Wednesday, December 3, 2008

The Value of BI in a Weak Economy


Today, Michael Corcoran published a very nice article in The Data Warehousing Institute (TDWI) called The Value of BI in a Weak Economy, where he talks due the financial situation, the CIOs must control spending and many of them are turning to business intelligence (BI) to derive maximum value from their existing assets. He offers several examples that demonstrate why BI is so valuable in a weak economy.

He divides the article by topics, and I would like to highlight some parts of the article:

Using Employee Metrics to Motivate Performance

One way to motivate positive performance is to make employees aware of how they compare to their peers. This information helps these workers make better decisions, and encourages them to work harder to improve their standing in the organization.

SwiftTrade, a financial services firm operating in the North American, European, and Asian markets, reveals how BI holds the key to productivity in lean times. Benson Chung, a member of SwiftTrade’s business process management team, created a BI system that automatically updates a reporting database whenever designated revenue and trading milestones are reached. Additionally, using BI technology, he has created several dynamic reports to motivate trader performance.

Using BI to Identify Cost-Saving Opportunities

One of the ways BI reduces costs is by shortening the time it takes people to get information. At the Hillman Group in Cincinnati, Ohio, a BI application is shrinking that process from weeks to minutes. Nearly 600 sales representatives use BI software to track sales transactions and see if they’re meeting quotas.

Helping a Dealer Network Reduce Costs

Few markets are experiencing economic doldrums like the U.S. automotive industry. As the industry expands to include new Chinese exporters, along with established players from Japan, Germany, and South Korea, one U.S. auto manufacturer used BI technology to create a dealer reporting system that saves $60 million each year. The system identifies excessive repair costs by monitoring how much each dealer’s warranty performance varies from the average performance of other dealers in the same geographic region.

Using BI as a Profit Center

BI can also uncover previously untapped revenue. The genesis of these initiatives is often a desire to fully analyze data about customers, products, and sales. Data visualization software can help

Consider the Commercial branch of Air Canada, which is chartered with understanding how revenue is generated for Canada’s largest commercial airline. To do its job more effectively, managers created an Advance Booking Report (ABR) that calculates revenue and yield for each of the airline’s major markets, sorted by week and month.

Air Canada used this report to answers questions such as the following: Do declines in bookings indicate a trend (such as a mitigating issue with one of the international markets)? Do we have excess capacity, or are the flights likely to be overbooked? Should our sales force investigate a bookings problem?

Air Canada’s data visualization software uses geographic displays to reveal point-of-sale data on a world map. Multiple views are just a click away simply by highlighting a specific data element. Linking interactive graphs makes it easier to detect correlations in the data. For example, they can select a time period and display a scatter plot of routes clustered according to profitability (low bookings with low fares). One more click produces a report that instantly identifies the issue in a single page. This leads to more productive meetings, better understanding of the issues, and more clearly defined follow-up activities.

Positioned for Growth

Many business leaders are looking to BI for near-term solutions, but BI delivers high-value returns on many levels. BI enables companies to work smarter, even when tight financial times mean smaller IT budgets and leaner staffs. Market-leading companies in every industry are turning to this software to stay ahead. When the economy turns—as it inevitably will—these are the firms that will be in the best position to seize the next wave of opportunities.

It is a very nice article, and I also believe that with the weak economy and recession around the world, to use BI is the right way to help companies to make decisions smarter and faster.

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