MORE DATA - MORE PROBLEMS

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1 July 2014 MORE DATA - MORE PROBLEMS HOW CAN SMBs ADDRESS DATA ISSUES? Data Source In this report, Mint Jutras references data collected from its 2014 Enterprise Solution Study, which investigated goals, challenges and status and also benchmarked performance of enterprise application implementations, with ERP at the core. In June 2012 Mint Jutras asked an intentionally provocative question: Are you suffering from a data problem? It was actually more of a rhetorical question because the assumption was: Of course you are. With the volume of available data growing exponentially, it is increasingly difficult to gain access to the right data and organize it in a way that truly enables data- driven decisions. As a result, we made a strong case for formulating a data management strategy. Two years later it is apparent many have still not addressed the problem, particularly in small to medium size businesses (SMBs). Perhaps SMBs think only big companies have issues with data management. Perhaps they choose to ignore the problem, hoping it will go away. While recognition of the problem is the first step to recovery, data problems won t go away unless you fix them. Almost 800 responses were collected from companies across a broad range of industries. This sample included responses from companies of all sizes, ranging from very small to very large enterprises, including 440 from small to midsize businesses (SMBs). For purposes here, SMB is defined as companies with 500 or fewer employees. TELLTALE SIGNS A PROBLEM PERSISTS WHERE IS ALL THIS DATA? What are some of the telltale signs that you still have not solved your data management problem? If you find yourself thinking along the lines of any or all of the following, you have a problem. We re drowning in data but we don t have the information and answers we need, when we need it I know the data is there somewhere, but don t have time to look for it All the data is there, but it would probably take at least a couple of days to gather, and by then it will have changed We have lots of data; in fact we have multiple versions of it Data? I need to call my IT guy Data problems result not only from volume, but also from having many different sources of data. While most will intuitively turn to enterprise applications like Enterprise Resource Planning (ERP) for business data and decisions, the reality is, these applications represent just one of many different categories of data sources. There is the structured data contained in applications like ERP, customer relationship management (CRM) and a whole slew of other applications. But there is also unstructured data. Today s knowledge workers constantly turn to the Internet as a source of information, using search engines like

2 Page 2 of 7 Definition of ERP Mint Jutras defines ERP as an integrated suite of modules that form the operational and transactional system of record of your business. It includes all the master data needed to support the full cycle from order to cash, including a full audit trail of all transactions. While this is our minimal definition, most complete ERP solutions do much more than this. Modules of ERP versus Other Applications Mint Jutras distinguishes between the embedded modules of ERP and other applications. All the modules of ERP use a single data base model. Integration is built in and there is little or no redundancy of data elements, except where there is a specific need. All modules are built with the same development tools, ond the same architecture and release cycles are all in lock step. Other applications are developed and maintained separately, may or may not be integrated and may have data redundant to ERP which must be synchronized. Google, Yahoo! and Bing or news feeds, , text messages or online chat. You might find answers but you can t save the information to retrieve it on demand. You might store data in a spreadsheet where it might take on a life of its own. The lack of structure itself creates challenges in organizing it and merging it with structured data for a complete and easily accessible 360 o view. And then of course there is physical data: paper and people. The paperless office has been an elusive goal for decades now. But pushing a lot of paper around is another symptom of a data problem. People are an important source of knowledge and information, but all too often are completely disconnected from other data sources. As an SMB you might (or might not) be dealing with a smaller volume of data. Yet you are actually more likely to have a data management problem. You may not even have an ERP, and if you do, your implementation is likely not as comprehensive and complete as those in larger companies. Whether this is because of budget contraints, limitations of your current solution or a lack of awareness of how comprehensive, yet affordable, solutions for SMBs have become, the result is the same. The cost of ignoring the problem manifests itself in a variety of ways such as: inefficient workflow and processes because employees can't find the information they need missed opportunities from not having accurate inventory data damage to your brand reputation because you don't have the information you need to make decisions As the operational and transactional system of record of your business, ERP becomes a necessity even for small businesses. If you don t have an ERP that covers all your business requirements, you turn to other data sources to complete your view. STRUCTURED DATA: ENTERPRISE APPLICATIONS Take a look at where your structured data resides. It is likely that you have multiple enterprise applications such as ERP, CRM, financial planning and budgeting, project management or any number of others. The other applications may or may not be fully integrated with ERP. The 2014 Mint Jutras Enterprise Solution Study found in SMBs, for every embedded module within ERP (see sidebar), there are 1.27 separate applications added to it. While the typical SMB uses 12.5 modules within ERP, it also has an additional 15.9 complementary, but disparate applications. That s a lot of applications for an SMB to manage. We calculated the same ratio in large enterprises and found a broader ERP solution, with more embedded functionality, and only.76 complementary applications for every module. And in those large enterprises, there were twice as many applications that were tightly integrated as loosely integrated

3 Page 3 of 7 or not integrated at all. Yet in SMBs there were almost as many complementary applications that weren t tightly integrated as were. While most SMBs (89%) prefer an integrated end- to- end solution, more than half (58%) will be cautious before sacrificing functionality for ease of integration or for the luxury of dealing with a single vendor (Figure 1). Figure 1: Preference for a suite? Source: Mint Jutras 2014 Enterprise Solution Study If BI and analytics are tools that can only be used by the IT staff, this can create a bottleneck, aggravating an existing data management problem. The collection of disparate solutions, whether integrated or not, presents a data management challenge. How do you get a single, comprehensive and complete view of this interrelated, structured data? Many turn to business intelligence (BI) or analytics as a special kind of enterprise application. In many cases it is not an application at all, but more of a tool that requires technical expertise and knowledge of how the data structures are organized and is therefore used exclusively by the Information Technology (IT) staff. This alone can make the IT department a bottleneck, only aggravating an existing data management problem. Business users wait in line as IT staff work off a potentially long backlog of requests. Often by the time the IT staff can provide an answer, the question has changed. Of course wherever possible the IT staff will develop queries and reports that can be run on demand by the business user, essentially creating the equivalent of a mini application. But any good analysis of data is an iterative process. What happens when data uncovered leads to more questions? Does the business user have to get back in line? Analytics are only useful in the hands of the business decision makers. That means they need to be delivered as, or at least look and feel like applications; they must be easy to use and very configurable. Otherwise they are only good until something changes. And everyone knows: The only constant is change. Given the growing volume of data and the associated growing need to access data for decision- making, we asked Mint Jutras Enterprise Solution Study

4 Page 4 of 7 Who you buy your BI/ analytics from, as an embedded module or a separate application is far less important than its underlying abilities, with the ability to aggregate data from different sources being right up at the top of the list. An example The purchase order and corresponding receipt transaction should be in ERP, but what about your supplier s planned shipments, competitive and perhaps commodity pricing and other market influences? You may need to tap into data in supplier collaboration or supply chain management applications. If these are modules of your ERP, great! If not, make sure your analytics tool can reach out and also make sure the complementary applications are easy to reach into. And of course commodity pricing and other market influences may not be in any of your applications because it comes from other sources as unstructured data. participants their preferences for these types of solutions. Were they looking for them to come embedded as a module of ERP or to be a separate, stand- alone application? Some SMBs had no preference and would make decisions on price and functionality alone, but we also saw a strong preference for purchasing these solutions as an embedded module of ERP. Embedding analytics into an ERP solution minimizes the effort in retrieving data from ERP, but does not guarantee data from other sources will be easily accessible. So who you buy it from and whether it is an embedded module or a separate application is far less important than its underlying abilities, with the ability to aggregate data from different sources being right up at the top of the list. What do SMEs feel are the most important characteristics of an analytics solution, and are they looking for the right things? What else should they be looking for in addition to the ability to aggregate from multiple sources of structured data? Table 1: Priorities for Selecting BI/Analytics Solutions Source: Mint Jutras 2014 Enterprise Solution Study Table 1 gives us some insights into the answers to these questions. It is sorted (from highest to lowest) by the percentage that views this feature as a must have. The ability to drill down to the actual transactions from which these analytics are derived tops the list. This further reinforces the desire to embed analytics within ERP. If we use the Mint Jutras definition of ERP, all the transactions with a fiscal impact are stored within ERP. But some of the corroborating data about those transactions might be in complementary solutions (see sidebar for an example). Notice in Table 1 that user self- service ranks quite high on the priority scale. If the backlog with IT becomes too long, business users might just give up and stop asking for answers. When this happens they look for alternatives. This might mean working around the applications in place or, most often, turning to spreadsheets. This explains in part the high priority placed on the

5 Page 5 of 7 The more end users turn to spreadsheets, the more data management problems they introduce. Applying social concepts to the applications that manage the structured data can unlock its potential. By improving the user experience, making data more easily and naturally accessible, a layer of disconnect can be removed, improving transparency and visibility. And you make people more effective by making data more accessible and complete. What about paper? Eliminate it. integration of analytics with spreadsheets. Of course the other factor is that most business people today are comfortable working with spreadsheets. But the more end users turn to spreadsheets, the more data management problems they introduce. The solution? Either change the way business users engage with both the analytics and the enterprise applications, which are the source of the data, or provide analytics that look and feel like spreadsheets, but secure and control the data. UNSTRUCTURED DATA: WHAT TO CONSIDER Of course a spreadsheet is only one form of unstructured data and the Internet provides a host of other forms of data, usually in vast and uncontrolled quantities. But if you want to have a complete picture of your business, including external customer and market forces, your analytics better be heavy- duty enough to handle it. While analytics embedded within an ERP solution might provide the best access to the greatest percentage of operational and transactional detail, and it might play quite nicely with others, you need to look very carefully under the covers to determine if it can also handle this other data, which by virtue of being unstructured, defies definition. Will it handle it right out of the box? Probably not. But before investing in a solution, think long and hard about what kind of data can and should influence your decisions and determine whether or not the tools and applications you select can handle it. PHYSICAL DATA And finally we come to the last type of data. While we call it physical some of it might actually be better referred to as metaphysical, because you can t really see it or touch it. It exists only in the brain of an individual. It is knowledge. How do you harness the knowledge of individuals to solve a data problem? You catalog the knowledge and provide ways to connect the people. This is where social collaboration meets talent management. An enterprise application with social capabilities is one that has easy and intuitive search capabilities. It has a highly configurable user interface that can result in a very personalized workspace. It pushes data to those that need to know, instead of waiting for it to be pulled. And it employs the concept of following, not (just) people, but business objects and events like sales orders, customers and products. It can collect activity against these business elements into activity streams that can be subscribed to and monitored. The result is better visibility, fewer surprises and more proactive and less (or at least faster) reactive management. But what about that other physical data, the kind stored in file cabinets? It s called paper. The simple answer is: You eliminate it. While not the perfect solution, even if all you do is replace paper documents with electronic

6 Page 6 of 7 documents, you score points in the battle against data problems. An electronic version of a purchase order, a contract or sales order, or an invoice does not necessarily solve all your data problems, but it is much more searchable, sharable and accessible than a hard copy stored in a file cabinet. And you have a fighting chance in managing different versions. RECOMMENDATIONS Just because the business user doesn t see a data management problem doesn t mean it doesn t exist. Your IT staff may be jumping through hoops to synchronize data and this may be contributing to the delays in working off that backlog of requests. Hopefully by now you are on the lookout for current or potential data management problems and have picked up some tips along the way for addressing them. Here are some specific recommendations: Make a brutal assessment of where you stand today Take a real inventory of all your enterprise applications and critically assess the level of integration required and the level of integration that has been delivered. Not sure if certain applications are part of your ERP solution or separate applications? Find out. Chances are you are either paying maintenance or a subscription fee. Whoever is paying those invoices will know which vendors are being paid. But the answer may not be as simple as who you bought the application from. Modules of an ERP solution all share common master data. No integration is required since the modules have been designed to work together. But just because you bought it from your ERP vendor doesn t mean it is an integrated module. It could be a separate application. If it looks like your ERP (same user interface) and the integration is seamless and transparent, having a separate application does not necessarily create a data problem, at least not one that is visible to the business user. But just because the business user doesn t see a data management problem doesn t mean it doesn t exist. Your IT staff may be jumping through hoops to synchronize data and this may be contributing to the delays in working off that backlog of requests. Having different applications on different release cycles may be hindering you from consuming innovation. Dig a bit deeper and find out exactly how these applications are integrated (or not) and what it is costing you in terms of time, effort, money and lost opportunity. If any of this is holding you back, consider replacing it. While many avoid replacing applications once they are implemented thinking it is too costly, you will likely spend less time, effort and money by re- implementing a well- integrated solution that removes those barriers than trying to scale the wall every time one piece of a patchwork solution changes. Ask yourself: are you analyzing or just reporting? Are you just reporting data or are you able to analyze it? Even if you are performing analysis now, can you analyze it a different way tomorrow in a way

7 Page 7 of 7 you may not have even thought of yet? You know you ll need to. If you don t have analysis tools that a nontechnical businessperson can use, get them. If you have them but have blind spots because the source of the data is not technology- enabled enough to be accessible, replace those data sources. CONVINCED YET? Are you now convinced you have, or might have a data problem? If the answer is yes that s good! Remember recognition is the first step to recovery. Understanding what and where all the sources of data you need for effective decisions is the logical next step. Replacing those you can t readily access might be the next after that. But remember to look in all the right places, not just in your enterprise applications. Don t forget unstructured data. Don t forget people; find out who and how they contribute and give them access to all the data they need. And continue to work on eliminating paper. And finally, get the right analysis tools. Take these steps and you will be well on your way to fixing your data management problem. About the author: Cindy Jutras is a widely recognized expert in analyzing the impact of enterprise applications on business performance. Utilizing over 35 years of corporate experience and specific expertise in manufacturing, supply chain, customer service and business performance management, Cindy has spent the past 8+ years benchmarking the performance of software solutions in the context of the business benefits of technology. In 2011 Cindy founded Mint Jutras LLC ( specializing in analyzing and communicating the business value enterprise applications bring to the enterprise.