Intelligent action

Posted on 11 May 2011 by The Manufacturer

Business intelligence is increasingly being used right across the manufacturing enterprise — and thanks to user-friendly advances such as dashboards, these days even smaller manufacturers can benefit, says Malcolm Wheatley.

When Southampton-based sailmaker Bainbridge International needed a better handle on its customers’ buying habits, the company turned to a business intelligence solution from QlikTech.

The goal: a sales tool that would help the company track and increase customer spend and profit — “a real ‘finger on the pulse’ solution,” as Bainbridge IT manager Nick Irvine puts it. At the touch of a button, he explains, the business could see which customers were buying fewer products than previously, as well as spot opportunities for cross-selling.

“Deploying the QlikView powered solution has allowed more far reaching benefits than we initially expected,” says Irvine, pointing to a six-month payback period. “Never before have we had so much detailed information on customers and sales at our fingertips so effortlessly.” As luck would have it, Bainbridge’s experience goes right to the heart of a debate which, for many manufacturers, summarises the whole notion of an investment in business intelligence.

And it’s a debate that revolves around two key questions. First, can smaller manufacturers benefit from business intelligence? And second, how exactly can business intelligence provide insightful information that will deliver a meaningful return on the investment involved? First, though, what exactly is business intelligence? While individual definitions vary, talk to experts and the core messages are remarkably similar.

James Robbins, Accenture’s North American head of industrial consulting, sees it “as the ability to use quantitative data to shape decisions and outcomes”, noting that the ‘outcomes’ part of that definition is critical. There is little value in business intelligence that doesn’t lead to clearly defined actions.

At Capgemini, head of business analytics David Pardoe talks of “gathering data from business processes and employing analytics tools to improve those processes.” Similarly, IBM’s Jonathan Crenner, an associate partner in the firm’s business analytics and optimisation service line, defines business intelligence as the “use of analytics tools to make better business decisions.”

All of which sounds not a little rarefied. Yet there is little doubt that manufacturers can — as at Bainbridge — most certainly benefit from business intelligence applications: the body of evidence, in short, is just too strong.

At British Sugar, for instance, a business intelligence application from BOARD has been used to replace complicated and difficult-to-control spreadsheets used in financial planning. Meanwhile, at Sennheiser Electronic, a business intelligence application from Business Objects — now part of SAP — simplifies and automates the company’s reporting processes.

But if those are some of the benefits that the application of business intelligence delivers, there’s less agreement on how business intelligence actually does it.

Intelligent excellence

Talk to John Hammann about business intelligence for manufacturers, and he’ll point you to a French food flavourings business called Metarom, which first implemented SAP’s BusinessObjects business intelligence solution back in 2006.

To Hammann — head of business development for manufacturing at SAP — Metarom sums up a number of lessons about the successful deployment of business intelligence.

“They’ve raised revenues by 12% over three years, even as they’ve reduced inventory holdings, streamlined procurement and improved manufacturing efficiencies,” he says. “You can’t credit business intelligence with all of that, but it’s certainly had a big impact.” Talk to experts such as Hammann, and a recurring theme is that business intelligence these days isn’t just about delivering better insights into the sales process.

Metarom, for instance, tackled sales data in its first year, the link between sales forecasts, purchasing forecasts and production planning in its second year, and manufacturing improvements and production costs in its third year.

“Increasingly, companies are going beyond the sales and marketing arena to apply business intelligence tools to any aspect of the business where there is a rich data stream: purchasing, quality, and manufacturing operations, for instance,” says Hammann. “And the opportunities in particular industries can be enormous — in automotive, for example, warranty costs are a significant burden.” QlikTech’s Telford agrees.

“The use of business intelligence in sales and marketing is certainly popular,” he notes. “But there are a lot of applications in the supply chain, too: strategic sourcing, sales and operations planning, collaborative forecasting, and supplier performance, for example.” That said, such forays into supply chain and manufacturing performance data streams underscore the fact that business intelligence these days isn’t about ‘big bang’ deployments any more. As at Metarom, it takes time to extend roll-out business intelligence across the enterprise.

“The mode of roll-out has changed,” says Dunacan Fitter, business development director for business intelligence within Oracle UK. “These days, it’s about ‘incremental discovery’ rather than ‘big bang’.” Yet that doesn’t mean that the benefits of business intelligence are delayed — for today’s approach to business intelligence is also very much about rapid implementation, adds Andrew Spence, Oracle director of business development for the supply chain.

“Go for a three month project,” he urges. “Be prepared to accept data issues, don’t try for 100% coverage, but aim to cover a few important KPIs and metrics and expand from there — both in terms of metrics covered, and areas of the business targeted.

Don’t spend a year working on something before delivering anything: aim for a continuing stream of deliverables.” And sage advice about a good starting point for a business intelligence project comes from Timo Burkard, managing director of specialist SAP business intelligence consultancy PIKON International Consulting.

“Dashboards and ad-hoc reports are still very popular with managements, because it gives them the information they need in a quickly digestible form. But often, what makes the difference to a business is that one ‘killer report’ — a report that used to take a considerable effort to compile manually, but which can now be produced automatically.”

To some, for instance, business intelligence calls for a significant investment in data warehouses, expensive analytics and reporting software, and high-power teams of specialist analysts. To this school of thought, the goal of business intelligence is the gaining of insights not readily available otherwise — such as which customers might be interested in which other products or services, for instance.

To others, business intelligence means the reporting, ‘dashboard’ and scorecard systems that are now built as standard into most modern ERP systems, or available through bolt-on packages and niche solutions. Here, the focus is on business intelligence as the presentation of pre-digested data into actionable insights, often for performance management purposes.

And a third school of thought sees business intelligence as a kind of ‘half way house’ — highpowered, and capable of advanced analytics tools, yet falling short of the burden of duplicate third-party databases and data warehouses. To this school of thought, business intelligence is often about projectcentric improvement programmes, targeting specific areas of weakness.

Yet this multiplicity of flavours of business intelligence need not be a problem. For a typical manufacturing business wondering which way to go, suggests Capegemini’s Pardoe. According to him, the pragmatic reality is that the chosen nature of the solution depends largely on both the nature of the problem and the scale of the opportunity.

In other words, for any given business, there’s a spectrum of choice stretching from simple problemcentric business analytics to full-scale business intelligence — beginning, if needs be, with the humble spreadsheet as a starting point.

“For all the criticism that spreadsheets get, they can do some very powerful things,” says Pardoe.

“But if you’ve got thousands of product lines to analyse, then a spreadsheet will probably be difficult to use. If it’s tens, or hundreds, then a spreadsheet can greatly help.” Dashboards, too, can help to make even the most indigestible mass of data intuitively easyto- read.

“Dashboards offer real time management information, and dashboard business intelligence tools can pull operational and financial information from multiple data sources — such as accounting packages, MRP systems, and supply chain solutions — and easily disseminate this to the relevant persons from management to the shop floor,” enthuses Neil Rushby, supply chain divisional manager at specialist ERP vendor Access.

All of which will be comforting words for smaller manufacturers, who may well balk at the apparent costs and complexity of full-scale business intelligence solutions involving dedicated analyst teams, data warehouses, and high-powered software. Business intelligence on this scale, for many smaller companies, will be a daunting — not to say expensive — proposition, especially if uncertainty surrounds the benefits.

The good news? While once true, things have moved on.

“Business intelligence has democratised quite dramatically over the last few years,” notes George Mathew, group vice-president and global manager of business intelligence at SAP. “It’s not just that it has become more accessible to smaller companies, it’s also been reflected in the types of users employing it — they’re no longer ‘power users’ and dedicated business intelligence analysts.” And what is striking, adds Håkan Ebersjö, director of product marketing at Epicor, is the nature of the impetus behind that move. In short, the recession and associated tough times.

“Margin and cost pressures have had a huge impact on the take-up of business intelligence among smaller manufacturers,” he says. “They can’t afford not to follow up any opportunity to influence profit.” Natasha Judge, a marketing and business development executive at business intelligence provider Board UK, agrees. “The economic conditions of the last three years have focused companies on how they can deliver, without cutting service,” she points out. “Some mid-tier manufacturers are investing quite significantly in business intelligence, recognising that spreadsheets and the like aren’t giving them the information that they need.

For smaller manufacturers, it depends on the particular challenges that they are facing: correctly allocating costs and profits to particular product lines, for instance, is complex — but it’s the sort of thing that we’re seeing a demand for.” “Implementing BI requires commitment, dedication and resource to realise its potential benefits, sums up Stuart Anderson, director of sales and marketing at specialist smaller-company ERP and accounting vendor Pegasus Software.” “But as economic conditions remain tough for smaller manufacturers, business intelligence currently represents an untapped means of achieving a substantial competitive advantage.”

Dashboard deployment

For a smaller manufacturer wanting an easy-to-use, easy-to-deploy business intelligence solution, dashboards are an obvious way forward. Presenting management with pre-formatted, easy-to-digest information, dashboards are business intelligence at its most basic level.

What’s more, they’re cost-effective from an IT perspective. Using dashboards as a business intelligence tool puts analytic power directly into the hands of management, while cutting the bulk and cost of traditional reports programmed by IT departments.

So when 135-employee Biggleswade-based AWA Bathrooms recognised that its management reporting was taking too long to complete, and that it didn’t provide the clear and comprehensive overview of profits and costs that the business required, dashboard technology from the company’s ERP provider Solarsoft seemed the obvious solution.

“The previous system that we were using had a traditional report writer that was limited in its capabilities and was extremely time consuming. Since implementing the dashboard technology from Solarsoft we can access data far more quickly than before and the reports are always up to date,” says Fred Colborne, financial director at AWA Bathrooms.

“With just few mouse clicks, dashboards let us analyse past transactions, inspect current activities and make ‘what if’ forecasts about where the business is heading. Using this information we can target sales and marketing campaigns to help improve turnover and we can see which product lines contribute most to growth and profitability.” According to Colborne, the Solarsoft dashboards have transformed the way that people carry out day-to-day activities. The dashboards give a clear view of company performance, he explains, and because they are fed directly from operational data in the ERP system, are always up to date and accurate.

“The ability to drill into a report on screen means that we are always confident that the information is accurate and can be tied back to our ERP system,” he says. “What’s more, it has saved the company vast amounts of time spent creating and maintaining dozens of reports, many of which were rarely used.

Previously the IT Manager would have to write, test and deploy every single report, with each report taking an hour or more to prepare. With dashboards it is all done at the click of a button.” None of which comes as a surprise to Steven Hargreaves, group product director at Solarsoft.

“Getting reliable and up to date information about what is happening within a business can be complicated,” he notes. “Using a business intelligence tool, manufacturers have much faster access to management information from any department — whether that’s Sales, Production, Finance or Warehousing. They also have a much deeper insight into sources of profit and cost. You can now quickly compare current and historic performance or ask ‘what if’ questions about the future with just a few clicks of a mouse button.”