Business Intelligence –Why and How

1. Business Intelligence –Why and How Jai Prakash AgarwalAssistant Director- ICSI jai.agarwal@icsi.edu

2. What is Business Intelligence • The Ability of using the information in such a way so as to gain insights of business and make fact-based better business decisions. • It is termed as an Information Technology buzz words but it is something more.

3. Does Investment in Business Intelligence Technology Required? • No Heavy Investment required for Small and Midsized Organization. • They need to inculcate the BI approach in their Normal business Transaction Processing Software/system. • Big Companies may yet afford to have a software for dealing with business Intelligence.

4. Why Business Intelligence is Required Business Intelligence benefits an organization in • Getting the complete turnaround • Planning, Organizing, and Controlling • In managing their operations with greater efficiency • In getting the reduction of their stock levels • In entire Business Reengineering • In receivables Management • Business Intelligence has helped various organization and it is widely used . It is a very help full tool for TOP management. .

5. Application of Theory of Constraints – Godrej • Godrej had been facing problem of Material constraints at their line. • The consultant analyze the existing data and it was observed that there are material worth crores which is of no use while the material they require is generally out of stock. • They set up a data base and arrange that the position of stock which is a constraint for the production line is displayed to the management on hourly basis. • They also worked on liquidating the access stock. • After great efforts of about a year, they were able to set up the TOC stock and they categorize the stock level into Yellow, Red and White. • The application of this approach benefited the organization a lot and they were able to get reduce their stock significantly. They apply the same concept in their associated companies too.

6. Application of Project Management Office By Godrej • Godrej Appliances has been facing acute loss due to shortage in margins, stiff competition and hike in Raw material cost. • It adopted BCG to suggest Godrej Appliances to over come on this. • BCG adopted the Business Intelligence Approach and this alliance could able to get • Reduction in Stock • Reduction in Material Buying Cost • Decrease in manufacturing Operation, Advertisement cost • Increase in sales • Increase in reduction of power cost • The same project Management approach is being used by the organization in most of its divisions and significant results have been achieved by the organization.

7. The basic components of Business Intelligence

8. Gathering Data • Data Gathering is the Primary task of Business Intelligence . Data is generally gathered in form of Data Warehouse. • Data Warehouse is a specialized kind of database which is designed to support business analytics and to contain data from one or many different sources. • A major challenge of gathering data is making sure that the relevant data is collected in the right way at the right time. • If the data quality is not controlled at the data gathering stage then it can jeopardize the entire BI efforts that might follow – always remember the old adage - garbage in garbage out.

9. Storing Data • In a data warehouse data is gathered through various sources. Sorting data is concerned with making sure that the data is filed and stored in appropriate ways to ensure that it can be found and used for analysis and reporting. • When storing data the same basic principles apply that you would use to store physical goods – say books in a library – you are trying to find the most logical structure that will allow you to easily find and use the data. • The advantages of modern data-bases (often called data warehouses because of the large volumes of data) is that they allow multi-dimensional formats so you can store the same data under different categories – also called data marts or data-warehouse access layers. • Like in the physical world, good data storage starts with the needs and requirements of the end users and a clear understanding of what they want to use the data for.

10. Analyzing Data • The next component of BI is analyzing the data. Here we take the data that has been gathered and inspect, transform or model it in order to gain new insights that will support our business decision making. • Data analysis comes in many different formats and approaches, both quantitative and qualitative. • Analysis techniques includes the use of statistical tools, data mining approaches as well as visual analytics or even analysis of unstructured data such as text or pictures.

11. Providing Access • In order to support decision making the decision makers need to have access to the data. Access is needed to perform analysis or to view the results of the analysis. The former is provided by the latest software tools that allow end-users to perform data analysis while the latter is provided through reporting, dashboard and scorecard applications.

12. Becoming an ‘Intelligent Company’ • Business Intelligence should sit within the overall approach to Enterprise Performance Management and help make companies more ‘intelligent’. Extensive research by the Advanced Performance Institute has identified that there are five essential steps to becoming a more intelligent company. • Step 1: More intelligent strategies – by identifying strategic priorities and agreeing your real information needs. • Step 2: More intelligent data – by creating relevant and meaningful performance indicators as well as qualitative management information linked back to your strategic information needs. • Step 3: More intelligent insights – by using good evidence to test and prove ideas and by analyzing the data to gain robust and reliable insights. • Step 4: More intelligent communication – by creating informative and engaging management information packs and dashboards that provide the essential information, packaged in a way that is targeted and easy-to-understand. • Step 5: More intelligent decision making – by fostering an evidence-based culture of turning information into actionable knowledge and real decisions.

13. Business Intelligence Application Enablers

14. Business Intelligence Tools • Some Popular Examples • OLAP ( Online Analytical Processing) • MS Excel/MS Access • SAS (Statistical Analysis System) • SAP ( System Application and Product) • TALLY 9 ( A very Popular Accounting Software in Mid sized Companies)

15. Which Companies use BI to become more Intelligent?Tesco • Tesco, the second most powerful retailer on the planet applied the principles of an intelligent company. • Tesco slogan is "never stop listening to your customers and giving them what they want". This Tesco philosophy is captured in the phrase 'Every Little Helps' and which is more than just a slogan: "Every Little Helps is behind everything we do. It's not just something we say, we really do mean it." • To guide their business intelligence activities, Tesco has adopted the Balanced Scorecard which they call the Corporate Steering Wheel, clearly outlines its strategic priorities. • With the performance framework in place, any efforts to collect and analyze data can be linked back to the strategic objectives of the organisation. That way, Tesco doesn't waste valuable time analyzing something that doesn’t really matter in the grander scheme of things.

16. CKE Restaurants • Restaurant chains such as McDonalds, CKE and T.G.I. Friday’s have successfully applied the principles of an intelligent company. • At the US-headquartered  CKE Restaurants, which includes major US brands such as the Hardee’s and Carl’s Jr. the process for new product introduction calls for rigorous testing at a certain stage. In the process of New product Introduction, rigorous brainstorming. Discussion, judgmental screening , trials is involved. • CKE has attained an enviable hit rate in new product introductions—about one in four new products is successful, versus one in 50 or 60 for consumer products—and executives say that their rigorous testing process is part of the reason why.

17. Yahoo • Yahoo Inc. is another intelligent company that used BI effectively to improve their website. • To test alteration to the home page they randomly assign one or two hundred thousand users to an experimental group and have several million other visitors as a control group. • By doing so, they can quickly see whether or not the alterations to the home page leads to the assumed change in the behavior of the customer. This in turn allows them to optimize their offerings to enhance revenues and profits. • Yahoo! typically runs about 20 experiments at any given time. This way, the results of the analysis drive behaviors, cutting out lengthy discussions about website design best practices - which of course can be extremely subjective and biased. Disclaimer Clause: Views expressed in this presentation views of the author do not necessary reflect those of the Institute.