By Tobin Gilman on Feb 25, 2012
Digital data volumes are increasing tenfold every five years, yet more than 31% of executives say they are not getting the information they need to make important decisions, and 36% say their business units and functional operations are making decisions based on inconsistent information. The resulting “analysis paralysis” is costing the US economy alone over $900 billion per year according to one recent study. Many organizations are turning these challenges into competitive advantage. What are the issues and how can analytics help provide a competitive edge, and drive continuous performance improvement?
Challenges in Managing Business Performance
There are a number of fault lines that interrupt the continuous flow of business processes in the enterprise. The primary focus of ERP, HCM and CRM systems has been to simplify and standardize operational processes. These systems have been very successful over the years but in parallel, analytic systems have been developed to enable you to analyze past performance in areas such as marketing effectiveness, workforce dynamics and customer profitability. Since transaction and analytic systems were created separately, your ability to connect the dots between operational variances and root causes has been elusive.
Furthermore, planning processes have been detached from both operations and analysis. This discontinuity makes it difficult, even impossible for you to achieve a dynamic planning environment where strategic plans cascade to operational plans and forecasts in manufacturing, human resources, finance, sales and marketing. The disconnects between planning, operations and analysis are one of the main challenges of analytic systems, but they also represent one of the biggest opportunities.
While analytics has emerged as a top priority because of its ability to provide deeper insight into business performance, there are obstacles that prevent its full potential from being realized. The proliferation of analytic tools across the organization and the corresponding data silos that exist make it difficult for you to leverage best practices, collaborate across functions and confidently see one version of the truth. People need to have a single, simple way of defining KPI’s so they can quickly align around complete, accurate and timely information and spend their time solving problems instead of gathering and correlating data.
In today’s volatile economic and market environment, analytic requirements change frequently, often exceeding 50% per year. To operate as a competitive organization you must have the capability to adapt to changing business requirements. Static, inflexible systems are a drag on agile business management. You need the ability to quickly visualize the status of performance that’s relevant to your role regardless of location – at your desk, in the factory or on the road – and have the confidence of knowing that you’re seeing current, accurate information.
Evolving from Efficiency to Effectiveness to Transformation
Given these daunting challenges, how do you get started and what's the best strategy for building an analytic roadmap for your company? Oracle believes that there are three major stages in deploying analytics. First, focus on improving operational efficiency by making insights pervasive and consistent across the organization while lowering total cost of ownership. Second, analytic initiatives should aim to increase the operational effectiveness of decision makers. Beyond gaining insight, operational effectiveness is about cascading strategy into operations, and creating more dynamic financial and operational plans that react and respond to a changing environment.
Third and most important, when deployed strategically analytics can be transformative for your company. When linking insights to action, decisions can be optimized and advantage can be created. By combining unstructured data with data warehouse, new insights and patterns can found. And through engineered systems new analytic applications can be created with extreme performance advantages.
Efficiency – Doing the Current Things Right
BI Platform Standardization. To create greater operational efficiency you need to standardize on an enterprise platform that can meet the diverse and continuously changing needs of your organization. The Oracle BI Foundation integrates the capabilities of multiple BI tools into a single, unified technology platform that supports the full spectrum of analytic requirements, including reports, dashboards, scorecards, scenario analysis, and ad-hoc query and analysis.
A unique Common Enterprise Information Model centralizes all metrics, calculations and assumptions which provide your users with confidence in the data, because the definitions are consistent regardless of where or how the information is accessed. Your users are insulated from the complexities of traditional BI tools enabling “self-service BI” which minimizes their reliance on IT to generate reports.
Workforces are increasingly mobile and the demand for access ‘on the go’ is exploding due the popularity of the Apple iPad and other tablet devices. In a recent report, Gartner estimates that over the next several years more than 33% of BI information will be consumed on mobile devices. Oracle identified this trend long ago and includes mobile capability in the Oracle BI Foundation. Unlike pure-play mobile BI vendors, Oracle’s solution shares common metadata, common definitions, and common infrastructure across web and mobile devices, meaning that you can see exactly the same information regardless of where you want to go.
Effectiveness – Doing the Right Things
Enterprise Performance Management. Core to improving operational effectiveness is linking strategy with execution. Leading companies have turned to Enterprise Performance Management (EPM) solutions to achieve this objective. Oracle leads this market with the most complete suite of EPM applications that span strategic, financial and operational planning areas.
Customers in all industries use EPM applications to drive agility and alignment into their enterprise planning processes. Annual financial plans are informed by strategic assumptions. These include product, customer, and business unit profitability models that can be created using Oracle’s cost management and profitability application. Through direct integration with ERP systems, baseline plans, forecasts and monthly updates can be informed by up to the minute actual information from the general ledger. Top down and bottoms up approaches can be reconciled and rolling forecasts provide more meaning to variance analysis. Additionally, Oracle has extended our enterprise planning solution to address the specific needs of workforce planning, capital asset planning and project planning. These modular solutions directly integrate with Oracle’s financial planning application to ensure that plans are connected and aligned to support the ongoing operational needs of your company.
Packaged Analytic Applications. Another key attribute of improving operational effectiveness is to challenge conventional wisdom and not build data warehouses from scratch. Although every company has unique reporting and analysis requirements, many can be addressed through packaged analytic applications.
The basic analytic requirements of your finance, HR, sales and procurement teams typically do not vary widely among different companies or industries. For example, finance departments in nearly all private and public sectors need to continuously monitor trends and variances of general ledger accounts, receivables, fixed assets and payable. Oracle is the only vendor that offers a comprehensive family of more than 80 packaged analytic applications for every major business function.
By using Oracle BI Applications, finance professionals have visibility into operating expenses, account balances and purchasing patterns. HR professionals can gain insights into global headcount status, attrition rates and the effectiveness of learning programs. Procurement and Operations professionals can track supplier performance and inventory trends, trade discounts and warranty return costs. In marketing, your managers can monitor the efficacy of promotions and campaigns and make adjustments to maximize success rates. Your sales managers can more effectively forecast revenues and transactions, manage pipeline and track key opportunities. Service teams can optimize call center and depot staffing levels, identify problem areas that need attention, and respond more effectively to customer service call volumes.
All of Oracle’s BI Applications are built on the Oracle BI Foundation, and are pre-integrated with Oracle ERP and CRM applications. Each application features dashboards, metrics, KPI’s and derived calculations based on industry best practices from over 3,000 deployments. Each application can be deployed individually or together, as each module conforms to a common enterprise data model.
Transformation – Doing New Things
Intelligent Business Process. To reach a transformative level you will need to consider a way of linking your planning and analytic systems with the operational systems that run the business on a daily basis. Oracle’s analytic strategy enables you to create an Intelligent Business Process that is connected and continuous. It supports all three aspects of performance management including shaping strategy through financial and operational planning, taking action to execute the strategy across the business operations and measuring the results to enable fact-based decisions and continuous improvement.
Delivering on the promise of the
Intelligent Business Process requires that analytics be tightly integrated with
operational processes. IDC coined the term “Closed Loop Analytics”, describing this
type of integration but until recently, the promise has not been
fulfilled. Conventional BI platforms can
deliver insight in the form of dashboards and reports, but in order to take
action based on that insight, you typically need to leave the BI environment
and enter some other system. Oracle has
introduced an innovative new capability the Oracle BI Foundation that breaks
down the traditional walls between analysis and execution by allowing you to
initiate actions, such as workflows and notifications, directly from your reports
and dashboards. This direct connection of insight with action has also been
built into Oracle’s Fusion Applications as a core capability. The compelling
result is that your business process is now continuous – you can discover
variances, drill to root cause, assess alternatives and initiate action all
within the same system – and confidently move forward with the right action at
the right time.
Visualization. Linking cause and effect, identifying patterns buried in massive databases has been the purview of statisticians and business analysts. Visualization tools have provided partial solutions but are constrained by data capacity or memory. To overcome these challenges, Oracle developed the industry’s first engineered system which combines analytic software, an in-memory database and hardware platform all built, tested and optimized together. Unlike stand-alone data discovery tools, Oracle Exalytics provided extreme performance and unconstrained visualization allowing users to navigate and explore information at the speed of thought.
Data. It’s estimated that 95% of the worlds’ data is
unstructured, which is driving the need to store, combine, access and analyze
this “big data”. Whether it’s social
media activity, web logs, warranty claims, call center activity, movement of
assets with RFID tags or sensor data, the need to gain insight on these new
sources is growing. Oracle offers the
broadest portfolio of solutions to help you acquire, organize analyze this
diverse data alongside your existing enterprise to find new insights and
capitalize on hidden relationships. The
Oracle Big Data Appliance is the first engineered system optimized for
acquiring, organizing and loading unstructured data into Oracle Database
11g. Oracle R Enterprise allows you to
run existing R applications directly against data stored in Oracle Database
How Oracle Can Help
To address the complex challenges associated with driving improvement in business performance, Oracle’s analytic strategy enables you to progress from operational efficiency to operational effectiveness to business transformation. This strategy incorporates a powerful and flexible BI Foundation which supports an extensive range of analytic needs, packaged analytic applications based on business best practices, and EPM solutions that link strategy with execution. It lets you access data from all types of sources, consume information when and where you choose, and expand or customize your analytic environment based on business requirements rather than on technology restrictions.
What does it mean? By establishing a
reliable and open foundation, you can get information when you want it,
visualize results and trends in the right context, and have the confidence of
knowing that there is one source of truth. By creating an Intelligent Business
Process, you will connect strategy with operations and analysis, and move
towards fact-based decisions. This approach is the basis for continuous
improvement and for increasing the competitiveness of your organization in a
rapidly changing world.