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Leveling the playing field: Business analytics for mid-sized companies
Leveling the playing field: Business analytics for mid-sized companies
Leveling the playing field: Business analytics for mid-sized companies
Leveling the playing field: Business analytics for mid-sized companies
Leveling the playing field: Business analytics for mid-sized companies
Leveling the playing field: Business analytics for mid-sized companies
Leveling the playing field: Business analytics for mid-sized companies
Leveling the playing field: Business analytics for mid-sized companies
Leveling the playing field: Business analytics for mid-sized companies
Leveling the playing field: Business analytics for mid-sized companies
Leveling the playing field: Business analytics for mid-sized companies
Leveling the playing field: Business analytics for mid-sized companies
Leveling the playing field: Business analytics for mid-sized companies
Leveling the playing field: Business analytics for mid-sized companies
Leveling the playing field: Business analytics for mid-sized companies
Leveling the playing field: Business analytics for mid-sized companies
Leveling the playing field: Business analytics for mid-sized companies
Leveling the playing field: Business analytics for mid-sized companies
Leveling the playing field: Business analytics for mid-sized companies
Leveling the playing field: Business analytics for mid-sized companies
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Leveling the playing field: Business analytics for mid-sized companies

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A recent Deloitte survey of mid-market CFOs and other senior executives showed that automation of business processes and data analytics/business intelligence are their top investment priorities, along …

A recent Deloitte survey of mid-market CFOs and other senior executives showed that automation of business processes and data analytics/business intelligence are their top investment priorities, along with cloud computing and software as a service (SaaS).1 The ability to leverage these technologies can help mid-market companies compete with larger companies in a cost-effective manner by better understanding their customers, operations, and overall business. This report examines how mid-market companies can benefit from analytics, with case studies that illustrate applicability and results.

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  • 1. Leveling the playing fieldBusiness analyticsfor mid-sized companies
  • 2. Contents 3 Introduction 4 Leveling the playing field 6 Case studies: Casual Male Retail Group, Inc. Cumming Encore Enterprises, Inc. Krueger International, Inc. Lakeside Foods, Inc. Proper Group International TradeCard, inc. TradingPartners
  • 3. “What is your information-based strategy? You have more information at hand about your business environment than ever before, but are you using it to ‘out-think’ your rivals?” Tom Davenport, Jeanne G. Harris. Competing on Analytics: The New Science of Winning. Harvard Business School Press, March 2007.2 Leveling the playing field
  • 4. IntroductionDecades ago, businesses relied on punched paper tape and “big iron”mainframes to support their operations. As the technology evolved,rooms filled with mainframes were replaced by streamlined servers thattransferred computing power to desktops, then laptops, PDAs, tablets, anda continuing stream of new technology.Along the way, companies have increasingly leveraged technology tostreamline business processes — collecting and analyzing data with thegoal of cutting costs, creating efficiencies, and gaining a competitive edge.Until recently, a company’s level of technological sophistication was oftenpre-determined by how much it could afford to invest. But the adventof cloud technology has leveled the playing field for smaller companieswith limited budgets, enabling them to leverage the benefits that cloudcomputing offers, especially in the area of data analytics.A recent Deloitte survey of mid-market CFOs and other senior executivesshowed that automation of business processes and data analytics/business intelligence are their top investment priorities, along withcloud computing and software as a service (SaaS).1 The ability to leveragethese technologies can help mid-market companies compete with largercompanies in a cost-effective manner by better understanding theircustomers, operations, and overall business. This report examines howmid-market companies can benefit from analytics, with case studies thatillustrate applicability and results.1 Mid-market perspectives: 2012 report on America’s engine, Deloitte, May 2012. Business analytics for mid-sized companies 3
  • 5. Leveling the playing field The world’s largest companies have been harnessing the According to Deloitte Analytics, the most common types power of business analytics for years. Now mid-sized of data analytics can provide companies with the following companies are starting to get in on the action, using benefits: advanced data analysis to make smarter decisions and improve business performance. Customer analytics provides companies with actionable insight on their customers — past, present, and future. Business analytics spans a broad range of capabilities, These insights often result from forming a single, expansive from backward-looking approaches that focus on past view of customer relationships and behaviors across performance, to forward-looking approaches such as previously siloed products and channels. Armed with the scenario planning and predictive modeling that help new insights, companies can discover previously hidden companies prepare for the future. Business analytics also up-sell and cross-sell opportunities, flag early signals includes related activities such as data management, of customer defection, and obtain better returns from performance management, and business intelligence. marketing campaigns. Analytics-as-a-service is a new delivery model that uses Supply chain analytics empower companies with insights cloud computing to provide business insights without on demand patterns, supply and distribution networks, requiring significant investments in internal infrastructure and customer service requirements across transactional and and support. The reports, dashboards, and scorecards operational systems. In a volatile economic climate, and in delivered by analytics-as-a-service are typically pre- the context of increasing globalization, analytics can help configured to reduce deployment time, focused on the companies to cut procurement costs, identify anomalies needs of business users to drive adoption, and paid for on and potential disruptions, forecast demand more reliably, a subscription basis to reduce capital expenditures. optimize logistics, and gain a holistic view of their entire supply chain. Since the 2007 publication of Tom Davenport’s book, Competing on Analytics: The New Science of Winning, Finance analytics help companies to manage performance many leading businesses have recognized the value of in alignment with their business strategy. By helping them using data to derive business insight. According to a get control of their financial data, finance analytics enable recent survey, 97 percent of companies with revenues of companies to model business processes and gain deeper more than $100 million are using some form of business insight into cost and profitability drivers. Plans, budgets, analytics, up from 90 percent two years earlier.1 and forecasts become more accurate, and companies can better understand the significance of KPIs — and their true In the past, business analytics was most often used to relationship to performance. address domain-specific or functional issues, such as supply chain optimization and financial forecasting. But now, HR (workforce) analytics help employers improve their business analytics is increasingly being applied to issues workforce management processes by linking their HR that are enterprise-wide. In fact, a 2011 survey report strategy to analytical techniques. In an ever more diverse published in the MIT Sloan Management Review showed and decentralized workforce environment, insights gained that 58 percent of organizations now apply analytics to from workforce analytics can help managers find ways to create a competitive advantage within their markets or recruit — and retain — world-class talent, and address other industries, up from just 37 percent one year earlier.2 data-driven workforce challenges such as employee safety. Tax analytics has become a crucial component of many advanced tax management approaches. Tax benchmarking, trend and data analysis, and predictive analysis are all approaches being used by tax leaders around the world to gain deeper insights into their tax processes and profiles. 1 “The Current State of Business Analytics: Where Do We Go From Here?”, SAS.com, September 21, 2011 2 “2011 New Intelligent Enterprise Global Executive Study and Research Project,” MIT Sloan Management Review, November 7, 20114 Leveling the playing field
  • 6. The case studies in this report demonstrate how seniorfinancial executives at mid-market companies are using Business analytics survey of mid-sized companiesbusiness analytics to improve the management of theirbusinesses and to better serve customers. Specifically, In February 2012, Financial Executives International (FEI)they address how mid-market companies are leveraging surveyed its member companies with under $1 billion in annualanalytics to support business decisions in areas including: revenue to better understand how mid-sized companies areproduct management, customer management, service using business analytics.and operations management, enterprise management,and supplier/partner management. Highlights include the Among the 53 companies that responded to the survey, 89following: percent are currently using analytics, with the greatest focus on financial and operational areas.• Real estate investment company Encore Enterprises Inc., uses data analytics for yield management to negotiate Business areas where analytics is being used new retail leases; buy, sell, and build decisions are based Financial 98% in part on market data. Operational 90%• Cumming, an international construction project and Customer 67% cost-management consulting firm, utilizes modeling Strategic 52% when considering potential acquisitions to determine HR 42% synergies, fit, revenue potential, cost efficiencies, profitability growth, and business valuation. For mid-sized companies, most of the value currently being• For speciality retailer Casual Male, using analytics to derived from analytics centers around efficiency and cost monitor inventory, sales, and gross margin, helps focus savings, with less impact in strategic areas, such as creating a buying, distribution, and pricing decisions. competitive edge and enhancing customer relationships.• TradingPartners, a procurement, technology and services How data analytics add value company, uses its own platform to create dashboard Operational efficiencies 90% visibility to enterprise data that enables customers to make better decisions, negotiate more effectively, and Cost savings 85% manage their businesses more profitably. Competitive edge 38% Enhanced CRM 31%The practical experiences and insights from these and theother companies included in this report can help mid-market companies consider new ways to drive business Among the relatively small number of companies that arevalue through advanced analytics. not using analytics, the main barrier is the perceived cost to implement. Factors influencing the decision not to adopt data analytics Cost 67% Who would implement 56% Management buy-in 44% Technology 22% One additional note on an emerging trend: 29 percent of the executives surveyed indicate that their companies are already taking advantage of analytics as a service. Business analytics for mid-sized companies 5
  • 7. CASE STUDYCasual Male Retail Group, Inc.Taking inventory control to the cloudWith over 400 store locations, Casual Male Retail Group, As the company’s investment in analytics grew to supportInc., is the world’s largest specialty retailer of big and tall the totality of the business, it transitioned to QuantiSense,men’s apparel, with retail operations in the United States a business intelligence tool. “We have a department of 50and England and direct businesses throughout the United employees who use QuantiSense to manage the businessStates, Canada, and Europe. with advanced analytics for merchandising. It helps us to decide what men will buy, so that we can optimize our“We are a multi-channel specialty retailer with four gross margin.primary retail brands: Destination XL, Casual Male XL,B &T Factory Direct, and Rochester Clothing,” says Dennis “We may have spent $500,000 over five years onHernreich, CFO. “Our objective is to appeal to all of our QuantiSense, but its value is a multiple of that amount.”customers, who are defined by their physical characteristicof being either big, or tall, or both, but otherwise Customer analyticsrepresent all demographic and socioeconomic groups, “We use the Customer Relations Management module ofby providing a good, better, and best array of product Epicor,” says Hernreich, “which provides a repository forassortments in all primary lifestyles with multiple and business intelligence.”convenient ways to shop.” He explains, “Epicor is an ERP system that helps usOperational analytics understand the behavior of our customers. It stores“Our challenge is inventory control,” explains Hernreich. transactions by address, and uses algorithms to tell us who“We sell 2,500 different styles of men’s clothing, and to contact and when during the year, so that we stay top59 different sizes of pants, and we need to know what of mind with our customers.”inventory to buy, where to place it and how to price it. Hernreich also uses Deloitte Analytics’ cloud-basedCasual Male originally engaged with a provider of analytics inventory analytics for task management. “This is aas a service through the cloud to quickly and economically communications capability that provides information soadd analytics to its business and monitor inventory and sales that we can tell our stores what they should do each day,and gross margin. [That provider was acquired by Deloitte in helping them to prioritize their activities.”May 2011 and now operates as part of Deloitte Analytics.]“This provided cloud-based analytics solutions that we wereable to deploy quickly to address pressing needs in ourbusiness, such as providing visibility into our direct (catalogand online) channel, and consolidating inventory dataacross six country-based web stores in Europe.”“This is a communications capability that provides informationso that we can tell our stores what they should do each day,helping them to prioritize their activities.”Dennis Hernreich — CFO, Casual Male Retail Group, Inc.6 Leveling the playing field
  • 8. CASE STUDYCummingModeling helps shape business decisionsCumming is an international construction project and “For example, in 2008, just before the commercial buildingcost-management consulting firm that delivers creative, downturn, we anticipated that there would be increasedcustomized solutions to a worldwide portfolio of clients. construction in the public sector, so we acquired two small businesses in California and South Carolina that were 100“We are a professional services firm,” says Brian percent in the public school market. We continue to look atRuttencutter, CFO. “We provide a range of professional other potential acquisitions and this process requires a lot ofservices for building construction projects, including modeling to determine synergies, fit, revenue potential, costcommercial and public sector projects. Our services include efficiencies, profitability growth, and business valuation.”cost estimation, budget management, scheduling, projectmanagement, and program management. Ruttencutter says the company used a similar approach when it decided to offer “constructability” services several“We are not a builder or developer. We typically provide years ago. “These services are aimed at evaluating howour services either directly to the building owners or the well a building is designed,” he explains. “Failure toowners’ architect.” perform a constructability review on a building project can result in change orders, which often help the builderFinancial analytics but hurt the owner, since costs are higher when changeRuttencutter explains that Cumming budgets revenues orders are required. However, if we catch something in theusing a bottom-up approach by business unit, based on its design phase, it will help the client, because it will result inhard and soft backlog. “Hard backlog is work that is under a better or more efficiently constructed building.”contract, and soft backlog is work that we believe wewill be awarded based on a probability analysis. We also Human resources analyticsprepare revenue plans by market segment and geographic Cumming monitors average billable hours and charts FTEslocation,” Ruttencutter says. by business unit, tracking both direct and indirect labor, and also keeps statistics on hires and terminations. Team“Additionally, we prepare complete detailed revenue, members’ performance evaluations include both qualitativecost and EBITDA budgets for our various business units. and quantitative metrics.We prepare periodic forecasts, using a similar approach.Other key metrics that we watch closely as key profitability “We have been shopping for benefits lately and havemeasures include operations personnel utilization, available changed carriers and brokers so that we can offer the bestbillable hours for operations team members, and average programs at the lowest cost to the company,” explainsbilling rate.” Ruttencutter. We subscribe to external sources for salary and benefits surveys to ensure that we are providingOperational analytics competitive compensation programs.”“Utilization metrics are big,” says Ruttencutter. “We lookat the revenue curve of billable hours and calculate the Customer analyticsaverage bill rate.” The company also tracks metrics on new “We use a rigorous business development planning processclients, new projects awarded, and new projects to be bid. to identify new clients and projects,” Ruttencutter says. “Our business development team is tasked with identifying“For project management work, we monitor the schedule potential clients and new projects in accordance with anand costs of each project. Our expectation is that we annual business development plan. They work diligentlycan bring projects in early or on time, and below or on to grow existing relationships and develop new clientbudget,” Ruttencutter adds. relationships in an industry that is highly dependent on our reputation and image in the marketplace.”Strategic analytics“Some of our most significant strategic issues involve In public school district markets, Cumming monitors newpotential acquisitions,” Ruttencutter says. public school bond issues to help identify new projects and to determine which potential clients the company should contact. Business analytics for mid-sized companies 7
  • 9. CASE STUDYEncore Enterprises, Inc.Migrating to the cloud promotes efficienciesEncore is a privately owned national real estate investment Multi-family: “At the corporate level, buy and sellcompany founded in 1999. The company is vertically decisions are based on market data, current interestintegrated with four divisions: Retail (including shopping rates and availability of bank financing,” explains Shetty.centers); Multi-family (including apartments); Office “At the property level, managers are permitted to makeBuildings, and Hospitality (including resorts and hotels). decisions on leases. For each apartment complex, we tell the manager what minimum revenue is required to break“Encore’s operational efficiency has allowed the company even with loan service costs, maintenance and propertyto stay ahead of the commercial real estate market curve taxes. This minimum revenue provides a floor for theduring the recent recession,” says Mahesh Shetty, COO manager to consider when he or she is negotiating newand CFO. “This efficiency, combined with disciplined apartment leases.underwriting, enables the company to capitalize onmarket trends providing returns in line with each investor’s We also give managers market data to use whenset of parameters.” negotiating leases, which allows leasing managers to calibrate lease renewals based on market demand andThe company has migrated many of its systems to the optimize rents. Yield management in the multifamilycloud, enabling it to reduce its accounting department sector is a significant tool used to improve occupancy andfrom 25 people down to six (including Shetty), and its IT rents. Breakeven is an internal threshold for measuring thedepartment from 15 people down to four (and to two leverage on each property. The managers are measuredby next year). These reductions save Encore $200,000 based on occupancy and rent/square foot and are incentedannually in IT costs, and $650,000 annually in accounting based on overall profitability.”department costs. Meanwhile, the number of propertiesowned or managed has increased by 30 percent. Hospitality: “The key measure for the hospitality business is Revenue per Available Room, or RevPAR,” says Shetty. “WeOperational analytics get competitive market data from Smith Travel Research’sAccording to Shetty, Encore uses data analytics for yield Online STR Report. This data helps us to do a sophisticatedmanagement and other key metrics across its operating revenue management analysis, based on currentdivisions. occupancy and future bookings, so we can do real-time analysis of reservations. For example, we can lower roomRetail: “We get market data on rent/square foot, which rates in markets that are slow, and we can raise room rateswe use in negotiating new retail leases,” says Shetty. “The in hot markets.”optimum rent/square foot will vary from market to market.”8 Leveling the playing field
  • 10. Strategic analytics Our operational strategy is to: consolidate – get our arms“[In multi-family], the decision to buy or build is based on around our costs [through HR analytics]; automate –market intelligence,” says Shetty. “We choose to develop reduce transactional costs, and outsource – reduce costsproperties in lieu of acquiring new properties because by transferring work to lower cost locations. Using thisthe spread between development costs and the market process, we are able to [create] an efficient operation andcapitalization provides better returns for our investors. We reap cost savings from outsourcing.”do not try to time the market, but we use data to help uspredict where the market is headed. Customer analytics “In hospitality, the hotel chains handle customerFor example, back in 2006, we were ready to buy some satisfaction for us, and we pay for the feedback data,”new hotels. However, our analysis of available data says Shetty. “We have been told that we own two of theshowed that these new hotels would not meet our Internal top Marriott properties nationwide, based on customerRate of Return objectives. We then decided that if the satisfaction.”market was not right to buy, maybe we should sell. Wethen sold a group of hotels, just before the financial crisis.”Human resources analytics“Our strategic objective in HR is to optimize or reduceheadcount,” says Shetty. “We decided that what we weregood at was financial due diligence and the developmentof new properties. So we decided to outsource everythingelse, including HR, benefits and risk management. “Business analytics elevates the role of the finance organization from record keepers to business partners who are proactively engaged with the business to improve processes and drive profits; finance becomes part of the strategy conversation and not a footnote in the execution.” Mahesh Shetty — COO and CFO, Encore Enterprises, Inc. Business analytics for mid-sized companies 9
  • 11. CASE STUDYKrueger International, Inc.Forecasting furniture solutions and market trendsKrueger International (KI), is in the commercial and Operational analyticscontract furniture industry. Since the introduction of KI holds a monthly management meeting, where seniorits first product in 1941, a steel folding chair, KI has and middle management review key performancerecognized market needs and responded with furniture indicators, and also evaluate the cost of quality withsolutions for customers in higher education, K-12, specific measurements.healthcare, business and government. Strategic analyticsFinancial analytics “Our go-to-market strategy includes two meetings each“Each year, we do a five-year financial forecast in late year to evaluate current market characteristics,” sayssummer,” says Nicholas J. Guerrieri, CPA, the corporate Guerrieri. “We use reliable external sources for this marketcontroller. “We complete next year’s operating budget information, and supplement those sources with our ownby the end of December. Then, in February, we prepare internally generated data.a preliminary 24-month cash forecast. This workingcapital forecast is important because our segments of the Because we are a leader in educational furniture, whichindustry are very seasonal. We update this forecast after includes furniture for colleges, universities, and K throughthe annual audit, and then again two more times during 12 grade schools, we look at trends in numbers ofthe year.” students by location. We are also a leader in the healthcare market, so we look at trends in numbers of beds and other“Manufacturing operations prepares a monthly billing relevant data points.”forecast, and the sales group prepares a monthly salesforecast. Consistent and relevant data is the result of Human resources analyticsconsistent and relevant processes and procedures,” “We are a closely-held company, partially owned as anGuerrieri adds. “It is imperative that all levels of the ESOP,” explains Guerrieri.organization understand how they influence outcomesand how their work products will be used. In the field, “Because the company is owned by the employees,sales representatives must capture data that may not be everyone has skin in the game. So we are open withspecifically relevant to closing a particular deal. However, financial data, and publish financial statements for allit is critical for setting future strategy and success. A key employee owners on a monthly basis.”to success is continual reinforcement of expectations, aswell as sharing of data and conclusions.” Customer analytics KI has a Ph.D. on staff who conducts customer satisfaction surveys, both online and by phone. “We belong to the Business and Industry Furniture Manufacturers Association,” says Guerrieri, “and we benchmark against other members of that association.”10 Leveling the playing field
  • 12. CASE STUDYLakeside Foods, Inc.Stocking grocery store shelves with analyticsLakeside Foods, founded in 1887, is a privately Operational analyticsheld, international private label food processor. It is Lakeside is connected to its major customers by Electronicheadquartered in Manitowoc, WI, and has 15 plants Data Interchange (EDI), which enables automatic inventoryand eight distribution centers throughout Wisconsin, replenishment. The customer’s system automaticallyMinnesota, and Ohio. generates a purchase order when their inventory supplies are low.Although the company is best known for vegetables, itsexpertise extends to shelf-stable meals, canned meats, Other operational analytics include natural gasorganic products, health beverage supplements, non-dairy consumption and plant information.frozen dessert toppings, salsa and other sauces. Lakesideprocesses food for the private labels of large national “We track our usage of natural gas very closely, because allretailers. of our plants run on natural gas,” says Kitzerow. “We are always looking for energy efficiencies.“There is a lot of competition in the food processingindustry,” says Denise Kitzerow, CFO and vice president of We use a software system to track what happens onadministration. “It is driven by customer demand, and if our packaging lines, including downtime, and it keeps athere is too much capacity in the industry, it can result in history of repairs and maintenance.”margin pressure.” Strategic analyticsFinancial analytics “We are always developing new products,” says Kitzerow.“Budgets and forecasts are based on private label customer “And we look at market trends to develop new products.demand,” says Kitzerow, “so we use metrics to anticipate For example, a current market trend is convenience. Tocustomer demand and how customers will take products. monitor market trends, we follow Nielsen data.”Logility helps us determine customer demand. We usesoftware to review our forecast and smooth out unusual Lakeside’s future strategy is to better reach the East and Westups and downs.” coasts, and they are currently using analytics to evaluate the best means of transportation to deliver product. “We use metrics to anticipate customer demand and how customers will take products.” Denise Kitzerow — CFO and vice president of administration, Lakeside Foods, Inc. Business analytics for mid-sized companies 11
  • 13. CASE STUDYProper Group InternationalDriving auto parts production with metricsProper Group International is a Tier 2 supplier that In our auto parts production business, we make partsprovides automotive tooling, plastic injection molds, and based on customer releases. For this business, we useinjection molding to Tier 1 automakers around the world. standard costs, and analyze variances. We make 400The company has locations in Warren, MI; Anderson, SC, different auto parts, and use standard costs for both laborand Shenzhen, China. It has more than 500 employees, and materials, plus any additional subcontractor costs. Weincluding 50 full-time engineers, and offers a wide range do a variance analysis when we compare actual costs toof services that include product development, prototype standard costs. We also include overhead costs, for whichand production molds, production injection molding, and we have developed a standard rate based on GAAP andsecondary equipment. Internal Revenue Code requirements.“We do things the proper way,” says Mark Rusch, CFO. “It For forecasting purposes, we have to get informationis this philosophy that drives us to world-class standards of about future vehicle programs from the OEMs [Originalprocess management, innovation, production and quality. Equipment Manufacturers] and other industry sources, and anticipate what parts and tooling will be needed. SoOur competitive challenge is that we have to deliver we use outside information and analytics, both free andworld-class products at the lowest possible prices to meet for sale.”or exceed customer expectations. Customers expect thehighest quality products and the lowest possible price, Operational analyticsdelivered on time. If we don’t deliver products on time, “We track a number of metrics with our ERP system,we would interrupt the customer’s launch program and and we also use Microsoft Excel and Access extensively,”supply chain initiatives. says Rusch. “For production metrics, we track our daily operations with an in-house report we call QuickStats,As a mid-market company, we need to reinvest any profits which includes parts sales; expendables (anything used toback into the business to grow the business, so we don’t ship parts); raw material balances, in dollars, pounds andwant to tie up a lot of capital in inventory.” locations; finished goods balances; labor costs, and cost of quality.Financial analytics“For budgeting purposes, we use sales metrics developed Our system receives customer releases via EDI. Forby the sales team for our automotive tooling business, example, a customer release might tell us ‘we need 2,000our primary business, and our auto parts production of this part at our plant in five days.’business, our secondary business,” says Rusch. “Ourautomotive tooling business is a make-to-order discrete For operational efficiencies, we monitor scrap levels;manufacturing business. We don’t produce extra press downtime; expedited freight, and Return Materialinventory, we produce to fill specific orders according to Allowances (RMAs).exacting specifications. We use direct [actual] costs, andthe metric is to compare direct cost to the original quoted To be a low-cost manufacturer, we need to maintaincost, which was based on detailed design specifications inventories of finished goods at a minimum number ofincluding both labor and material costs. days on hand, so we have to be good at production planning, so that we don’t have too much capital tied up in inventories.”12 Leveling the playing field
  • 14. Strategic analytics“We don’t really develop new products, because productsare dictated by our customers,” explains Rusch. “However,we can and do develop new ‘processes’ to incorporatethe newest technologies in our automotive toolingbusiness.”Human resources analytics“We track both direct and indirect labor, and monitorthese numbers daily,” says Rusch. “We also monitoremployee absenteeism. This is important for ourautomotive tooling business (our primary business),because the biggest component of these costs is labor.We essentially see labor as knowledge, skills and abilitiesthat we sell to our customers through our steel products.For direct labor, we track how much time each associatecharges to each job. We also track indirect labor, whichare hours charged by supervisors.”Customer analyticsIn its automotive tooling business, the company ratesevery tool it produces with a “Mold PerformanceEvaluation Report” that includes dimensional accuracyof the tool, based on the customer-generated design;functionality; part quality, and delivery characteristics. “We see the use of appropriate Business Analytics as a tangible differentiator between our Company’s success and that of our competitors. Data is everywhere. It’s how you use that data to drive performance that makes a difference.” Mark Rusch — CFO, Proper Group International Business analytics for mid-sized companies 13
  • 15. CASE STUDYTradeCard, Inc.A global network for optimizing supply chainsTradeCard provides hosted technology, online services, and and agent systems interact with each other. We sendtrade experts to help connect buyers, suppliers and service instructions to move payments from the buyers to theproviders. This unique offering gives companies the data factories in the Far East. All of the 40,000 members canand tools they need to automate and optimize transactions interact on the TradeCard multi-tenant, single instance,and control their extended supply chain. collaboration software program.”The company manages a global network of more than Strategic analytics40,000 members, providing support in 78 countries TradeCard’s product development program is based onand 32 languages. Members collaborate electronically a feedback loop with their customers. “We capture bothto generate mutual value, while a network of alliance hard and soft data from all trades,” explains Ford. “Anpartners – including inspection services, consultants, analysis of this data provides ideas for new products andtechnology providers, and banks – contribute expertise and services. Although we generate a lot of ideas for newbring innovation to TradeCard’s members. products and services, our offerings are focused on what our customers need the most.”“Our biggest competitor is a company’s IT department,”says Steve Ford, CFO. “We run into competition at The company updates its products and services providedcompanies that use installed legacy software. So a sale to a by the TradeCard System on a quarterly basis, and allcustomer could allow them to replace their old technology, customers, large and small, get the benefits of thesuch as their mainframe or server. Our business model is upgrades.similar to that of Facebook.” TradeCard also gets external business analytics fromFinancial analytics the greater marketplace. “We belong to many industry“We use NetSuite software,” explains Ford. “Everything councils, which are essentially circles of influence, fromdone by our finance function is done through NetSuite, which we gather external market information,” saysstarting with the sales opportunity. With NetSuite, we Ford. “Our customers also have their own supply chains,can capture time, expense and revenue, and all related and therefore their own circles of influence, so we cananalytics. All employees can access financial information also participate in their supply chains. Approximately 10with an Internet connection. percent of our revenue is from doing consulting work for our customers.”We use Adaptive Planning to do budgets and forecasts.Everyone has their own budget, and they can do their own Human resources analyticsanalysis and produce their own dashboards. In essence, NetSuite provides an electronic employee time card foreveryone can become their own CEO or CFO. TradeCard, and those timecards are used for all employees. “We thus standardize the Human Resources program,Because NetSuite is a cloud-based software-as-a-service (SaaS), which is both a benefit and a challenge,” says Ford. “Thewhen it is updated, everyone will use the same updated primary challenge is standardizing the work flow, not whatrelease, and there will be only one version of the truth.” employees do.”Operational analytics In the future, TradeCard plans to use NetSuite for“TradeCard provides cloud services associated with the automating the company’s performance evaluationpurchase order,” explains Ford. “We developed and use our process.own software (the TradeCard System) for operations. TheTradeCard System exchanges information with NetSuite. Customer analytics “All customer and trade data is stored in the TradeCardWe have approximately 100 customers (with 40,000 users) System,” says Ford. “We keep all purchase informationwho do business with more than 8,000 factories. The data in the system separately and securely by customer. InTradeCard System provides operational analytics, including collaboration with a few large customers, we are investi-an activity history for every customer. The TradeCard gating the potential for deriving Business Analytics whichSystem is the basis of the supply chain, and all customer could be used to track seasonal activity, usage, and flow.”14 Leveling the playing field
  • 16. CASE STUDYTradingPartnersHelping clients with spend managementTradingPartners is a procurement, technology and services We are then able to position our consultants appropriatelycompany that helps clients with their spend. The company ensuring the correct skill set and foreign languageprovides spend management products and services that capabilities are available. Business analytics has resulted increate dashboard visibility to enterprise data and enable a favorable impact on productivity of our consultants andcustomers to make better decisions, negotiate more forecasting opportunities.effectively and manage their business more profitably.With category expertise in retail, manufacturing, services, SpendScience™ can analyze market trends to develophealthcare, public sector and food service, TradingPartners optimal buying timelines. It can analyze purchasing datahelps customers improve enterprise performance while across the enterprise, and can consolidate spend datareducing supply chain risk. across multiple ERP systems. For example, one client had 65 distribution centers, all buying from different vendors.“We provide spend management,” says Ginger Gorden, We helped them consolidate their purchases so that theyCFO. “And our solution, SpendScience™, gives dashboard could get a better rate on a greater volume purchase.”visibility throughout an entire organization. Operational analyticsDifferent organizations in different industries have “We use our own platform to analyze events and projectsdifferent issues to deal with, so SpendScience™ is for clients, not to analyze our own spend,” explainsvery flexible. We provide the technology coupled with Gorden. “For example, we have teams in different partsconsultants who can help organizations derive the most of the world. The tool can help the client analyze projectsvalue from the technology. being done in different regions of the world, and provide visibility across the world.The use of data analytics within our organization hasprovided us an enhanced ability to gain visibility of our As CFO, I can monitor the projects that we work on. Thisconsultants and customer activities. Our operations are helps in the budgeting and forecasting processes, in whichenhanced by our SpendScience™ platform as the analysis I have to forecast revenues based on the number andprovided indicates the categories and markets where types of projects that we do for clients. I can then sharespend negotiation opportunities arise in the pipeline. this information at a macro level with our consultants.” Business analytics has resulted in a favorable impact on productivity of our consultants and forecasting opportunities.” Ginger Gorden — CFO, TradingPartners Business analytics for mid-sized companies 15
  • 17. ContactsForrest DansonPrincipalDeloitte Consulting LLPfdanson@deloitte.comJohn LuckerPrincipalDeloitte Consulting LLPjlucker@deloitte.comWilliam M. SinnettSenior Director, ResearchFinancial Executives Research Foundation, Inc.bsinnett@financialexecutives.org About Financial Executives Research Foundation, Inc. Financial Executives Research Foundation, Inc. (FERF) is the non-profit 501(c)(3) research affiliate of Financial Executives International (FEI). FERF researchers identify key financial issues and develop impartial, timely research reports for FEI members and non-members alike, in a variety of publication formats. The Foundation relies primarily on voluntary tax-deductible contributions from corporations and individuals. The views set forth in this publication are those of the author and do not necessarily represent those of the Financial Executives Research Foundation Board as a whole, individual trustees or employees. Financial Executives Research Foundation shall be held harmless against any claims, demands, suits, damages, injuries, costs, or expenses of any kind or nature whatsoever except such liabilities as may result solely from misconduct or improper performance by the Foundation or any of its representatives. This and more than 120 other Research Foundation publications can be ordered by logging onto http://www.ferf.org. About Deloitte Growth Enterprise Services Deloitte Growth Enterprise Services professionals deliver a distinctive client experience through service offerings tailored to address the unique needs of mid-market and privately held companies. For more information, visit our Deloitte Growth Enterprise Services site (http://www.deloitte.com/us/ perspectives/dges). As used in this document, “Deloitte” means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.
  • 18. Copyright © 2012 Deloitte Development LLC. All rights reserved.Member of Deloitte Touche Tohmatsu Limited

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