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Decisions – Dawn of the New Data

New system – Metapraxis
Old system – Spreadsheets

When Argos FD Steve Robinson joined the company from the UK retail group Kingfisher in 2001, he found the finance and trading areas swamped by raw data. People lacked the facility to discover in a timely manner the fundamental business issues locked up in the data.

One of the key management goals in a company such as Argos is to understand the nature of immediate past sales and the drivers behind those sales figures in order to build tomorrow’s performance. Trying to handcraft analysis using spreadsheets is too slow when the raw data is based on sales volumes on the scale that Argos generates.

Robinson also found weaknesses in the information tools supporting the store operations area at Argos. The existing systems were unable to support adequately the performance dialogue between regional, area and store managers.

The project
A practical feasibility study was carried out in autumn 2002 to create indicative analyses of current monthly and weekly Argos data. Next came a Proof of Principle assignment to create a prototype facility for a hands-on analysis workshop in January 2003. This went down well, but further work was needed to refine the analysis and to define robust processes for updating and distributing the business intelligence facility. Metapraxis was commissioned to complete the full implementation, completed in June 2003.

The Metapraxis Empower 2000 Performance Visualisation Edition software sits on top of an Oracle database and Business Objects data analysis tools to provide a visual analysis of daily source data. The visual system provides guidance on key business objectives that are supported at every level in Argos. According to Robinson, the outcome has been a solid contribution to enhanced profitability, improved cash flow, increased shareholder value and better performance on non-financial indicators as well.

New system – GEAC/Comshare
Old system – Spreadsheets

Cairn Energy is an Edinburgh-based independent public company specialising in oil and gas exploration. According to Robert Scriven, finance manager at Cairn Energy, the company realised it did not have the control, visibility and flexibility it needed over essential management data because of the day-to-day difficulties in maintaining an elaborate system of linked Microsoft Office documents and spreadsheets across multiple geographic locations. The dynamic nature of the sector requires forecasting and analysis that can respond rapidly to the changing business environment. Cairn set up a shortlist of 10 suppliers.

The project
The rollout was done as a phased process, with the management reporting module delivered first in March 2004, followed by the forecasting and budgeting models. The system aims to provide a single management information facility to increase access to critical information with the aim of enhancing responsiveness.

In addition to the improvements in forecasting, budgeting and reporting, Cairn Energy expects to see improvements in its scenario modelling and manpower planning capabilities. “We will be able to get a better understanding of the impact of a range of strategies across the business. We will be able to focus on more detailed strategic analyses and reviews,” Scriven says.

Robert Scriven, finance manager

“The GEAC/Comshare system was the only one of the 10 solutions we evaluated that could address all our key requirements: replicating and enhancing our existing business models throughout the group, satisfying our workflow control and delivering individual reporting capabilities to end-user desktops.

“We want the benefits of live, single-click forecasting so that the impact of changes in assumptions or conditions are seen throughout the application immediately. Our aim is to increase the speed and flexibility with which we produce reports and forecasts.

“We have finance managers, operational managers and budget holders throughout the UK, India and Bangladesh. The software provides us with one central place for management information, allowing staff in all locations access to the same information. This produces better buy-in to the budgeted figures, and smoother, faster budgeting, forecasting and reporting.”

New system – Hyperion
Old system – No overall view obtained

Johnson Matthey is a world leader in precious metals and high-value chemicals. The company has four divisions – Catalysts and Chemicals, Pharmaceutical Materials, Precious Metals, and Colours and Coatings. It has operations in 34 countries and employs 6,500 people.

The project
Management wanted a detailed split of all the group’s major customers worldwide. Getting this information took several weeks and a great deal of work. It highlighted weaknesses in the information systems supporting consolidated information gathering. Key factors in the buy decision were that the business intelligence system should require little or no IT maintenance and should integrate well with existing systems. The system is accessed via a web interface and is intuitive for users, requiring little or no training.

Tony Whitby, group systems development manager

“We are not a monolithic business – each division is run as a separate operation. Because of our decentralised approach, we have a variety of information systems in each of the four divisions. We selected Hyperion because it provided us with a way of centrally managing all of the information from these disparate systems. It serves as a kind of honest broker between all the platforms.”

The business tasks dealt with by the system are many and various, but most of them are critical determinants of success. For example, the system has a key role in the catalysts and chemicals division, which uses platinum in car exhaust catalysts at over $400 an ounce. Three monthly forecasts of inventory and materials usage are produced from customer demand forecasts. Optimising inventory usage can make a significant impact on the division’s financial performance. Savings on working capital of even a few percent have a major impact on the bottom line. According to Whitby, savings from improved forecasting in this and other areas have already covered the costs of the project. “All future benefits gained from the system are, in effect, free,” he says.

New system – Business Objects
Old system – Spreadsheets

According to David Eggleston, head of system development at West Bromwich Building Society, management grew tired of relying on lots of individual spreadsheets and reports. “We had a mishmash of systems and reports and the arguments were always over whose numbers best reflected reality. Trying to pull the information together and make sense of it all was very difficult. It meant people were focusing on the data gathering exercise and not on trying to work out what they could do with it or what it meant.

“We were geared to monthly reporting so this was the main source of much of the data, and it would be late arriving on people’s desks. Telling someone they missed their targets for last month half-way through the present month does not leave much space for corrective action,” he comments.

The project
Eggleston and his team went round the business from the CEO down to identify the key performance indicators that meant most to each person. Five main performance areas were identified and broken down into a number of individual metrics. This was assembled using consultancy from Business Objects into a visual dashboard. “It had to be simple, intuitive, and purely point and click. We used dashboards to measure performance against targets, but we also gave executives the facility to drill down to see where the danger was if a particular indicator was on amber,” Eggleston says.

The system went live in May 2004 to a handful of top executives, but it is still early days for the system. It will roll out first to the top 40 executives in the organisation. It is supported by a Business Objects data warehouse that Eggleston claims is flexible enough to feed any management information requirement that West Bromwich is likely to generate in the next decade. “We focused on building a project that could deliver in phases, with benefits coming quickly from the opening phase. We delivered a number of the key performance indicators in May and more became available in dashboard format in August. Feeds are on the previous night basis, which is timely enough for us.”

At 9am, managers can see exactly what the state of play was at 8pm the previous night, with full trend analysis and forward forecasting of pipeline business. “There have also been huge compliance benefits. We can tell exactly what the impact of any lending is on our overall commercial lending limits. We plot our risk ratio and have good visibility on internal and external compliance control information,” he says.

New system – Cognos Series 7
Old system – No overall view obtained

PMI Mortgage Insurance, based in Walnut Creek, California, specialises in private mortgage insurance in the US, Australia, New Zealand and Europe.

The system was ordered in March 2004. PMI is in the process of implementing a new framework for corporate business intelligence. The aim is to provide analysis regarding risk management as well as customer and product profitability. The system will track key performance indicators across the enterprise, including sales, operations, finance, underwriting and risk management.

Stan Pachura, vice president of e-business and strategic technologies

“Moving to Cognos will enable us to implement a new framework for business intelligence that allows us to look beyond just financial measures. A management team can’t manage what it can’t describe, and employees can’t execute what they don’t understand. We use our business intelligence facilities and our corporate business intelligence systems to identify the channels that are most used by our customers. By knowing the channels they prefer, we can enable them to improve their efficiencies and their profitability.

“For example, one of the first implementations was the use of the product to monitor our e-business channels. At the beginning of 2000, for example, we were only receiving about 14% of that business through the e-commerce channel. For calendar year 2003, more than 80% of our business was received through electronic channels. Knowing the customers that are using those channels and deploying the methods and processes within those channels which our customers prefer significantly improves our ability to partner with that customer and to increase their profitability.”

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