BUSINESS and COMPETITIVE INTELLIGENCE Paul Gray CIO Breakfast Round Table 9-11-08

Aims Of This Talk To tell you what the shouting is about Help you decide whether business intelligence is: Simply a new name A repackaging of DSS in a more appealing wrapper The true future of decision support Examine the ROI from BI and CI Examine the impact of Web 2.0 Examine business considerations

To tell you what the shouting is about

Help you decide whether business intelligence is:

Simply a new name

A repackaging of DSS in a more appealing wrapper

The true future of decision support

Examine the ROI from BI and CI

Examine the impact of Web 2.0

Examine business considerations

Definition Of BI Systems Business intelligence systems combine: Data gathering Data storage and Knowledge management with Analysis to evaluate complex corporate and competitive information and present the results to planners and decision makers. Objective: Improve timeliness and quality of the input to the decision process

Business intelligence systems combine:

Data gathering

Data storage and

Knowledge management with

Analysis

to evaluate complex corporate and competitive information and present the results to planners and decision makers.

Objective: Improve timeliness and quality of the input to the decision process

Implicit In Definition Business intelligence systems provide: actionable information and knowledge at the right time in the right location in the right form

Business intelligence systems provide:

actionable information and knowledge

at the right time

in the right location

in the right form

BI Relation to Other Software Data Mining DSS/ EIS Business Intelligence Data Warehouse Knowledge Management CRM/dB Marketing Web 2.0 GIS OLAP

What BI does Strategic use Corporate performance management Optimizing customer relations Packaged standalone BI applications Management reporting of BI/CI data Tasks Creating forecasts and estimates of future direction “ What if” analysis of alternative scenarios. Ad hoc access to answer non-routine questions. Strategic insight

Strategic use

Corporate performance management

Optimizing customer relations

Packaged standalone BI applications

Management reporting of BI/CI data

Tasks

Creating forecasts and estimates of future direction

“ What if” analysis of alternative scenarios.

Ad hoc access to answer non-routine questions.

Strategic insight

Implications Ordinary reports of a firm’s performance and competitor performance (what BI software gives) is not enough. Need analysis to put it in context For too many firms, BI (like DSS and EIS before them) is still inward looking and is used only by a small subset of people

Ordinary reports of a firm’s performance and competitor performance (what BI software gives) is not enough. Need analysis to put it in context

For too many firms, BI (like DSS and EIS before them) is still inward looking and is used only by a small subset of people

BI Application Company that sells natural gas to homes builds dashboard to support Operational performance metric measurement Real time decision making Result: No. of repeat repair calls reduced saving $1.3 million

Company that sells natural gas to homes

builds dashboard to support

Operational performance metric measurement

Real time decision making

Result: No. of repeat repair calls reduced saving $1.3 million

Return on Investment Costs Upfront cost and upkeep are high ($200/seat for Cognos) Cost efficiencies in IT can be forecast but not in BI or CI Benefits Cost reductions don’t pay cost Get new opportunities, discover problems, and avoid difficulties

Costs

Upfront cost and upkeep are high ($200/seat for Cognos)

Cost efficiencies in IT can be forecast but not in BI or CI

Benefits

Cost reductions don’t pay cost

Get new opportunities, discover problems, and avoid difficulties

Return on Investment Costs include : Additional hardware Large amt. of software Purchased external data A dependent data mart for BI Analysts and support staff Hardware, software update and maintenance User time thinking about BI outputs Benefits mostly soft; include: Hope for ‘big bang’ returns in the future (but can’t forecast them or their timing) Better understanding of the business and the competitor’s business

Costs include :

Additional hardware

Large amt. of software

Purchased external data

A dependent data mart for BI

Analysts and support staff

Hardware, software update

and maintenance

User time thinking about BI outputs

Benefits mostly soft;

include:

Hope for ‘big bang’ returns in the future (but can’t forecast them or their timing)

Better understanding of the business and the competitor’s business

Change: BI for the Masses BI tools are moving to the whole mass of knowledge workers, not just few specialists A way of closing gap between analysis and operations, moving to multiple levels in the organization Previously, typical analyst use is ‘one-off’ study Large deployments of BI include 70,000 at French Telecom, 50,000 at US Military health systems. Other examples at 20,000 users

BI tools are moving to the whole mass of knowledge workers, not just few specialists

A way of closing gap between analysis and operations, moving to multiple levels in the organization

Previously, typical analyst use is ‘one-off’ study

Large deployments of BI include 70,000 at French Telecom, 50,000 at US Military health systems. Other examples at 20,000 users

Web 2.0 Example:5 Bashups

Web 2.0 Example: GIS,BI

WEB 2.0 IMPLICATIONS Does not require much end-user skills (<20% of users in most orgs. Use reporting, ad hoc query, and online analytic processing) Web 2.0 results in intuitive interface, better data mgmt. and access Get “bashups” in std. format from variety of sources. Brings together, e.g., GIS, on-demand BI, external sources (e.g., Web) Lets businesses see value in analytics

Does not require much end-user skills

(<20% of users in most orgs. Use reporting, ad hoc query, and online analytic processing)

Web 2.0 results in intuitive interface, better data mgmt. and access

Get “bashups” in std. format from variety of sources.

Brings together, e.g., GIS, on-demand BI, external sources (e.g., Web)

Lets businesses see value in analytics

WEB 2.0 EXAMPLE Mass. Housing Finance Agency Mapping capabilities External MapInfo Software Cognos Dashboard Now used by 300 , not just 12 analysts Future: show housing units, loan data, public transportation visually on one screen In insurance: link claims and wellness data to allow employers to evaluate ROI of different programs and benefits

Mass. Housing Finance Agency

Mapping capabilities

External MapInfo Software

Cognos Dashboard

Now used by 300 , not just 12 analysts

Future: show housing units, loan data, public transportation visually on one screen

In insurance: link claims and wellness data to allow employers to evaluate ROI of different programs and benefits

CHALLENGES Data quality (governance, master data management, performance indicators) Agreeing on common data definitions, meaning of performance indicators Having right infrastructure in placed In some firms, IT’s relies on ‘name’ vendors (SAP, Salesforce.com), not small startups in BI space

Data quality (governance, master data management, performance indicators)

Agreeing on common data definitions, meaning of performance indicators

Having right infrastructure in placed

In some firms, IT’s relies on ‘name’ vendors (SAP, Salesforce.com), not small startups in BI space

WEB 2.0 BI AND THE CIO Put more capabilities in user hands. Make IT enabling infrastructure IT should allow users to get data without programming “ IT should get out of developing interfaces and become involved in data quality and data integration IT should not fight emerging BI technologies to enforce standards –Schlegel, Gartner group. Should put them into the BI architecture to avoid rogue BI capabilities Use a self-service BI strategy to reduce cost, speed delivery

Put more capabilities in user hands. Make IT enabling infrastructure

IT should allow users to get data without programming

“ IT should get out of developing interfaces and become involved in data quality and data integration

IT should not fight emerging BI technologies to enforce standards –Schlegel, Gartner group. Should put them into the BI architecture to avoid rogue BI capabilities

Use a self-service BI strategy to reduce cost, speed delivery

Competitive Intelligence “ No more sinister than keeping your eye on the other guy, albeit secretly” –Claudia Imhoff More formal definition by Society of Competitive Intelligence Professionals (SCIP) “ CI is a systematic and ethical program for gathering, analyzing, and managing external information that can affect your company’s plans, decision and operations”

“ No more sinister than keeping your eye on the other guy, albeit secretly” –Claudia Imhoff

More formal definition by Society of Competitive Intelligence Professionals (SCIP)

“ CI is a systematic and ethical program for gathering, analyzing, and managing external information that can affect your company’s plans, decision and operations”

Definition Of CI In Practice CI ensuring marketplace competitiveness Through understanding: -competitors - over-all competitive environment -------- Can use whatever you find in the public domain to make sure you’re not surprised by your competitors.

CI ensuring marketplace competitiveness

Through understanding:

-competitors

- over-all competitive environment

--------

Can use whatever you find in the public domain to make sure you’re not surprised by your competitors.

Examples Of CI Comshare bought a competitor after monitoring the competitor’s hometown newspaper Texas Instrument made $100m acquisition by figuring out competition’s potential bids Merck developed counter-strategy about competitor’s upcoming product, saving $200M

Comshare bought a competitor after monitoring the competitor’s hometown newspaper

Texas Instrument made $100m acquisition by figuring out competition’s potential bids

Merck developed counter-strategy about competitor’s upcoming product, saving $200M

Sources of CI Government information Online databases Interviews and surveys Special interest meetings such as SIM Competitors, suppliers, distributors, customers Media (newspapers, journals, wire services, financial reports, speeches by executives bragging about their firm)

Government information

Online databases

Interviews and surveys

Special interest meetings such as SIM

Competitors, suppliers, distributors, customers

Media (newspapers, journals, wire services, financial reports, speeches by executives bragging about their firm)

Competitive Intelligence Tools Simulations to test ‘what if’ conditions Data mining about competitor & firm Track patents to assess competitor technologies Scan public record, Internet, press release, mass media Talk with customers, suppliers, partners, industry experts, sales people

Simulations to test ‘what if’ conditions

Data mining about competitor & firm

Track patents to assess competitor technologies

Scan public record, Internet, press release, mass media

Talk with customers, suppliers, partners, industry experts, sales people

Notes on CI Problem is not lack of information but too much information Once you start CI, you try to find ways to make task of finding out about you more difficult. Get CI, CCI, CCCI, … C n I Same game is played in politics, int’l competition

Problem is not lack of information but too much information

Once you start CI, you try to find ways to make task of finding out about you more difficult.

Get CI, CCI, CCCI, … C n I

Same game is played in politics, int’l competition

BI Market Market size (IDC) $6.3 billion (2006) Trend in pre-built analytic applications because home-built systems take too long (>6 mos.) and cost too much ($2-3 million)

Market size (IDC)

$6.3 billion (2006)

Trend in pre-built analytic applications because home-built systems take too long (>6 mos.) and cost too much ($2-3 million)

VENDORS-Gartner 2008

Managerial Issues Is BI an oxymoron? BI is really about understanding your own position, your customer, your competitor An important part of planning and operations CI is a way of finding out about your market position

Is BI an oxymoron?

BI is really about understanding your own position, your customer, your competitor

An important part of planning and operations

CI is a way of finding out about your market position

Managerial Issues What do I know once I deploy BI? Capabilities available in firm State of the art, trends and directions in the markets The technologies and regulatory environment Competitor actions and their implications

What do I know once I deploy BI?

Capabilities available in firm

State of the art, trends and directions in the markets

The technologies and regulatory environment

Competitor actions and their implications

Managerial Issues What capabilities do investments in BI create? Complex corporate and competitive information for planners and decision makers Improved timeliness and quality of input to the decision process (Occasionally) major breakthrough

What capabilities do investments in BI create?

Complex corporate and competitive information for planners and decision makers

Improved timeliness and quality of input to the decision process

(Occasionally) major breakthrough

Managerial Issues How do you gather, transfer BI? BI a form of knowledge; includes both explicit and tacit knowledge Some knowledge bought (scanner data), other created internally from analysis of public and private data Must disseminate to many people in firm; customize by individual, group

How do you gather, transfer BI?

BI a form of knowledge; includes both explicit and tacit knowledge

Some knowledge bought (scanner data), other created internally from analysis of public and private data

Must disseminate to many people in firm; customize by individual, group

Managerial Issues Organization for BI? Not necessarily; both centralized and decentralized org. work What technologies are available? Specialized software packages, many still quite crude

Organization for BI?

Not necessarily; both centralized and decentralized org. work

What technologies are available?

Specialized software packages, many still quite crude

CONCLUSIONS Business Intelligence is a part of DSS but certainly not all of it. BI name gives DSS a new skin. Semantics matter The technology for BI and CI is getting better, broader, and more universally available. Web 2.0 is coming The capabilities of the DSS analyst in business improve as both structured and unstructured data grows

Business Intelligence is a part of DSS but certainly not all of it.

BI name gives DSS a new skin. Semantics matter

The technology for BI and CI is getting better, broader, and more universally available. Web 2.0 is coming

The capabilities of the DSS analyst in business improve as both structured and unstructured data grows

CONCLUSIONS BI and CI are steps along the way. They are the short-term future of DSS in the commercial world. In the long term, we will inevitably find new ways of thinking about and solving decision problems.

BI and CI are steps along the way. They are the short-term future of DSS in the commercial world.

In the long term, we will inevitably find new ways of thinking about and solving decision problems.