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Value-Driven Data Warehousing

Value-Driven Data Warehousing. Engineering the Information Supply Chain For Greater, More Obvious ROI. About Jay Foulkrod. Mission: Two Core Convictions. Better connect Business Intelligence to business Results Pass this know-how on to others via a workable framework.

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Value-Driven Data Warehousing

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  1. Value-Driven Data Warehousing Engineering the Information Supply Chain For Greater, More Obvious ROI

  2. About Jay Foulkrod

  3. Mission: Two Core Convictions • Better connect Business Intelligence to business Results • Pass this know-how on to others via a workable framework

  4. Noteworthy Contributions • Creator of the Value-Driven DW Framework • Fortune 100 Retail: Delivered possibly the largest ABC / OLAP implementation on the planet • Inventor / Author: OLAP-based ABC Allocation Tool • Fortune 100 Oil & Gas: Enterprise Data Warehouse Decommission & Re-construction • Fortune 100 Computers: Supply Planning System

  5. Overview

  6. What this workshop will cover: Part One: The Case for a New Approach Objective: Unpack a core issue that currently besets the DW / BI industry and define criteria for a solution Part Two: An Intro to Activity Based Costing Objective: Learn what ABC is and how it works, via a hands-on exercise Part Three: The VDDW Framework Objective: Learn the elements of the VDDW Framework, the nature of the insight provided, and business initiatives enabled

  7. Part One The Case for a New Approach

  8. The State of the DW / BI Industry Promise or Problems?

  9. Signs of Promise • Vendor Consolidations • IBM/Filenet, Oracle/Hyperion, Microsoft/Proclarity, SAP/Outlooksoft, BOBJ/ALG • A precursor to better, more interoperable tools? • Projected budget increases and market growth • Gartner: 6% growth in BI spending thru 2009 • Lexicon explosion (BI, CRM, SRM, CPM, MDM, DW2.0, BI2.0, EII, etc.) • Innovation doesn’t happen in a vacuum

  10. Signs of Problems • General Business Dissatisfaction with IT • The Offshoring Movement • HBR Commentary • Is SarbOx keeping DW / BI afloat? • Internal Industry Confusion around various players’ roles & value props • Failure to articulate / prove ROI • Numerous anecdotes of customer dissatisfaction – from users to executives

  11. Promise or Problems?What do you think? Let’s Discuss…

  12. One Big Problem:A Critical Content Gap Is this really the state of affairs? Let’s Revisit some Basics…

  13. A Quick DW / BI Overview The Information Supply Chain

  14. GOAL: Process Enablement CHARACTERISTICS: • Designed for speed of data entry • Normalization & RI to protect data integrity • Unit of work is an individual transaction • Time scope is very current – data quickly stales

  15. GOAL: Transform Raw Data to Information Content HOW: Integrate, stage, cleanse, structure, allocate, score / stratify, and otherwise enrich it somehow

  16. CHARACTERISTICS: • Big Data, Long Processing (an assembly line) • Big Hardware • Unit of Work is the Individual Query • Read –Intensive • Time-Scope is Historical-to-Current

  17. GOAL: Disseminate the Content

  18. SO WHAT? The value of the Supply Chain metaphor:Not just an explanatory aid…A diagnostic aid

  19. Let’s Zoom In: Can the ISC metaphor help explain issues?

  20. Why re-manufacture content between the factory and the channel?

  21. This means: • Additional Storage • Additional Processing Time • Additional Handoffs • More Points for Failure • Inconsistency of Metric Definitions • Additional Admin / Support Effort Why re-manufacture the content between the factory and the channel?

  22. Let’s Zoom In on this… How do users typically gain insight from the DW/BI system?

  23. Answer: Excel Hell! (More Integration) • What are the Costs with this approach? • Human Time & Effort • Lost Opportunities • Questions of Accuracy

  24. These are symptoms of a problem, but not the root of it. What do all these layers of integration indicate?

  25. The problem originates in the factory Re-integration downstream indicates deficient integration upstream

  26. Conclusion:The goods coming out of the factory are deficient The factory must somehow be: • Repaired • Retooled • Re-engineered • Or Replaced

  27. Agree or Disagree?Is this a problem? Are we indeed data-richyet content-poor? Let’s Discuss…

  28. What do we do about it? First Step: Dig Deeper… …Unpack the nature of the deficiency

  29. What is the nature of the deficiency? The Content Deficiency… …reflects a Design Deficiency The Design Deficiency… …Flows from a Purpose Deficiency The Purpose Deficiency …Flows from a Knowledge Deficiency

  30. Content is a function of Design Content Defined… A repository of information that is: Refined Insightful Meaningful Valuable Usable Good Content requires Design Any debates on this point?

  31. Design flows from Purpose Purpose Defined… A complex of human drives, including: Intentions Priorities Assumptions Goals Felt Needs Design is the product of Human Aims Any debates on this point?

  32. The Purpose of the DW Some commonly proffered viewpoints: • Decrease the cost of information • Enable better-informed decisions • It depends on the business need • Single Version of the Truth How Compelling are these?

  33. Questions for Reflection • What human purpose(s) are reflected in the design of my company’s DW / BI systems? • What are common design characteristics that flow from the views of purpose espoused on the previous slide? • Are there significant Unspoken purposes that also affect design? If so, what are they, and how do they affect it? • How are these Purposes often manifest within IT, more broadly speaking? In IT incentive structures? IT Job Performance Evaluations?

  34. A Different View of DW Purpose The Business Person’s, not the Engineer’s: Money Show me: Where I am making and losing it Why What to do about it

  35. And the people said… DUHHH !!! What’s Your Point !?

  36. Why the Uninspired Response? The Engineer’s Biggest Concern: Not WHY, but HOW Get things working! Keep them working! This is our primary need… …our perceived Purpose Why disconnected from How… …does not compute!

  37. But this is a serious problem! Why must govern How, for… Purpose drives Design, so… What’s the solution?

  38. The Purpose Deficiency Flows from a Knowledge Deficiency What do we need? Answer: A Framework A Framework…By which to decompose the enterprise as a piece of money-making, money-spending machinery A Framework… that guides design and integration so as to close this financial intelligence content gap

  39. What would such a Framework do? • Expose Bottom-Line Profitability • Do so at the Transaction grain • Expose the drivers of that performance • Be valid financially and operationally • Harmonize performance measurement goals and vocabulary enterprise-wide • Produce a system that is fast and easy to use Let’s Drill In…

  40. 1. Expose Bottom-Line Profitability Some Basics: What is Profit? …Revenue Minus Cost Is there a standard way of looking at Profit? … via a “P&L” or “Income Statement” One example: Wal-Mart

  41. Wal-Mart’s Income Statement Let’s color-code the various elements… …Revenues, Costs, Margins

  42. Which Line is the “Bottom Line”? • For our purposes, NOP (Net Operating Profit) • Why? • It’s the next stage of Profit insight into which companies typically don’t have deep, reliable visibility • It’s controllable with a cause-and-effect relationship to the products and partners with whom the company does business • Keep this workshop simple and focused on learning the core concepts, which can be more deeply applied once learned

  43. Let’s put back on our Engineering Hats TIME Dim Engineers, Data Architects, Modellers, what do you see here? …A Cube anyone? What are the dimensions and measures in this cube? …HINT: Two dimensions, one measure What is the granularity of this cube? …What additional dimensionality would be valuable? INCOME Dim AMOUNT Measure

  44. 2. NOP at the Transaction Grain Why? BEST PRACTICE for both DW Design and ABC, because of… • Maximum reporting flexibility  Value Capture • Ease of Integration • ABC Allocation accuracy & auditability

  45. 3. Expose Performance Drivers Don’t just show me what the numbers are …Show me why they are …Show me what’s behind them Why? • To know where and how to act upon them • Accuracy & Auditability

  46. 4. Financial & Operational Validity Numbers should tie back to financials… And also reflect real efficiency differences… • Between Products, Partners, & Transactions • Validated by operational line managers • With real business cause-and-effect explanation Why? Accuracy  Buy-In  Use  Value Capture

  47. 5. Harmonize Perform. Measurement Enterprise decisions are made… …with Bottom-line visibility And evaluated… …for Bottom-line results Why? Value Capture

  48. 6. Fast & Easy to Use Why? Use  Value Capture Many nuggets require Heuristic analysis Heuristic analysis requires: • Speed • Ad Hoc Slice & Dice

  49. Meeting these criteriaHow close do companies typically get? The Current State of enterprise profit insight Options for closing the gap Associated Issues

  50. The Current State • Revenue and COGS are comprehensively analyzed • Available typically for all transactions, customers, & products • Why? • …ERPs track this data well • …This means Gross Margin is deeply available • OPEX is available in the GL • There is no direct link of OPEX to individual transactions, partners, and products • Why? • …The relationship of OPEX to transactions is indirect • …Not conducive to point-in-time transaction-based updates • …incidental to the ERP’s core job of process enablement • …therefore, not captured in the ERP • …And that’s OK!

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