Running the Numbers
Business intelligence delivers speed in a world where offerings on the Web can be changed in minutes and last month's sales report is worthless. "There's the whole need for speed to market, to introduce new, creative products and services," says Mike Schroeck, managing partner of the iAnalytics practice at PricewaterhouseCoopers. "Analytics can help companies identify areas to pursue, which customers to target. And most important, it can show them the impact or payback from introducing a new product or service in a manner timely enough that they can refine and adjust their strategies."
Companies are discovering that the information itself has value. Owens & Minor Inc., a Fortune 500 distributor of hospital supplies based in Richmond, Va., introduced a BI system from French software vendor Business Objects SA, in 1996 to better understand the flow of products from its suppliers to its customers; the system was eventually deployed to 700 of its 3,000 employees. It has been able to ferret out redundancies, reducing the company's total number of suppliers from 3,300 to 1,400 and the number of products it handles from 300,000 to 170,000. That saves millions in inventory costs.
Two years later, Owens & Minor realized that it was sitting on gold that its 4,000 customers, mostly hospitals, could mine. So it rolled out an extranet, offering versions of the same data it was using internally. Now a hospital chain can determine, for example, that its various units are buying 10 different surgical gloves from 10 different suppliers and consolidate that in one contract for a better price.
"We sell a subscription to this service," says Don Stoller, director of information management at Owens & Minor, "and it helps cover our costs. But the biggest revenue generator is the retention of customers and new business we're able to bring in because of this service. It's a real eye-opener for our customers. They can save a lot in no time and get a return on their investment in our little monthly fee." Stoller adds that because his company was the first to market this type of service, "we were ahead of our competition, and it's forced them to follow us."
BI software uses a Web interface that anyone who can navigate Yahoo! can use. If you want the data displayed as charts or maps, just click. The system will even send alerts to your PDA or mobile phone. Bart Foster, senior vice president for worldwide marketing at Informatica Corp., a BI vendor in Redwood City, Calif., says he probably sits at his desk 10 percent of the time; the rest of his days he's in meetings or on the road. So he programs thresholds for key metrics into the software. One is how many sales leads are generated in a week. Every Monday morning the system checks the number, and if leads have fallen to 80 percent of the goal, it sends an e-mail to his wireless PDA or calls his mobile phone and leaves a voice message.
"Here's another one," Foster says. "This one really freaks people out. I watch the aging of leads in the telebusiness pipeline. If a lead has not been followed up in 30 days, I get an alert with the specifics. So I can call the head of telebusiness and say, 'What are you guys doing down there?' That kind of stuff used to be quarterly, at best. It begins to change the way you behave. Good stuff happens. It's all about metrics-driven management. What the best companies have done manually and are increasingly automating is being clear about the metrics you want to use to run the business, and then getting the metrics in the hands of people. It's that simple. But it's not so simple to do." That's because, notes Foster, people are involved.