. Another key success factor is ensuring that everyone in the organization is working from the same data and using the same business rules. More often than not, business users are struggling to produce consistent results using manual processes, error-prone spreadsheets, or different tools using different queries with different rules to access data. To ensure data consistency and accuracy and that users are working from the same numbers; the first step is having open data access to any data. A best practice approach is having one place to define the data, a single query service to retrieve the data, and one place to centrally manage the business rules. When everyone works from the same data, query and business rules, business users can have confidence in the results. With multiple tools from multiple vendors, achieving this goal is highly unlikely. With open data access and a common business model users can have access to a complete, consistent view of information, no matter which BI capability they use. Users are empowered with the right data, everyone is working from the same numbers and data complexity is hidden from them. (OLAP) cubes for the different types of performance metrics. These cubes compile the core elements of dimension (e.g. customer, item, etc.) and measures (e.g. net amount, quantity, etc.) and can carry out the necessary consolidation and calculations required to create visible KPIs. Companies will also need to implement tools for ad hoc creation of pre-defined reports of performance metrics information. For example, IBS has developed a solution that delivers this information in clear, intuitive and secure portals. These portals can display graphs, charts, scorecards and tables that show the financial and supply chain performance data in its most beneficial form and allows key comparisons to be made across all aspects of the business. The portals allow users to drill down deep into the very core of the business and display accurate and timely information for key decision making. At the touch of a button, managers can evaluate all aspects of business and operational performance and can make informed decisions on how and where this can be improved. 6. Ensure easy deployment and maintenance To maximize the benefits that companies can gain from an effective Business Intelligence solution requires a system that comes with pre-defined processes analyses and KPIs for many aspects of the business, such as supply chain, sales, purchasing and financials. This preconfiguration jump starts the implementation project by shortening the length of implementation, reducing the risk and ensuring a high success factor. An effective BI solution implementation should ensure that the system can easily grow with the demands of the business and with the rest of the IT infrastructure. BI tools need to be extended to include a metadata repository and include all the design patterns, standards, process generators and error detection tools required to allow accurate, in-depth analysis of the business. The system also needs to have a low cost of ownership to ensure its value to the organization. In order to access the information held in the data warehouse, there needs to be another level of conversion that exploits the data, allowing end users to manipulate it for advanced reporting. This is performed by developing a range of predefined online analytical programming
5 Conclusion With IBS Distribution Intelligence solutions, IBS customers can analyze and leverage all aspects of supply chain and other company processes. It incorporates a range of pre-configured and pre-loaded reports and other functions that reflect companies specific business management models and delivers real facts. These tools are designed to support all employees, no matter how large the organization. As well as the pre-configured reports, IBM Cognos 8 BI allows users to perform a limitless array of complex tasks. Core data from the databases is presented to users in an easy to read and intuitive user interface. Items such as products, customers, suppliers, currencies, etc. can be arranged in any format and allow the operator to view and analyze information from different views, angles and details levels. Any changes made to information on the screen is immediately re-calculated and presented as accurate, real-time data. KPIs themselves do not determine what changes companies need to make but they can help map out where the weak links are. It is then necessary to apply appropriate execution adjustments specific to the particular chain. Successful business management is about consistent scrutiny and getting real-time information that allows companies to react to less than optimal performance. It also means getting quality business intelligence. IBS can help companies gather, understand and manipulate this information to gain the competitive edge they need in the tough world of modern business. Would you like to know more? Contact IBS today: About IBS: With over 30 years of experience, IBS is a leading provider of distribution management solutions. IBS focuses on industries such as automotive, electrical components, paper & packaging and pharmaceutical distribution. More than 4,000 customers across 40 countries use IBS software to gain fast and measurable returns on IT investments. For more information, please visit The materials contained in this document are summary in nature, subject to change and intended for general information only. For updates of this information, please contact your local IBS representative. v IBS 2013