APPA 38 – Business Intelligence Solutions for the Workplace

1. APPA 38 – Business Intelligence Solutions for the Workplace

2. Agenda • What is EPM? • What is BI? • Why is it important? • How to do it? • Pitfalls • What’s coming next? • Q & A

3. What is Enterprise Performance Management (EPM)? • Corporate Performance Management (Gartner): • Methodologies, metrics, processes and systems used to monitor and manage the business performance of an enterprise. • Business Performance Management (Forrester): • It is not simply a reporting system — it is a tool for implementing business strategy, but it is of little value without the organizational commitment and cultural transformation to make it work. • Enterprise Performance Management (AMR): • It is an emerging superset of applications and processes that cross the traditional department boundaries to manage the full lifecycle of business decision-making. Common Themes: Business Intelligence, Analytic Applications, Methodology

4. What is EPM? • Not a single product • BI applications, methodologies, and change management • Linking strategy to action • Metrics (KPIs) • Information delivery, right person, right time • Process automation and optimization

5. Gartner CPM Magic Quadrant Chart (2005) Source: Gartner

6. What Is Business Intelligence? • Business Intelligence is… • A term invented by Gartner in 1992 • An integrated suite of tools that provides organization-wide reporting and analysis via role-based dashboards, delivering the right information to the right people at the right time. • Cross-functional data, both structured and unstructured data and operational systems, comes together to provide sharply focused views. • Users can navigate smoothly from alerts to interactive analysis down to detailed reports and even to the transactions all while maintaining the context that’s critical to root cause analysis.

7. Definition: What is Business Intelligence? • BI transforms raw transactional data collected within business applications into actionable information • BI delivers the right information to the right people at the right time • BI focuses on improving decision making processes • BI improves the ability of the business to manage performance versus targets at all levels • BI provides visibility to the root drivers of financial performance • BI links strategy to action • BI links people, processes, and information

8. Challenges with BI Solutions • What are my most profitable areas of improvement? • Where is the data, is it relevant? • How often is the data updated, is it current? • Who should get this information? • Is this Information good or bad? • What should users do with this information? ACTION!

9. Business Requirements: • Statutory, Operational Reports • Monthly, quarterly, vs. budget, benchmarks… • View, print, archive,… • Secure delivery with low administration • Exception Alerts • Nearing budget, out of stock, overdue.. • Get further info (guided/root cause analysis), take action,… • Analytical Views • Transform data to optimize analysis • Interactive analysis (slice & dice), find trends, find opportunities • Work Lists / workflow • Filtered lists of records that need your attention • Knowledge capture

10. Innovating: Performance culture, Tiered objectives, Senior executive driven Integrating: Executive/Manager Accountability, Bottom Line Performance, Integrated Metrics Operating: Departmental Metrics, Spreadsheets, Functional Driven, Tools based approach Business Intelligence – Hierarchy of Needs Optimizing: Closed loop processes, business planning, application integration, collaboration, continuous improvement John Hagerty, AMR Research: Performance Management Maturity Model

11. Proactive Notification Event Internal Controls Root Cause Analysis Operational Decisions Interactive Link to Transactions Reporting Closed Loop Budgeting & Planning Scheduled What happened? Why did it happen? What will we do about? A Portfolio of Solutions is Required * Conceptual diagram based on Business Intelligence: Key Trends and Evolving Markets, Bill Hostmann, Gartner Mid-Sized Enterprise Summit West 9/20/04

12. Business Skills Link to corp strategy Set & prioritize expectations Alter processes Interpret results Monitor results Summarize and analyze Implement change Extract data Discover and explore Store, maintain, & Integrate data Analytic Skills IT Skills Business Intelligence Crosses Organizational Disciplines *Conceptual diagram based on Business Intelligence: Key Trends and Evolving Markets, Bill Hostmann, Gartner Mid-Sized Enterprise Summit West 9/20/04

13. Market: BI is a top Priority Among CIOs 2006 CIO Technology Priorities Ranking Spending Increase To what extent will your investment in each of the following technologies change in 2006? 2005 2006 Business Intelligence (BI) 1 2 + 4.8% Security enhancement tools 2 1 + 4.5% Mobile workforce applications 3 3 + 3.9% Collaboration technologies 4 * + 3.6% Customer sales and service technologies 5 8 + 3.4% Service-oriented applications and architecture (SOA, SOBA) 6 11 + 3.2% Workflow management 7 4 + 3.2% Networking, voice and data communications 8 7 + 3.0% Virtualization (storage, computing, data center) 9 10 + 2.9% Legacy application modernization and upgrade 10 5 + 2.5% *New question for 2006 Source: Gartner EXP 2006 CIO Survey

14. Gartner BI Magic Quadrant Chart (2005) Source: Gartner

15. Market: Global Business Intelligence Market Size $10.2 billion in 2009 — 5% Compound Annual Growth Rate (CAGR) Millions of U.S. $ *2005 market sizes are preliminary Source: Gartner

16. Macro BI Market: Trends in Buying BI Software Worldwide License Revenue By Vendor Type Millions of U.S. $ *2005 market sizes are preliminary Source: Gartner

17. EPM/BI – Benefits • Makes things happen faster. • Helps instill discipline, predictability, and certainty into business processes. • Ensures the right people are always aware of the right information at the right time – and take action! • Relieves people from having to monitor information manually. • Makes multiple applications and data sources work as one. • Knowledge capture around roles • Speeds learning

18. BI Examples

19. ACTS Retirement-Life Communities, Inc.

20. HealthPartners

21. State of Michigan Screenshot. State of Michigan Test Data for Demonstration Use Only

22. Factors in BI Failures

23. What are the barriers to a successful BI implementation? • Core systems take precedence (e.g. go-live) • Executive support & funding • No champion, ongoing EPM ownership • Unclear business model / metrics • Operational issues push to back burner • Data access challenges • Lack of understanding of value • Unfamiliarity with tools, training skills • Organizational resistance to change • Expectations of cost and development effort

24. Goals and Methodology • Companies struggle to define goals for business intelligence • How should you be performing as an organization? • What are the best practices that will get you there?

25. If You’re Missing the Yeast, You Can’t Bake Bread • Struggling to assemble the right ingredients to deliver cost-effective BI results • Outside consulting • BI tools • Enterprise application integration • Report creation • Training • Role-based personalization • Etc….

26. Irrelevance • How to do irrelevant BI: • Ask questions that can’t be answered. • Provide intelligence based on bad data. • Overwhelm users with “FYI” data. • Take data out of context so it doesn’t make sense.

27. Seven ‘Fatal Flaws’ of CPM/BI • “If we build it, they will come” • “Managers need to work the numbers” • “We don’t have a data quality problem” • “Our applications vendor will deliver the best solution” • “We can get it right the first time” • “We can outsource BI/CPM” • “Just give me a dashboard” Gartner June, 2005 Bill Hostmann, Frank Buytendijk, Ted Friedman

28. Factors in BI Success!

29. 25% Median Median 20% 42% WC WC WC Median Overall HR cost per employee Overall Procurement cost as a % of spending Overall Finance cost as a % of revenue Excellence is no accident… World-class organizations operate and perform very differently than their median peers Hackett 2005 Functional Performance Data Human Resources Finance Procurement IT 1,895 -10% 0.85% 1.26% WC 9,617 Median 8,715 1,422 0.73% 0.68% Overall IT cost per end user Median benchmark client identifies $4.8 Million in potential HR cost savings per 10,000 employees Median benchmark client identifies $5.3 Million in potential finance cost savings per $1 Billion of revenue Median benchmark client identifies $1.7 Millionin potential procurement cost savings per $1 Billion of spend Median benchmark client spends $9.0 Million less per 10,000 end-users; less adept at leveraging IT to reduce labor costs Source: The Hackett Group

30. World-class organizations are far more efficient Length of plan and forecast development Strategic plan Forecast Planning and performance management cost as a percent of revenue Source: The Hackett Group

31. World-class companies focus on limited measures to reduce cycle time and improve content Best Practice Profile • Exception-based reporting • Use proportionately more leading, operational, external indicators • Budget fewer line items and budget driven by tactical plans • Forecast only major variables • Vary forecast detail with time horizon Number of budget line items 200 127 World-class Median Source: The Hackett Group

32. Information Access – World-Class performers enable efficient access to information Best Practice Profile • Consistent and pervasive use of key technologies • Common definitions • Common delivery infrastructure • Personalized delivery • Filtered content Percent of business performance reports generated from a central data repository 62% 48% World-Class Median Source: The Hackett Group

33. Data collection Data validation Report preparation Variance analysis Ad hoc analysis Forecasting Action planning More complexity results in less time to focus on value-added activities Concentration of Skills Commitment of Time by Reporting Activity Historical Reporter Insightful Analyst 11% 21% 6% 16% 14% Leader Transaction Processor 17% 15% Businesspartner Accounting Specialist Source: The Hackett Group

34. World-class companies spend twice as much time analyzing data as they do collecting and compiling data Allocation of analysts’ time for standard reports 54% 46% Median 65% 35% World Class 0% 20% 40% 60% 80% 100% Collecting / compiling data Analyzing information Source: The Hackett Group

35. Average companies are internally and historically biased… Measurement Source Measurement Perspective External operating 4.4% External financial Leading or predictive 24.0% 12.9% 76.0% 49.8% 32.9% Internal operating Internal financial Lagging or historical Source: The Hackett Group

36. Average companies still rely heavily on spreadsheets Percent of companies using spreadsheets as a stand-alone budgeting application 54% 44% 33% Median World-Class World-Class Efficiency Source: The Hackett Group

37. Top BI Best Practice Themes: Metrics and Measurement Linked to Strategy Simplification & Standardization Effective Governance Consistent & Available Reporting Self Service for Information Access So which Business Intelligence best practices really matter? Hackett studies show strong correlation between use of best practices, lower BI costs and greater business value. Source: The Hackett Group

38. Top differences between Peer Group (median) and World-class performers • Commitment to strong performance • Widespread use of best practices • Constant measurement • No end to the improvement process • Strong culture of superior performance • Execute, execute, execute Source: The Hackett Group

39. Keys to successful EPM Implementations • Sponsorship at C-level • Visioning with CFO and operational VPs • Inclusion of multiple functional areas • Peer success / case studies (been done before) • Momentum • Need to attack significant pain point for pilot • Deliver value at every phase • Change management strategies • Understanding of cultural barriers • Identifying and empowering champions

40. Change Management Strategy • Understand and plan for it • What is the history of the organization? • Steady vs. Dynamic change • Average tenure • Known silos • Are any areas anticipating cuts? • Number of changes planned? • Size of changes planned? • Communication plan, rumor control

41. Lawson EPM / BI solutions • Predefined Key PerformanceIndicators and proactive notifications speed delivery of role-based dashboards • Hackett Scorecard • Benchmark against peer organizations and WC • Identify performance gaps • Scorecard annually to monitor performance Best Practices Configuration guides that map Hackett-certified best practices down to Lawson applications How does Lawson-Hackett EPM solution work? EvaluateProgress World-ClassDefined Lawson Professional Services Methodology • Trusted Lawson advisors— together with Hackett transformational consultants deliver the solution Execute QuantifyOpportunity • C-Level Vision Session • Create performance management strategy based on Scorecard results • Develop a “blueprint” of prioritized business opportunities and performance improvement initiatives Prioritize Identify ProvenPractices

42. Lawson Solution Analytic Applications Benchmarks & Best Practices Business Intelligence Platform Data Warehouse EPM Implementation Services

43. The Future of BI

44. What do we hear today About BI? • Pervasive – moving to operational • Support for agility • Support for speed • “Competing on Analytics” – Davenport, Harvard Business Review, January 2006 • Massive volumes • BI reaching customers and partners Have we really come this far?

45. The People Who Use It Don’t Think So Source: Hired Brains, Inc. research 2003-2004

46. Today Reactive, historical facts are gathered Time lagged, Analysis happens after the fact Elitist, power users only Disparate, departmental solutions Tomorrow Predictive, forward planning and modeling Near-Time / Real-Time - alerts trigger analysis during events Ubiquitous, users throughout org. Unified, integrated BI platforms, standards Future of BI

47. In the future BI will: • Go beyond your organization: e.g. supplier’s inventory of parts has dropped below safety stock level • And will have business logic: Risk of part shortage on production quantified • And be able to respond proactively: Automatically order from alternate supplier

48. Questions?