Business Intelligence Gets Smart(er)

>of research at Nucleus Research. "They're looking to
BI as a way to, with a small additional investment,
A broad range of applications for BI is helpingsqueeze additional value out of those systems."
companies rack up impressive ROI figures. BusinessBesides making data accessible, BI software can give
intelligence is being used to identify cost-cutting ideas,companies more leverage during negotiations by
uncover new business opportunities, roll ERP data intomaking it easier to quantify the value of relationships
accessible reports, react quickly to retail demand andwith key suppliers and customers. Given a corporate
optimize prices.directive to cut purchasing costs by $2 billion in 2002,
Companies are using business intelligence software forMotorola needed a consolidated view of its global
more than simple data mining. They're using it tosupplier network. It used Informatica's PowerAnalyzer
identify hot sellers, cut costs and discover newto analyze purchasing data to ensure that buyers
business.around the world were taking advantage of negotiated
IT LOOKED LIKE your average faux fish, mounted ondeals. The tool automatically alerts buyers when they
a faux wood plaque. But when you walked by, the fishexceed spending thresholds that entitle the company
would turn its head, open its mouth and start singing,to discounts.
"Don't Worry, Be Happy" or "Take Me to the River."Discover Opportunities, Drive Decisions
Pure kitsch. And as it turned out, pure gold for the TrueWithin the walls of the enterprise, there are plenty of
Value store owners lucky enough to have them inopportunities to save money by optimizing business
stock. "It was a hit," says Neil Hastie, former CIO ofprocesses and focusing decisions. BI yields significant
TruServ, a member-owned hardware cooperative ofROI when it sheds light on business bloopers, à la
7,000 or so independent retailers. "We ran out ofTruServ's gophers. Employees of the city of
them." So when the same company came out with aAlbuquerque, N.
gopher singing "I'm All Right"—rememberM, for example, used Cognos to identify opportunities
Caddyshack?—it seemed like a sure bet. "Everyoneto cut cell phone usage, overtime and other operating
thinks, 'God, this is the second fish! Let's order the hellexpenses, saving the city $2 million during three years.
out of it.' So we did," Hastie says. "We ended up withLikewise, using Brio's BI software, Toyota realized it
truckloads of gophers we couldn't give away."had been double-paying its shippers to the tune of
Fortunately for TruServ, the company had business$812,000 in 2000. Companies are also using BI to justify
intelligence (BI) software that helped it recognize theor disprove the wisdom of what would otherwise be
gopher fiasco early enough to liquidate the unwantedgut business decisions. "Too often, evaluations of
rodents and recoup some of its expenses. That abilityopportunities for growth are based on gut feelings,
to quickly make sense of oceans of data can be aestimations and assumptions because it would be too
competitive advantage, making BI software essentialexpensive and time-consuming to get hard data," says
for many companies.Nucleus's Wettemann. "BI can let you run some quick
A 2003 Forrester Research report found that 45numbers to justify that gut."
percent of companies surveyed planned to shop for BITrack What's Hot and What's Not
software this year, which explains why vendors suchTo jump-start a campaign to reduce "red zone"
as Business Objects and Cognos have seeninventory, TruServ used Business Objects to identify
double-digit increases in their revenue. With today's BIproducts that had been languishing in one of its 14
tools, business folks can jump in and start slicing andwarehouses longer than 120 days. The company fed
dicing data themselves, rather than wait for IT to runthat information into supply chain software from JDA
complex reports.Software Group, which pulled the merchandise from
A broad range of applications for BI is helpingthe distribution centers and sold it to member stores at
companies rack up impressive ROI figures. Businessor below cost. That helped TruServ save $50 million in
intelligence is being used to identify cost-cutting ideas,inventory carrying costs in 2002. Marketing managers
uncover new business opportunities, roll ERP data intoat TruServ also use BI to identify where promotions
accessible reports, react quickly to retail demand andare doing well and quickly redirect merchandise to
optimize prices. TruServ's Hastie, for example, spentthose distribution centers from areas where the
$250,000 on BI software from Business Objects andpromotion is faring poorly.
says the investment paid off in about two months.Pick the Perfect PriceHitting on the price that
Besides using it to track anomalies like the gophersmaximizes profits has long been an art, but BI's ability
through an executive dashboard, TruServ is alsoto crunch data in short order is changing that. "We're
pressing it into service as a CRM tool and is using it toable to put a lot more science into establishing
integrate data from disparate accounting systems,suggested retail prices," says Mike Altendorf, vice
which will help the company close its books two dayspresident of IT at Ace Hardware. Although stores are
earlier every month.encouraged to adapt pricing to their location, BI has
Time To Leverage That Datahelped Ace show store owners how much they could
To get at that data stuck in corporate America'sexpect their gross margins to increase if they were to
big-ticket enterprise systems, many companies areraise their prices to Ace's suggested retail. In many
turning to BI software. "We've seen a number ofcases, it was more than $50,000 annually per store.
companies that invested a lot in ERP or CRM thatAce had hoped to increase its wholesale margin by
have not necessarily seen the big returns they$19 million in one year. It actually increased by $175
expected," says Rebecca Wettemann, vice presidentmillion.