4 Steps to Cost-Effective Mid-Market Supply Chain Business Intelligence

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Introduction

4 Step 1: Know how and what you measure now and want to measure in the future.

5 Step 2: Know your data sources

6 Step 3: Know why and how your company will use the data

7 Step 4: Shop around

Conclusion

Table of Contents

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While the concept of Business Intelligence (BI) has been around for a while, advances in Big Data have driven a number of new solution providers into the market. This variety is good news for mid-market companies because BI has long been considered an expensive and complicated tool that could only be afforded by larger enterprises. Increased competition, however, is quickly driving prices down, features up, and expanding deployment options to meet a number of business models. And while mid-market companies stand to benefit from all these new providers, the influx of solutions has created a very noisy marketplace. This eBook will help mid-market companies cut through the clutter by providing cost-saving advice for choosing supply chain BI solutions.

Most pundits agree that BI can be a valuable tool for managing business health and conducting strategic planning, but many of these new solutions, with their flashy reports and slick marketing, can be a distraction from BI’s core purpose. Without careful planning, BI can end up cast aside as yet another failed technology tool that never delivered on its value proposition but still stuck you with the check.

Mid-market companies should consider a number of factors when exploring if and how BI can help your organization; in particular, you should explore how BI can affect the health of your supply chain operations. While not exhaustive, the following four steps can help you evaluate and select the right BI solution.

Introduction

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Existing KPI measurements

If you already have formalized KPI measurements such as a balanced scorecard, you know that even compiling that information requires a good deal of manual data gathering and chart building. Before looking at new BI solutions, evaluate your current KPIs.

Determine if your current reports are sufficient and cost efficient. Do you have future enhancements to the reports planned? Those should also be evaluated. Then determine the scope of the reports you would like covered in the BI tool. If other areas of the company — such as finance, sales or customer service — also use a balanced scorecard, you may be able to combine requirements by implementing a more centralized solution.

Informal KPIs

If you operate with more informal KPIs, it might be time to formalize your measurement system and implement some disciplined data collection and evaluation processes around your critical indicators. Formalization doesn’t have to be overly time consuming and complicated; it can be a simple, standard process that states the indicator, how often it is measured, thresholds, why it is important, the source data, the calculations required, and the department/position resources responsible.

When formalizing your informal KPIs, keep in mind -

1. Only get as granular as necessary. Many are tempted to dive deep into the details when, especially at first, a broader brush stroke can often get you 80 to 90 percent of what you need at 50 percent of the effort.

2. Don’t do the exercise in a vacuum. Involve employees at all levels and in all affected departments to ensure major needs or road blocks aren’t missed. If you have internal resources experienced with BI who can serve as a project lead, use them accordingly. If not, seek out a reasonably priced independent resource to help you formalize.

STEP 1: Know how and what you measure now and want to measure in the future. Like any system that drives decision-making and is heavily data dependent, incorrectly implemented BI can produce misleading reports and encourage decisions based on inaccurate information.

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STEP 2: Know your data sources - reports are only as valuable as the data that drives them. BI tools are designed to integrate data from multiple systems, which all must have the capacity to export that data into the BI tool. To ensure this process runs smoothly –

1. Identify each system that stores data for the reports. If the data is housed in multiple places, understand the differences between those storage units. For example, if data is maintained in an original state (non-rounded, non-truncated, etc.) in one system and differently in another, those minor translation issues, when rolled up into higher volumes, can potentially alter your reporting results. Knowing your data storage sites is especially important when complex calculations are leveraged for more sophisticated reporting.

2. Identify the data’s accessibility. You need to know the amount of effort required to export it, whether or not the export can be automated and if the export is in a format that is easily usable. If you are housing information in an IBM AS400, for example, it is more difficult to export data in IBM’s proprietary RPG format than exporting from a SQL system that can create XML or CSV files through an automated script.

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1. If you already have a formalized KPI measurement practice, it’s a good time to revisit the objective, tangible value of each metric you want to include.

2. If you measure KPIs informally, loosely mock up what you would like your reports to look like, including the data sources, how the metrics are calculated and, most importantly, the tangible decisions that can be driven by the data. The type of reports and amount of ad hoc data filtering and segmentation you need will help ‘screen in’ the vendors who are the best fit.

3. Brainstorm with key stakeholders to understand what data and reporting could be more beneficial to decision making, such as, “If we had this, we could do this.” Vet each requested report carefully by asking hard questions like, “What tangible business benefits will it provide?” Many companies have reports that provide little-to-no meaningful contribution to the organization’s decision making at any level and simply consume resources and margin.

STEP 3: Know why and how your company will use the data. Some companies work from a “wish list” rather than a “needs list” simply due to the dramatically expanded BI options. The result can be very costly, especially if the wish list includes data from less accessible systems or reports that add little overall value. Keep in mind these three steps when creating your “needs list” of reports from the system:

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1. Know that there are two basic offerings for BI, and that pricing, pros and cons will vary for each. Which will work best for your business model?

A. Stand-alone solution. Stand-alone tools tend to be more feature-rich because they’re often the provider’s primary solution focus. While not a steadfast rule, this can be the more expensive route from a licensing, implementation and ongoing cost of ownership standpoint.

B. Add-on solution. Add-on solutions are usually offered by core system providers (such as ERP vendors) as a complement to their system. Other business systems that tie multiple departments together, such as supply chain management, are also beginning to offer BI to enable better visibility and reporting of internal procurement and external trading partner performance data that flows thru their system. While not as robust as stand-alone offerings, add-on solutions—especially those that are cloud-based— are becoming far more feature-rich and cost-effective.

2. Make sure the solution is highly regarded within the BI industry. This reputation can stem from high analyst and customer grades and also from the strength of vendor partnerships: is the vendor connected with other leading corporations?

The solution should be reliable and updated with valuable features on a regular basis so it can grow and change with your business needs. It should be built on an architecture that provides the flexibility you need to make reasonable changes to your reports without incurring unreasonable development fees. This flexibility will vary based on solution, price and architecture, but you should be able to make basic modifications and segment your report data in different ways beyond its standard configuration without getting your technology partner involved.

STEP 4: Shop around. The emergence of fierce competition in the BI market means that you’re in the driver’s seat. To take full advantage, create a prioritized list of requirements to hand to your existing technology partners, and consider inviting a few new partners into the evaluation process as well. Because many good solutions are available in a variety of offerings, you have the ability to be selective when it comes to price and features. Here are five tips to help you evaluate solutions.

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3. Compare “apples to apples.” It might be a cliché, but in order to choose the BI solution that is best for your company, you need to cut through the marketing and sales lingo and evaluate solutions on a level playing field. Because each vendor wants you to believe that their solution is unique, they will often avoid direct comparisons with their competitors. If you do your homework sufficiently, you should be able to analyze each solution using a checklist or matrix with the same criteria. There are a whole host of factors that you should be considering, including –

A. Do you have the ability to create complex reports, or are you limited to just basic reports? Can the solution utilize complicated algorithms to produce outcomes that you need?

B. Does the solution have a dashboard with a powerful user interface? Will your current employees need extensive training to learn how to operate the new system?

C. Can multiple departments link to the system? Does the dashboard provide just one view or can you have multiple views based on department login? Can you use it as centralized solution?

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4. Confirm that the solution can be deployed based on your IT environment and corporate purchasing policies. Although it’s historically been an on-premise offering, BI is increasingly available in the cloud. Both have pros and cons –

A. On-premise, perpetual license solutions come with higher upfront costs and generally higher total cost of ownership because internal resources are often required for maintenance and upkeep. Software upgrades can be included in maintenance, but implementation of the upgrade is usually a fee-based services engagement. With on-premise licensing, you’ll need to procure the hardware and additional operating system/database licensing to run the solution. On-premise solutions have traditionally been the most secure; however, because cloud security is rapidly reaching parity, security is becoming less of a differentiator for on-premise systems.

B. Cloud-based, subscription (i.e., license lease/rental) solutions come with lower up-front costs and generally lower total cost of ownership because you do not need to purchase hardware and internal resources are far less involved in ongoing maintenance. Upgrades are typically included in the subscription pricing, and if the solution is multi-tenant, implementation is usually faster and at a lower cost than on-premise solutions because the data integration connectors are typically pre-built and often require only minor modifications. Some cloud-based offerings do, however, offer a lower level of configuration of standard reports and customization.

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5. Learn the hidden cost areas to address during negotiations. It’s easy to be seduced by the seemingly rock-bottom up-front prices offered by some vendors, but when choosing a BI solution, you need to assess the total cost of ownership. In other words, don’t just compare off-the-shelf prices; instead, focus on what the solution will cost you months and years down the road. Total cost is determined by a number of factors, including:

A. How much will implementation cost — is it a fixed fee or time and materials?

B. Will you have to allocate resources for training so that your employees can effectively use the BI solution?

C. What about licensing and/or subscription fees — are those one-time or ongoing costs?

D. How much, if anything, will it cost to upgrade the system?

E. Will you need to hire an IT professional to maintain the system’s technology, or an operations specialist to create and package the reports?

F. Can you build the reports in-house, or does your vendor need to be involved for each one?

G. What levels of ongoing customer support does the vendor offer, and how much do those vary in cost?

All these questions should be taken into account when you sign on the dotted line for your new BI solution. If they are not, you could face mounting costs down the line that could undermine the savings and efficiencies that the BI solution was going to offer…or worse. Once you’ve narrowed down your selections to a few possible vendors, dive into analyst research to determine what total cost of ownership really looks like. If you can, try to also speak to current customers using your potential BI solutions: they will provide the most honest and helpful insight into not only the performance of the solution but also the resources you’ll need to bring it onboard. Armed with this knowledge, you’ll have substantial leverage for the eventual negotiation process.

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BI is a valuable tool that can help assess and monitor the health of your supply chain operations. It can be used to build stronger relationships with suppliers, secure better pricing, and serve as an early warning system for issues, such as supplier on-time delivery performance, that can negatively impact customer satisfaction and your bottom line.

While on-premise, perpetual BI systems have historically been prohibitively expensive for anyone but the largest enterprises, new cloud-based solutions that are priced more appropriately for mid-market companies are quickly saturating the market. If you are

prepared and disciplined in your BI evaluation — and if you ask the right questions and come armed with answers to the negotiating table — you can find a BI solution that improves both your business operations and your bottom line.

Conclusion

To discuss a specific project, contact us at 800-324-5143. For more information about supply chain improvement, visit: takesupplychain.com/resources

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A B O U T TA K E S U P P LY C H A I NFor more than a decade, TAKE Supply Chain has been selected by leading companies across the globe for solutions that deliver increased accuracy, visibility, and responsiveness across their supply chains. We offer robust collaboration and data collection solutions that leverage existing and emerging technology to support the increased challenges of expanding global supply chains. Together with our customers, we are regular recipients of supply chain industry awards for technology, value, and innovation.