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APPA 38 – Business Intelligence Solutions for the Workplace.

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1 APPA 38 – Business Intelligence Solutions for the Workplace

2 Page 2 Agenda  What is EPM?  What is BI?  Why is it important?  How to do it? –Pitfalls  What’s coming next?  Q & A

3 Page 3 What is Enterprise Performance Management (EPM)?  Corporate Performance Management (Gartner): –Methodologies, metrics, processes and systems used to monitor and manage the business performance of an enterprise.  Business Performance Management (Forrester): –It is not simply a reporting system — it is a tool for implementing business strategy, but it is of little value without the organizational commitment and cultural transformation to make it work.  Enterprise Performance Management (AMR): –It is an emerging superset of applications and processes that cross the traditional department boundaries to manage the full lifecycle of business decision-making. Common Themes: Business Intelligence, Analytic Applications, Methodology

4 Page 4 What is EPM?  Not a single product  BI applications, methodologies, and change management  Linking strategy to action –Metrics (KPIs) –Information delivery, right person, right time –Process automation and optimization

5 Page 5 Gartner CPM Magic Quadrant Chart (2005) Source: Gartner

6 Page 6 What Is Business Intelligence?  BI is a term invented by Gartner in 1992  BI provides access to structured info  Reporting that is “analytical” or informational in nature  Ad hoc reporting, OLAP, data mining, BAM, scorecards, and dashboards  Data warehouse reporting  Even “operational reporting”  Answers questions, informs, alerts

7 Page 7 What Is Business Intelligence?  Business Intelligence is…  A term invented by Gartner in 1992  An integrated suite of tools that provides organization-wide reporting and analysis via role-based dashboards, delivering the right information to the right people at the right time.  Cross-functional data, both structured and unstructured data and operational systems, comes together to provide sharply focused views.  Users can navigate smoothly from alerts to interactive analysis down to detailed reports and even to the transactions all while maintaining the context that’s critical to root cause analysis.

8 Page 8 Definition: What is Business Intelligence?  BI transforms raw transactional data collected within business applications into actionable information  BI delivers the right information to the right people at the right time  BI focuses on improving decision making processes  BI improves the ability of the business to manage performance versus targets at all levels  BI provides visibility to the root drivers of financial performance  BI links strategy to action  BI links people, processes, and information

9 Page 9 Challenges with BI Solutions 1.What are my most profitable areas of improvement? 2.Where is the data, is it relevant? 3.How often is the data updated, is it current? 4.Who should get this information? 5.Is this Information good or bad? 6.What should users do with this information? ACTION!

10 Page 10 Business Requirements:  Statutory, Operational Reports –Monthly, quarterly, vs. budget, benchmarks… –View, print, archive,… –Secure delivery with low administration  Exception Alerts –Nearing budget, out of stock, overdue.. –Get further info (guided/root cause analysis), take action,…  Analytical Views –Transform data to optimize analysis –Interactive analysis (slice & dice), find trends, find opportunities  Work Lists / workflow –Filtered lists of records that need your attention –Knowledge capture

11 Page 11 Business Intelligence – Hierarchy of Needs Operating: Departmental Metrics, Spreadsheets, Functional Driven, Tools based approach Optimizing: Closed loop processes, business planning, application integration, collaboration, continuous improvementInnovating: Performance culture, Tiered objectives, Senior executive driven John Hagerty, AMR Research: Performance Management Maturity ModelIntegrating: Executive/Manager Accountability, Bottom Line Performance, Integrated Metrics

12 Page 12 A Portfolio of Solutions is Required * Conceptual diagram based on Business Intelligence: Key Trends and Evolving Markets, Bill Hostmann, Gartner Mid-Sized Enterprise Summit West 9/20/04 Event Interactive Scheduled What happened? Why did it happen? What will we do about? Proactive Notification Reporting Root Cause Analysis Link to Transactions Internal Controls Operational Decisions Closed Loop Budgeting & Planning

13 Page 13 Business Intelligence Crosses Organizational Disciplines *Conceptual diagram based on Business Intelligence: Key Trends and Evolving Markets, Bill Hostmann, Gartner Mid-Sized Enterprise Summit West 9/20/04 Analytic Skills Summarize and analyze Discover and explore Interpret results Business Skills Link to corp strategy Alter processes Set & prioritize expectations Monitor results IT Skills Implement change Store, maintain, & Integrate data Extract data

14 Page 14 Market: BI is a top Priority Among CIOs 20052006 Business Intelligence (BI) 1 2+ 4.8% Security enhancement tools 2 1+ 4.5% Mobile workforce applications 3 3+ 3.9% Collaboration technologies 4 *+ 3.6% Customer sales and service technologies 5 8+ 3.4% Service-oriented applications and architecture (SOA, SOBA) 611+ 3.2% Workflow management 7 4+ 3.2% Networking, voice and data communications 8 7+ 3.0% Virtualization (storage, computing, data center) 910+ 2.9% Legacy application modernization and upgrade 10 5+ 2.5% To what extent will your investment in each of the following technologies change in 2006? Ranking *New question for 2006 Spending Increase 2006 CIO Technology Priorities Source: Gartner EXP 2006 CIO Survey

15 Page 15 Gartner BI Magic Quadrant Chart (2005) Source: Gartner

16 Page 16 Market: Global Business Intelligence Market Size $10.2 billion in 2009 — 5% Compound Annual Growth Rate (CAGR) Millions of U.S. $ *2005 market sizes are preliminary Source: Gartner

17 Page 17 Macro BI Market: Trends in Buying BI Software Worldwide License Revenue By Vendor Type Millions of U.S. $ *2005 market sizes are preliminary Source: Gartner

18 Page 18 EPM/BI – Benefits  Makes things happen faster.  Helps instill discipline, predictability, and certainty into business processes.  Ensures the right people are always aware of the right information at the right time – and take action!  Relieves people from having to monitor information manually.  Makes multiple applications and data sources work as one. –Knowledge capture around roles –Speeds learning

19 BI Examples

20 Page 20 ACTS Retirement-Life Communities, Inc.

21 Page 21 HealthPartners

22 Page 22 State of Michigan Screenshot. Test Data for Demonstration Use Only State of Michigan

23 Factors in BI Failures

24 Page 24 What are the barriers to a successful BI implementation?  Core systems take precedence (e.g. go-live)  Executive support & funding  No champion, ongoing EPM ownership  Unclear business model / metrics  Operational issues push to back burner  Data access challenges  Lack of understanding of value  Unfamiliarity with tools, training skills  Organizational resistance to change  Expectations of cost and development effort

25 Page 25 Goals and Methodology  Companies struggle to define goals for business intelligence –How should you be performing as an organization? –What are the best practices that will get you there?

26 Page 26  Struggling to assemble the right ingredients to deliver cost-effective BI results –Outside consulting –BI tools –Enterprise application integration –Report creation –Training –Role-based personalization –Etc…. If You’re Missing the Yeast, You Can’t Bake Bread

27 Page 27 Irrelevance  How to do irrelevant BI: –Ask questions that can’t be answered. –Provide intelligence based on bad data. –Overwhelm users with “FYI” data. –Take data out of context so it doesn’t make sense.

28 Page 28 Seven ‘Fatal Flaws’ of CPM/BI  “If we build it, they will come”  “Managers need to work the numbers”  “We don’t have a data quality problem”  “Our applications vendor will deliver the best solution”  “We can get it right the first time”  “We can outsource BI/CPM”  “Just give me a dashboard” Gartner June, 2005 Bill Hostmann, Frank Buytendijk, Ted Friedman

29 Factors in BI Success!

30 Page 30 Excellence is no accident… World-class organizations operate and perform very differently than their median peers IT Procurement Finance Human Resources Overall Finance cost as a % of revenue Median WC 42% Overall Procurement cost as a % of spending Median WC 20% Hackett 2005 Functional Performance Data Overall IT cost per end user Median WC -10% 0.85% Overall HR cost per employee Median WC 25% Median benchmark client identifies $4.8 Million in potential HR cost savings per 10,000 employees Median benchmark client identifies $5.3 Million in potential finance cost savings per $1 Billion of revenue Median benchmark client identifies $1.7 Million in potential procurement cost savings per $1 Billion of spend Median benchmark client spends $9.0 Million less per 10,000 end-users; less adept at leveraging IT to reduce labor costs 0.68% 8,715 9,617 1.26% 0.73% 1,895 1,422 Source: The Hackett Group

31 Page 31 World-class organizations are far more efficient Length of plan and forecast development Strategic plan Forecast Planning and performance management cost as a percent of revenue Source: The Hackett Group

32 Page 32 World-class companies focus on limited measures to reduce cycle time and improve content Best Practice Profile  Exception-based reporting  Use proportionately more leading, operational, external indicators  Budget fewer line items and budget driven by tactical plans  Forecast only major variables  Vary forecast detail with time horizon Number of budget line items 200 127 Median World-class Source: The Hackett Group

33 Page 33 Information Access – World-Class performers enable efficient access to information Best Practice Profile  Consistent and pervasive use of key technologies  Common definitions  Common delivery infrastructure  Personalized delivery  Filtered content Percent of business performance reports generated from a central data repository 48% 62% Median World-Class Source: The Hackett Group

34 Page 34 More complexity results in less time to focus on value- added activities Commitment of Time by Reporting Activity 21% 11% 16% 17% 15% 14% 6% Ad hoc analysis Forecasting Action planning Data collection Data validation Report preparation Variance analysis Business partner Accounting Specialist Historical Reporter Insightful Analyst Leader Transaction Processor Concentration of Skills Source: The Hackett Group

35 Page 35 World-class companies spend twice as much time analyzing data as they do collecting and compiling data Allocation of analysts’ time for standard reports 0%20%40%60%80%100% World Class Median Collecting / compiling data Analyzing information 35% 65% 46% 54% Source: The Hackett Group

36 Page 36 Average companies are internally and historically biased… Measurement Source 49.8% 4.4% External operating 12.9% External financial 32.9% Internal operating Internal financial 24.0% Leading or predictive Measurement Perspective 76.0% Lagging or historical Source: The Hackett Group

37 Page 37 Average companies still rely heavily on spreadsheets Source: The Hackett Group Percent of companies using spreadsheets as a stand- alone budgeting application 33% 44% 54% MedianWorld-ClassWorld-Class Efficiency

38 Page 38 So which Business Intelligence best practices really matter?  Top BI Best Practice Themes: –Metrics and Measurement Linked to Strategy –Simplification & Standardization –Effective Governance –Consistent & Available Reporting –Self Service for Information Access Hackett studies show strong correlation between use of best practices, lower BI costs and greater business value. Source: The Hackett Group

39 Page 39 Top differences between Peer Group (median) and World-class performers  Commitment to strong performance  Widespread use of best practices  Constant measurement  No end to the improvement process  Strong culture of superior performance  Execute, execute, execute Source: The Hackett Group

40 Page 40 Keys to successful EPM Implementations  Sponsorship at C-level –Visioning with CFO and operational VPs –Inclusion of multiple functional areas –Peer success / case studies (been done before)  Momentum –Need to attack significant pain point for pilot –Deliver value at every phase  Change management strategies –Understanding of cultural barriers –Identifying and empowering champions

41 Page 41 Change Management Strategy  Understand and plan for it  What is the history of the organization? –Steady vs. Dynamic change –Average tenure –Known silos  Are any areas anticipating cuts?  Number of changes planned?  Size of changes planned?  Communication plan, rumor control

42 Page 42 How does Lawson-Hackett EPM solution work? C-Level Vision Session Create performance management strategy based on Scorecard results Develop a “blueprint” of prioritized business opportunities and performance improvement initiatives Best Practices Configuration guides that map Hackett-certified best practices down to Lawson applications Lawson EPM / BI solutions Predefined Key Performance Indicators and proactive notifications speed delivery of role-based dashboards Hackett Scorecard Benchmark against peer organizations and WC Identify performance gaps Scorecard annually to monitor performance World-Class Defined Quantify Opportunity Identify Proven Practices Prioritize Execute Evaluate Progress Lawson Professional Services Methodology Trusted Lawson advisors— together with Hackett transformational consultants deliver the solution

43 Page 43 Lawson Solution Data Warehouse Business Intelligence Platform Analytic Applications Benchmarks& Best Practices EPM Implementation Services

44 The Future of BI

45 Page 45 What do we hear today About BI?  Pervasive – moving to operational  Support for agility  Support for speed  “Competing on Analytics” – Davenport, Harvard Business Review, January 2006  Massive volumes  BI reaching customers and partners Have we really come this far?

46 Page 46 The People Who Use It Don’t Think So Source: Hired Brains, Inc. research 2003-2004

47 Page 47 Future of BI Today  Reactive, historical facts are gathered  Time lagged, Analysis happens after the fact  Elitist, power users only  Disparate, departmental solutions Tomorrow  Predictive, forward planning and modeling  Near-Time / Real-Time - alerts trigger analysis during events  Ubiquitous, users throughout org.  Unified, integrated BI platforms, standards

48 Page 48 In the future BI will:  Go beyond your organization: e.g. supplier’s inventory of parts has dropped below safety stock level  And will have business logic: Risk of part shortage on production quantified  And be able to respond proactively: Automatically order from alternate supplier

49 Questions?

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