APPA 38 – Business Intelligence Solutions for the Workplace

Agenda

 What is EPM?  What is BI?

 Why is it important?

 How to do it?

 – Pitfalls What’s coming next?

 Q & A Page 2

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

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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 Page 4

Gartner CPM Magic Quadrant Chart (2005) Source: Gartner

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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.

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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 Page 8

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!

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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 Page 10

Business Intelligence – Hierarchy of Needs Innovating:

Performance culture, Tiered objectives, Senior executive driven

Optimizing:

Closed loop processes, business planning, application integration, collaboration, continuous improvement

Integrating:

Executive/Manager Accountability, Bottom Line Performance, Integrated Metrics

Operating:

Departmental Metrics, Spreadsheets, Functional Driven, Tools based approach John Hagerty, AMR Research: Performance Management Maturity Model Page 11

A Portfolio of Solutions is Required Event Interactive Scheduled

Proactive Notification Reporting Root Cause Analysis Link to Transactions

What happened?

Why did it happen?

* Conceptual diagram based on Business Intelligence: Key Trends and Evolving Markets, Bill Hostmann, Gartner Mid-Sized Enterprise Summit West 9/20/04 Internal Controls Operational Decisions Closed Loop Budgeting & Planning

What will we do about?

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Business Intelligence Crosses Organizational Disciplines

Business Skills

Link to corp strategy Alter processes Set & prioritize expectations Interpret results Summarize and analyze Discover and explore Extract data

Analytic Skills

Monitor results Implement change Store, maintain, & Integrate data

IT Skills *Conceptual diagram based on Business Intelligence: Key Trends and Evolving Markets, Bill Hostmann, Gartner Mid-Sized Enterprise Summit West 9/20/04 Page 13

Market: BI is a top Priority Among CIOs 2006 CIO Technology Priorities To what extent will your investment in each of the following technologies change in 2006?

Ranking 2005 2006 Spending Increase Business Intelligence (BI)

Security enhancement tools Mobile workforce applications Collaboration technologies Customer sales and service technologies Service-oriented applications and architecture (SOA, SOBA) Workflow management Networking, voice and data communications Virtualization (storage, computing, data center) Legacy application modernization and upgrade *New question for 2006

Source: Gartner EXP 2006 CIO Survey

7 8 9 10

1

2 3 4 5 6

2

1 3 * 8 11 4 7 10 5

+ 4.8%

+ 4.5% + 3.9% + 3.6% + 3.4% + 3.2% + 3.2% + 3.0% + 2.9% + 2.5% Page 14

Gartner BI Magic Quadrant Chart (2005) Source: Gartner

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Market: Global Business Intelligence Market Size

$10.2 billion in 2009 — 5% Compound Annual Growth Rate (CAGR)

Millions of U.S. $

8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2004 2005* 2006 *2005 market sizes are preliminary

Source: Gartner

2007 2008 2009 Consulting - 5% CAGR Software - 7% CAGR Page 16

Macro BI Market: Trends in Buying BI Software

Worldwide License Revenue By Vendor Type

Millions of U.S. $

3,000 Pure-Play BI - 4% CAGR 2,500 2,000 1,500 1,000 500 0 DBMS - 18% CAGR Enterprise Applications - 21% CAGR 2003 2004 2005* 2006 2007 2008 2009 *2005 market sizes are preliminary

Source: Gartner

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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 Page 18

BI Examples

ACTS Retirement-Life Communities, Inc.

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HealthPartners

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State of Michigan State of Michigan Screenshot.

Test Data for Demonstration Use Only Page 22

Factors in BI Failures

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 Page 24

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? Page 25

If You’re Missing the Yeast, You Can’t Bake Bread

 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….

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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.

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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

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Factors in BI Success!

Excellence is no accident… World-class organizations operate and perform very differently than their median peers

Hackett 2005 Functional Performance Data

Human Resources Finance Procurement IT 1,895 25% 1,422 1.26% 42% 0.85% 20% 8,715 -10% 9,617 0.73% 0.68% Median

identifies

WC

Overall HR cost per employee Median benchmark client $4.8 Million in potential HR cost savings per 10,000 employees

Median WC

Overall Finance cost as a % of revenue Median benchmark client identifies $5.3 Million revenue in potential finance cost savings per $1 Billion of

Source: The Hackett Group

Median WC

Overall Procurement cost as a % of spending Median benchmark client identifies $1.7 Million in potential procurement cost savings per $1 Billion of spend

Median WC

Overall IT cost per end user Median benchmark client spends $9.0 Million less per 10,000 end-users; less adept at leveraging IT to reduce labor costs

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World-class organizations are far more efficient Length of plan and forecast development Strategic plan 120 22 Forecast 79 15 Median 1st Quartile Median Planning and performance management cost as a percent of revenue 26% 1st Quartile 13% 3 Top Performer Median World-class Source: The Hackett Group

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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 Page 32

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 62% 48% Median World-Class Source: The Hackett Group

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

Source: The Hackett Group Page 34

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

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

Source: The Hackett Group Page 36

Average companies still rely heavily on spreadsheets Percent of companies using spreadsheets as a stand 54% alone budgeting application 44% 33% Median

Source: The Hackett Group

World-Class World-Class Efficiency

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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

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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 Page 39

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 Page 40

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 Page 41

How does Lawson-Hackett EPM solution work?

Lawson EPM / BI solutions Hackett Scorecard

• Predefined Key Performance

Indicators and proactive notifications speed delivery of role-based dashboards Evaluate Progress Lawson Professional Services Methodology • Trusted Lawson advisors— together with Hackett transformational consultants deliver the solution Execute Prioritize World-Class Defined Identify Proven Practices Quantify Opportunity Best Practices Configuration guides that map Hackett-certified best practices down to Lawson applications

• Benchmark against peer

organizations and WC

• Identify performance gaps • Scorecard annually to

monitor performance C-Level Vision Session

• Create performance

management strategy based on Scorecard results

• Develop a “blueprint”

of prioritized business opportunities and performance improvement initiatives

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Lawson Solution Analytic Applications Business Intelligence Platform Data Warehouse EPM Implementation Services

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The Future of BI

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?

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The People Who Use It Don’t Think So Avg. Hours/Week - Mktg Analyst Training Spend vs Outcome

18 16 14 12 10 8 6 4 2 0 BI Tool Excel Access

Suitability of BI Tool

Data Admin Indispenable Very useful Could work without it Not useful <1% 1-5% 6-10% 11-15% 16-20% >20 %

Traing Spend % Budget

% Reporting Favorable Training % Total Budget

Shortcomings Cited

80 60 40 20 0

Releva nce Integra tion Unders tanding Work fl ow Ease of Use Perfor mance % Citing (n=251) 61 55 49 35 22 21

Source: Hired Brains, Inc. research 2003-2004

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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 Page 47

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 Page 48

Questions?