Your senior management just read you the riot act about the company’s proliferation of systems and the lack of data integrity in those systems. “We have the same data—like sales and inventory—in different systems, with different timing and accuracy. Between our order management, warehouse management and forecasting systems, there is no single version of the truth. We are no longer in touch with the data, and the department managers are analyzing performance in different ways and getting different results—even though they are using the same data! No one system gives us more than 25% of the data we need to plan and manage the business. And we aren’t even users of the major business systems.”
They have given you 30 days to come up with a plan to eliminate this confusion and deal with these realities.
Sound familiar? So what’s the answer? Some IT professionals try to mash together solutions by extracting data from a wide range of applications into spreadsheet management reports. But this strategy doesn’t work long-term, because of the manual effort necessary and resulting inaccuracies. Others use query tools, but those require technical training and knowledge of the data aspects of the various systems. And they don’t allow you to analyze data across the enterprise.
Clearly, the smartest solution is to research and select business data intelligence solutions that will allow you to analyze data across the business from any and all information transactional systems, telephone ACDs, spreadsheets, etc.
This article discusses the issues involved in selecting business intelligence (BI) solutions for your multichannel business. Why are we talking about BI solutions, rather than just BI development software? Because there is plenty of BI development software out there, but we feel that the most effective approach to answer this challenge is to select a vendor that has not only software, but predefined industry best practices, views and analysis already integrated into the system. This reduces the time needed to deploy the system and get actionable solutions in place.
#1 Access to Data Across Multiple Disparate Systems
How will the BI solution tap into the data from multiple disparate sources and data sets? In reality, moderate to large multichannel businesses have a wide variety of systems ranging across call center, e-commerce, warehouse management, forecasting and inventory management, merchandising, and marketing. Figure 1, Using Inventory Data Across the Enterprise, shows how various managers can get multiple uses of inventory data from multiple systems, with their own dashboards, Key Performance Indicators (KPIs) and analytics.
In order to make this a reality and gain access to these multiple systems, you first have to determine which data is necessary for analytics, and is usable. The next steps are to determine what pieces of data are common from one application to the next, so that data can be utilized in any analytic environment. One you have the common data indentified you need to create a normalized and standardized database layer, to which all data from these systems will be mapped. This makes it much easier to map the data feeds for the BI solution and to have audit capabilities for the data. In addition, you will need to consider: What are the methods and processes that are involved with this? How will you make this transformation of the data? What services does your BI solutions provider have to shorten this implementation? With what frequency will the data be updated to the BI database?
#2 Back In Touch With Their Data
As in selecting any system, developing user requirements is key to getting the proper solution match for your business. In order for you to put management back in touch with their data, you must know what decision support tools, analytics, KPIs and dashboards they want implemented with a new BI solution. As Figure 1 shows, the KPI alerts and analytics must be relevant to their responsibilities. Additionally, the applications need to be easy to use. Can senior management and department managers set up their own views and change KPIs as their needs change?
Does the BI solution allow you to use field and file names that are more intuitive to the user—or are they going to remain the programmer oriented mnemonics or abbreviations utilized by the company that developed the various business applications? To be most effective the applications need to be point-and-click oriented and not require users to know the data structure, file names, etc.
Programmers and business analysts will need to implement the systems. But does the BI solution require programmers or business analysts on a day-to-day basis to bring the benefit to senior management? Have we unnecessarily inserted an additional IT resource or analyst into the process?
#3 Industry Templates
Many BI software tools do not have direct and retail industry oriented templates. Does your BI solution provide ways to analyze inventory, analyze productivity in the call center and warehouse, and incorporate channel metrics for retail, catalog and e-commerce, marketing, merchandising, and finance? BI development software is often generic analytical software that requires you to do all the data design, determine the analytics needed that are oriented to your industry, and then implement.
#4 Actionable KPIs and Dashboards
What lies at the heart of what managers need, is the difference between data or reporting data, and truly setting up KPIs that alert them to changes in performance which are outside the managers’ pre-defined values or goals. An example maybe helpful. Most inventory control systems report units and dollars by category and product. KPI alerts will help managers stay on top of their business if they are alerted to conditions such as:
- When a category of merchandise falls below a certain fill rate or inventory turns goal, (with drill-down into the items that are negatively affecting that category)
- When backorders exceed a certain user defined threshold
- When aged inventory over a certain number of days exceeds a certain percentage of the total inventory
In addition, these applications should also assist managers with identifying potential issues so they can be headed off before becoming a problem that affects customer service, top line sales or profitability. In considering inventory management, these might include:
- Products which are selling better than plan and may become a stock out based on the weeks of supply on hand and the vendor’s lead time to get back in stock
- Products that should be considered for liquidation based on their low rate of sale, excess weeks of supply on hand and whether or not they are going to be offered in future offers
- When a merchant exceeds a user defined threshold for open to buy
Companies will need to consider how the BI solution should be used to provide alerts across the business in inventory, merchandising, marketing, fulfillment, call center, finance and retail management.
In addition, senior management will want to be using the same data as their department managers and be able to drill down into the details. This achieves the goal of getting everyone on the same page.
KPIs and alerts need to be able to be set up and flexible. Some may be tied to your strategic plan. Some KPIs may tend to be temporary in nature, utilized to address problems mangers are trying to stay in contact with and solve. All systems have data and general operational type reporting, but do they have KPI alerts that allow management at all levels to stay in touch?
#5 Open Systems
Even if the BI solution has predefined views to assist in analysis, does it have an open system architecture so that you can modify the KPIs and analytics to be even more meaningful to your business? Does it require extensive programming from the software development company to alter some of the KPIs?
#6 Strategic Nature
Does the BI solution show you where to take strategic action with your business? Or is it simply reporting results? We think that the strategic approach—“where and how to take action” type alerts—is critical to improving performance and getting the most from the application. Do the solutions and applications include industry best practices?
#7 BI Solution Rather Than Just Software
Services, education and training are part of the selection. Does the BI solution provide best practice improvement as part of the solution? Can the provider truly assist you with strategic thinking and how to really get the most from the solution? Do they understand your business environment or are they just developing software?
#8 Data Integrity and Timeliness
Companies must insure that the data being mapped to the BI solution is clean, usable and has integrity in the information. What data will need to be fed, at what intervals? Can data feeds from transactional systems be near real-time as well as batch, depending on the need for the quickness of the data to be updated?
#9 Time to Deploy
How much time will it take for your vendor and your staff to have the data mappings and BI solution implemented? In our experience, the selection and implementation of BI solutions is no different than any other major system. In the case of BI, where there are no industry templates, it may take months to years to have any operational systems up and running. Thoroughly understand the internal and external resources that will be required.
#10 Total Cost of Ownership
Included in the total cost of ownership is the hardware, licensed software, third party hardware and software modules, annual maintenance and support costs, training and professional services. What internal resources will you have to expend to select and implement the BI solution?
Most Critical of All
In addition to these 10 considerations, there is one more that may be even more important than all the others: Return on Investment (ROI). What hard savings and intangible benefits will be derived from the BI solution? Which BI solution can bring the higher ROI in the shorter amount of time? We believe that well designed, industry specific business intelligence solutions will provide a positive ROI in 12 to 18 months, by enabling these functional areas of the business:
- Inventory Management – by optimizing inventory, companies should be able to now develop their strategy for balancing inventory levels with fill rates and backorders; reduce costs associated with processing backorders; improve overall inventory turns and increase Gross Margin Return on Investment (GMROI); reduce aged inventory and implement comprehensive liquidation strategies.
- Merchandising – Analyze merchandise performance and the net contribution to profit. This allows companies to understand what merchandise segments are working and which ones are under performing. BI solutions should help you to determine your breakeven price point, plan to actual performance and develop strategies for determining winning items and improving top line sales.
- Distribution Center – Ability to report productivity and performance of workers against an internal standard or goal. Develop long-term trends with regards to costs associated with fulfilling customer orders such as direct and indirect labor, occupancy costs and more. Business intelligence to assistance with product velocity and movement for efficient slotting and warehouse profiling. Ability to develop strategic initiatives to balance costs, customer service levels and facility utilization.
- Call Center – Ability to report productivity and performance of workers against an internal standard or goal. Develop long-term trends with regards to costs associated with supporting customer orders and service calls, chat, email correspondence and more, including labor costs and occupancy costs. Understand and measure the cost per transaction and cost per contact against a plan, and balance that with the stated customer service level objectives.
- Marketing – Solutions should allow companies to understand their customer file—how many one-time buyers versus multi buyers. Do customers cover the marketing expenses associated with subsequent customer orders? What are the costs associated with acquiring new customers? Understand what type of marketing initiatives are most effective at customer retention versus customer acquisition. Measure offer response rates and performance against plan. Understand both Lifetime Value and Recency, Frequency and Monetary Value (RFM).
- Finance – Financial executives should now be able to manage and understand all aspects of the business that affect profitability, from inventory management to marketing results.
One of the biggest benefits to management is to get back in touch with the business from an analytical perspective. BI Solutions and KPIs can easily be set up and changed to monitor performance in your areas of responsibility—providing you with hard savings, performance improvements and a rapid ROI.
About Manage Metrix
Manage Metrix is a business intelligence system with KPI alerts and dashboard capabilities that can be easily customized for each user. In addition, managers can use pre-built retail and direct analytical templates and KPIs or clients can customize their own unique analysis. Senior management has drill down capabilities into the same detail data as the department management assuring everyone is using “the same version of the truth”. Another unique approach offered is that F. Curtis Barry & Company works with the client management to set appropriate KPIs and action plans for improvement. Modules have functionality for inventory management, merchandising, marketing, call center, fulfillment, retail merchandising and finance which shares data across the enterprise. The product is co-developed by Taurus Software and F. Curtis Barry & Company. To learn more about Manage Metrix, visit www.managemetrix.com or call 650-482-2022 x1.
About Taurus Software
Taurus Software has been making data liquid since 1987. Taurus offers an entire range of solutions that incorporate products such as DataBridger—a robust open platform data foundation creation tool, and application specific data models such as Ecomedate for Ecometry customers and Analysis Suite—a powerful analytical and reporting toolset. Taurus is a member of the HPe3000 Transition Partners Program and has technology partnerships with DirectTech, Quest Software, Lund Performance Solutions, Managed Business Solutions, Escalate Retail, Orbit Software, Pathway Pacific, DST Health Solutions and Acumium. To learn more about Taurus Software, visit www.taurus.com or call 650-482-2022 x1.
F. Curtis Barry & Company is a fulfillment consulting firm for catalog, e-commerce, and retail businesses. We offer clients expertise in business process and order management systems, inventory management systems, warehouse management systems; warehousing and distribution; call center services; inventory management and forecasting solutions; and strategic, financial, and operational planning for all business channels.
