Business Intelligence for Process Industries: Actionable Insights for Business Decision Makers


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Read this white paper by Don Tapscott and explore the criteria best-in-class process manufacturers use for selecting business intelligence solutions. Companies that effectively harness the vast quantities of information that IT systems generate - both within the corporation and outside its walls - are poised to gain competitive advantage.

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Business Intelligence for Process Industries: Actionable Insights for Business Decision Makers

  1. 1. Business Intelligence for Process Industries: Actionable Insights for Business Decision Makers by Don Tapscott Brought to you by Business Objects (an SAP company), SAP and Intel.
  2. 2. Business Intelligence for Process Industries: 1 Actionable Insights for Business Decision Makers Executive Summary axes: (1) simplicity and relevance, (2) agility and (3) integration. FIRMS IN PROCESS INDUSTRIES have made significant investments in information technology to increase the First, new user-friendly interfaces and approaches to efficiency of their operations and supply chains. One side business intelligence provide easier access to relevant data effect of these investments has been the creation of vast and empower more decision makers. Second, new stores of valuable data. But most firms are overlooking or technology advances such as in-memory BI are providing underutilizing this potential goldmine: they’re missing new levels of performance and helping users gain real- opportunities to analyze and redeploy their data to drive time insights into their data. Finally, in a world where the the next stage of innovation and competitive advantage. logistics of a distributed, global supply chain have created To take full advantage of this data, firms need a new new opportunities to tighten up alignment between supply generation of business intelligence (BI) tools and and demand, BI needs to be integrated into business applications to integrate cross-enterprise, inter-enterprise processes and be more widely distributed. All of these and externally available information with processes to systems must rest on a solid data foundation with aligned achieve insight, transparency and competitive advantage. master data: only then is that data trustworthy, and only Enterprises that effectively harness the vast quantities of then can decision makers be confident that they have a information that IT systems generate⎯both within the single version of the truth. corporation and outside its walls⎯are poised to gain competitive advantage. 2.0 Simplicity and Relevance 1.0 Value Proposition Effective business intelligence is simple and relevant: simple so that a large number of users have access to the information through an interactive, user-friendly interface Firms in process industries such as oil and gas, chemicals, (regardless of the type or source of information), and pulp and paper, or mining today face multiplying business relevant so that users can deploy the information to challenges driven by phenomena such as globalization, address immediate issues and support business decisions. unpredictable input costs, fluctuating exchange rates and geopolitical instability. In this rapidly changing environment, companies can’t afford to be satisfied with 2.1 Simplicity traditional business intelligence systems that merely report In the past, BI implementations were often driven by on “what happened.” BI systems need to answer more sophisticated “power users” in the IT department who timely questions: “what is happening now?” and “what created reports on behalf of business decision makers. will happen in the future?” Accurate answers to these These power users were technologically sophisticated and questions for all stakeholders, both inside and outside the were accustomed to working with complex data systems. organization, will drive superior performance and Their efforts, in conjunction with first generation business competitive advantage in the future. intelligence tools, brought real advantage to their firms. In addition, today’s business imperatives mean that BI But this approach also introduced new challenges. has to go beyond its traditional role of helping to control First, the few power users were rapidly overwhelmed by and cut costs. BI data is now the basis for new growth demand for their services. As organizations became more strategies. This is true even in the process sector⎯think, data-driven and users began to see the value of their for example, of global industrial leader Rohm and Haas. business intelligence systems, they began to clamor for Mike Masciandaro, business intelligence director, agreed various new reports they required. This increased demand that “our main imperative is growing profitably. Of for reporting combined with complex tools created course, controlling costs is not off the table, but it’s too untenably long wait times for BI-driven information. much of a short-term proposition. Eventually, you’ll run Secondly, the power users creating the reports often out of ways of cutting, unless you also grow the top line.”1 misunderstood or didn’t know the context of the requests In this paper we discuss how technological advances are they received and often made inaccurate assumptions enabling improved decision making across three broad about the needs of the business decision makers. As a © 2008 New Paradigm Learning Corporation
  3. 3. Business Intelligence for Process Industries: 2 Actionable Insights for Business Decision Makers result, internal clients were unhappy with BI’s inappropriate solutions and producers of reports felt Breakout Case Study: Rohm and Haas overworked and underappreciated. Rohm and Haas is a leading global specialty materials company that operates in industries as diverse as The solution to the problem is to democratize BI: create construction, electronics, food, industrial process and easy-to-use visual and interactive tools that the average personal care. The company does business in North business decision maker can use themselves without IT America, Latin America, Europe and Asia-Pacific, and has support. We live in a world where literally billions of more than a hundred manufacturing, technical research and users interact on a regular basis with the simplified customer service sites in 27 countries, over 16,500 highly interfaces of Google and other search systems. These qualified employees, and annual sales of $8.2 billion in 2006. systems work because they present information in a visual Rohm and Haas competes through outstanding innovation in way and make the interface as simple and accessible as science, business and services, and their business possible, so that any user can ask questions and get the intelligence systems are a key component of the data-driven desired, context-sensitive answers. Business intelligence decision making that backstops their innovation efforts.2 systems are building similar easy-to-use visual and Good business intelligence is essential for Rohm and interactive tools so that all users can create their own Haas. The company buys more than two million tons of raw materials and 23 million BTUs of natural gas each year in an reports. environment of rapidly changing prices and exchange rates. One simple to use, next generation tool is Polestar, Many decisions are made on the spot with no time to available from Business Objects, an SAP company. schedule a meeting or engage in “duelling spreadsheets.”3 Whereas new reporting solutions once were only suitable Despite this difficult economic environment, the company for technically-savvy software developers, Polestar has maintained and even grown profit by utilizing their BI program to drive decision making. One senior executive enables business users to explore data without prior stated that the BI program gave the company “confidence”— knowledge of data structures or content. Polestar brings not just in the data’s accuracy, reliability and timeliness, but together the simplicity and speed of search capabilities also in the data’s usefulness for making important decisions with the trust and analytical power of BI tools, giving and getting consensus that wasn’t possible before. immediate answers to business questions. Users employ In addition to its day-to-day success, Rohm and Haas’ BI familiar keyword searches to find information hidden in program offers them another important advantage. In the data sources, and then navigate and explore directly on industries where the company competes, mergers and data—no existing reports and metrics are necessary. By acquisitions are a fact of life and Rohm and Haas is a player. increasing self-service BI and maintaining IT control, this For many firms, one of the downsides of growth through technology empowers business users to create their acquisition has been integrating business and IT. Rohm and content thereby reducing IT report creation backlog. It Haas exercises a “1 company, 1 measure” discipline that applies to existing units and newly integrated acquisitions. reuses existing security, metadata, and other services from No matter the business, the company makes investment Business Objects Enterprise, meaning it’s easy to decisions based upon the same criteria, with the additional administer and quick to deploy, often in a matter of days, benefit that employees can move from unit to unit and still thereby abbreviating time to market and expediting have a common “language.” decision making. Despite the success of their traditional BI deployment, the company is not resting on its laurels. Masciandaro is a BI 2.2 Relevance visionary, and grasps the need to consider “both our structured reporting and analytics, as well as our Enterprise In addition to the improved insight and effectiveness that Content Management, which embodies the unstructured better tools deliver, many software vendors are using data, including documents and emails all the way through industry-savvy BI experts to create templates specifically informal pieces of competitive intelligence. We need to focused on solving an industry’s business challenges. merge it all together for true business advantage.”4 These templates include pre-defined data models, queries and metrics that incorporate industry best practices. outcomes. Although the relative importance of these In process industries, for instance, virtually all firms are inputs may vary by firm, there is no doubt that all firms interested in how variations in energy prices, input costs, will be affected and pre-defined templates can shorten the exchange rates and shipping rates will affect business decision making cycle. The amount of data available in BI © 2008 New Paradigm Learning Corporation
  4. 4. Business Intelligence for Process Industries: 3 Actionable Insights for Business Decision Makers systems both inside and outside the firm today is unpredictable, and yet so little of that price volatility can staggering and it is easy to be overwhelmed by the be passed along to their customers? One answer is to use challenge of synthesizing the data to drive advantage. data to make rapid decisions and stay one step ahead of What matters most is not the quantity of data, but its the competition. Unfortunately, the large and growing relevance. quantity of electronic data can slow traditional BI systems to a crawl. One way to increase the relevance of data is by utilizing “best practice” templates to help bridge the gap between Traditional reporting solutions rely on a painstaking IT professionals and the business units they serve. These two-step process: first, model the end-user requirements; templates include pre-defined data models, queries and second, optimize the system to meet those requirements. metrics while incorporating industry best practices into the This method was once dependable but it can also be implementation process, which not only saves time, but inflexible and result in deteriorating performance when also helps the BI initiative deliver on business needs. business needs divert from the original assumptions. New technologies such as “in-memory” BI help solve this Business Objects customers that exploit the power of problem; with more (and more affordable) memory now user focused tools can also access “business blueprint” available, today’s BI solutions can process reports on the templates. These data models and templates solutions fly by loading data sets into memory, and eliminate some include a bundle of technology and industry knowledge of the old bottlenecks. that leverages SAP’s and Business Object’s substantial business knowledge, which was developed over many SAPPI’s recent implementation of in-memory years while delivering software solutions to the world’s technology was a huge success. SAPPI is a global pulp largest companies. By leveraging these “packaged” and paper company with 16,000 employees that does industry best practices, customers increase the likelihood business in more than a hundred countries around the of a successful BI deployment. At the same time, they world. The company is a leading producer of coated fine shorten development cycles and lower costs. The business paper and chemical cellulose and follows an innovation blueprint templates can act as a foundational solution that strategy. Understanding their customers’ business models individual organizations can extend to meet their specific and challenges are key to innovative responses and requirements. Specific components of business blueprint success in the marketplace. templates include: pre-defined “extractors,” large Didier Magnien is a BI director with SAPPI: quantities of pre-defined data models, master data objects, authorization roles, query views and reports⎯all of which “We implemented in-memory BI because we did have are delivered in the software. some issues with the response time of our previous system. It was a huge success. We had significant The simplicity of business user oriented tools like improvements on all of our queries, ranging from two Polestar and the enhanced relevance enabled by bundles times faster in the smallest improvement to seven to ten such as business blueprint templates are enabling solutions times faster on average, and in some extreme cases for competitive advantage. The ease of use and enhanced over three hundred times faster. We were somewhat relevance of these solutions build on the capabilities of skeptical but the implementation was smooth and the existing BI systems, thus increasing their value to the system is stable. People now have access to multiple organization. scenarios and can dive through daily, weekly, monthly data, by region, etc. Senior managers even use it at live 3.0 Agility meetings instead of paper reports to review different situations. It makes a big difference not just to the way The recent global economic environment makes it clear we access data, but how we run the company.”5 why process industries must be agile. In the Rohm and Another major global firm that implemented in-memory Haas example we saw how one firm uses over two million technology had an unusual problem. The performance tons of raw materials and 23 million BTUs of natural gas improvements were so significant that they were worried each year in an environment of rapidly changing prices that users would not believe the results. “We actually had and exchange rates. How do companies grow revenue and to warn users about the upgrade, so they wouldn’t think profits in a world where so many input prices are there was an error, as queries that used to take 10 to 15 © 2008 New Paradigm Learning Corporation
  5. 5. Business Intelligence for Process Industries: 4 Actionable Insights for Business Decision Makers minutes were now delivered under a minute. For the first tons of packaging steel yearly, serving over 400 customers time in my career, we actually had a honeymoon phase in 80 countries. Says Denker: with the business unit.”6 “We use BI extensively for planning purposes, and our planning process is very tightly integrated with our 4.0 Integration sales team and financial profit analysis. Our division decided to run one plant instead of two, so we have Business intelligence is moving beyond the “end-of-line” been at near-capacity for over five years, but we analysis and reporting function to an integrated system manage what products we produce when and for what embedded within business processes. In the past, the profit margin extremely closely. We have an reporting mechanisms that reached the end user came at optimization process that integrates the sales process the final stage of a tedious “in series” approach to business and forecasts (tons), exchange rates, cost data (direct intelligence. Data was processed, stored in the production and overhead), input from material groups and based system, and then extracted into a data warehouse in a on all of these variables we build scenarios to linear sequence. Only then was the information the end determine which orders are most profitable. So BI users require ready for analysis and reporting. The new touches every aspect of the business and this tight approach injects business intelligence “in parallel” with integration enables us to be successful.” the business processes, providing business clients with As business intelligence is integrated with business more timely access to better information about critical processes, companies can also revisit and refine existing business processes. processes. After all, accurately documenting and The ultimate benefit comes from a complete integration measuring an ineffective process does nothing to improve of the information across systems and across departments. the business. Most effective business intelligence Planning for day-to-day activities and significant events solutions will provide industry-specific resources, in the such as new product launches can now be integrated form of expertise (e.g. consultants) or specific technical across marketing, sales and other departments. The resources (e.g. templates, queries). benefits of tighter integration include⎯to start⎯ consistent and accurate information and customer messaging. Ultimately, it delivers substantial 5.0 The Payoff improvements in revenue and profitability. The challenges that process industries face are Business intelligence is not limited to senior managers; compounded in today’s volatile business environment. smart companies are distributing business intelligence Trends such as globalization, changing input costs, more broadly across their organizations. Every business complex supply chains and fluctuating exchange rates are process requires a certain amount of insight and analytics, here to stay. which should be delivered to the right individual at the To maintain competitive advantage, organizations must right time. leverage internal and external information into an ThyssenKrupp is one of the world’s largest accessible, usable medium and provide business manufacturing and technology groups. The group’s intelligence to a wider array of employees. Business 190,000 employees worldwide are distributed around core intelligence solutions will continue to evolve as exciting focus areas of steel, capital goods and services. The group new capabilities such as in-memory arrive and are adopted reached sales of more than €51 billion in fiscal 2006/2007. broadly in the market. Alongside product manufacturing, the company also Organizations that enable business intelligence solutions provides system solutions and services in five segments: that are simple, relevant, agile and integrated have the steel, stainless, technologies, elevator and services.7 potential to sustain competitive advantage in an ever- Martin Denker is in charge of business intelligence for changing world. Simple and relevant BI tools can Rasselstein, part of the ThyssenKrupp steel group. empower employees to make effective decisions faster. By Rasselstein’s 2,400 employees turn out about 1.4 million integrating real-time decision making with mission-critical business processes, smart businesses can set a path for industry leadership. © 2008 New Paradigm Learning Corporation
  6. 6. Business Intelligence for Process Industries: 5 Actionable Insights for Business Decision Makers Moving from legacy BI solutions to these next generation solutions represents a giant step forward and corporations will continue to face a choice: execute these best practices or fall by the wayside. The leaders will see empowered employees, rapid execution and adjustments to plan, resulting in bottom-line growth. I am grateful to Pierre-Luc Bisaillon and Paul Barter of the New Paradigm team for their help in researching this paper and I also thank SAP and Intel for their financial support of this White Paper series. However, the views expressed are my own and my company New Paradigm takes responsibility for the opinions expressed herein. Don Tapscott, chairman and founder, New Paradigm Don Tapscott, one of the world’s leading authorities on business strategy, is the founder and chairman of international think tank New Paradigm. Established in 1993, New Paradigm produces ground-breaking research on the role of technology in innovation, competitiveness and society. The company was acquired by BSG Alliance in November of 2007, and is expanding its syndicated research programs globally. Currently four multi million dollar efforts—The Enterprise 2.0, Talent 2.0, Marketing 2.0 and Government 2.0—investigate strategies for winning through next generation enterprises. Tapscott is the author of 11 widely read books about information technology in business and society, including Paradigm Shift, The Digital Economy, Growing Up Digital and The Naked Corporation. His most recent book, Wikinomics: How Mass Collaboration Changes Everything is an international best seller in 20 languages. It was a finalist for the prestigious Financial Times/Goldman Sachs Best Business Book award and has been chosen by many publications including The Economist as one of the best books of the year. He is also adjunct professor of management at the Joseph L. Rotman School of Management, University of Toronto. His clients include top executives of many of the world’s largest corporations, and government leaders from many countries. He holds a master’s degree in Research Methodology and two Doctor of Laws (Hon). © 2008 New Paradigm Learning Corporation
  7. 7. Business Intelligence for Process Industries: 6 Actionable Insights for Business Decision Makers Endnotes 1 Interview with Michael Masciandaro of Rohm and Haas, conducted by Paul Barter and Pierre-Luc Bisaillon, New Paradigm, October 25, 2007. 2 Rohm and Haas corporate Web site, November 2007. 3 Rohm and Haas application to the Gartner BI Excellence Awards 2007. 4 Interview with Michael Masciandaro of Rohm and Haas, conducted by Paul Barter and Pierre-Luc Bisaillon, New Paradigm, October 25, 2007. 5 Interview with Didier Magnien of SAPPI, conducted by Pierre-Luc Bisaillon, New Paradigm, September 2007. 6 Interview with Phil Nikolai of Kimberly-Clark, conducted by Paul Barter and Pierre-Luc Bisaillon, June 15, 2007. 7 ThyssenKrupp corporate Web site, November 2007. © 2008 New Paradigm Learning Corporation
  8. 8. A message from the sponsors… Enabling Better Business Intelligence More strategic IT through the intelligent use of information Today’s competitive environment is fast and fierce, marked by complex supply networks and increased consumer power. In order to succeed, companies in the process industry need to fully leverage the power of information to their advantage. No longer is it enough to leave information access to a select few; every business person needs to be empowered to access, analyze and act on trusted information, wherever and whenever needed, and in the context of the relevant business activities. That is why leading companies worldwide rely on solutions from Business Objects and SAP to provide end-to-end solutions for better business intelligence (BI). The business user is in the focal point, with an intuitive and system-agnostic solution set that delivers on even the most demanding needs. Embedded into the context of business activities and work environments, information is immediately relevant and actionable. At the same time, IT can focus on being an enabler of innovation, rather than just working overtime to just “keep the lights” on. With solutions from Business Objects and SAP, companies in the process industry get: • More effective business decison making. Simple and intuitive user interfaces foster broad adoption, while reducing IT backlog. Business users quickly access any type of information, regardless of its source. And with BI accelerator technology, response times are consistently fast, independent of data volumes analyzed or question asked, allowing IT to meet the increasing demand for real-time BI embedded into business operations. • More efficient IT, freeing up resources for innovation. The broadest solution set in the industry, combined with best-in-class capabilities, dramatically reduces the need to deal with multiple vendors. Due to inter-operability with any systems, applications or databases, investments are protected and don’t require expensive custom-integration. And by providing the right level of controls with an agile infrastructure, IT can focus on managing service levels, and does not need to manage individual users. • Faster realization of value from IT investments. Out-of-the box content and templates, across both SAP and non-SAP data sources fosters accelerated deployments of BI solutions while significantly increasing the chance to “get it right” from the beginning, as compared to pure custom-built approaches. And alternative delivery models (e.g. on-demand, appliances) provide drastically reduced setup time and lower maintenance. The result is that IT is better able to meet the information needs of business users thus becoming a strategic partner to the business. To learn more about how solutions from SAP and Business Objects can help you empower your employees to make the best-informed business decisions, visit SAP and Intel not only understand the challenges businesses face in today’s volatile global marketplace, but since 1994 they have worked together to offer a powerful set of optimized solutions on innovative platforms that help companies quickly adapt their strategies and execution. Today, more than 74 per cent of all new SAP installations are deployed on proven Intel platforms, enabling IT to become more efficient and responsive with breakthrough performance, energy efficiency, and reliability needed for virtualization and business-critical applications. With Intel solutions, companies can be more responsive, efficient and dependable using innovative, highly reliable and compatible Intel Xeon and Itanium®2 platforms that help them optimize their IT infrastructure and scale with confidence. They can benefit from: • Performance and flexibility: Build their business on scalable, flexible infrastructure that can grow with shifting enterprise demands using Intel’s market-leading multi-core processing technology. This is achieved with second generation quad-core technology based on Intel® Core™ microarchitecture and 64-bit virtualization capabilities. • Reduced operating costs: Intel’s market leading server technologies are key to building a stable and efficient IT infrastructure that will help reduce operating expenses. This is achieved with energy efficient performance, quad-core architecture, server consolidation, virtualization and reliability features. • Reliability: Intel-based servers are the foundation of a dependable IT infrastructure with built-in reliability features, uptime, virtualization and software optimization and enabling investment. © 2008 New Paradigm Learning Corporation