Take-aways from 5 years of events at Stanford:

2008 Focus: 2013 Focus:

Enterprise software

Enterprise data

Org. units & people

Enterprise software

Enterprise & big data

Org. units & people

Data management & analytics

Cross-functional data-intensive operational activities

Data tsunami impacting all functions and all industries

Creating business value with enterprise analytics

Business analytics

1. Enable direct business user access to enterprise data 2. Central analytics team for critical mass + members in each business function 3. Blur boundary between business and IT

Enterprise & Big data

Org. units & people

Enterprise software

Creating business value with enterprise analytics 2013 best practice: Focus on data

Three critical enablers:

What’s missing? - Data-centric: Data access is foundational, but not a solution in itself - Still need to enable collaboration, business processes & integration with enterprise software

Evolve paradigm to encompass all three solution elements

Expensive, inflexible functionality and data access Standardized – not a source of competitive differentiation

Enabling analytic “apps” at the organization and enterprise software layers

Current status and challenges:

Enabler #1: Connect Excel and enterprise software “data islands” Steelwedge “Enterprise Excel” interface

Enterprise software

Enterprise data

Org. units & people EXCEL! Valuable, but “non-enterprise” data and analytics - Pros: Familiar, flexible, customizable - Cons: Non-scalable, non-integrated, non-collaborative

Enabler #2: Open enterprise software data and “process enablement” to analytics Steelwedge “Open Apps” architecture

“Enterprise Excel” interface

“Open Apps” architecture

Mobile phone analogy

Carrier software

Texts

Enterprise software

Excel

Apple iOS

Apps explosion

Role and value of phone transformed

Open Apps

S&OP transformed?

Will other enterprise software providers follow suit?

“Enterprise Excel” interface

- Shortages - Inventory and liability - Poorly utilized capacity - Expediting and overtime

Profits

Revenues

Costs

Material cost

Write-downs

/ write-offs

Inventory

holding costs

Income statement

Profits

Revenues

Costs

Material cost

Write-downs

/ write-offs

Inventory

holding costs

Income statement

Assets

Inventory

Balance sheet

LiabilitiesMaterial liabilities

CapacityAssets

Inventory

Balance sheet

LiabilitiesMaterial liabilities

Capacity

Too much Cost

Too little

- Ours - Customers - Suppliers - Commitments - Coordination

Plan Reality Operating

performance

- Re-planning - Re-coordinating - Constraints - Fire-fighting - Cost and conflict - Damaged relationships - Income statement and

balance sheet impact - Lack of control - Lack of accountability

It’s an Uncertain World

Financial performance

Plans and performance management based on “best guess” forecasts create risk and lost opportunity

AZTRAL

Range Forecasts and Planning: What is the right type and amount of flexibility?

“Bucket” at end of “supply chain pipe”

Inventory

“Supply chain pipe” Capacity

Materials Production

Finished goods

Forecast accuracy lower further in future

Planning flexibility should be sized to match forecast uncertainty - Unless forecast accuracy = 100%, flexibility is required to match supply and demand

90th

75th

25th

10th

Forecast error percentile

Benefits of proactively planning for forecast uncertainty:

AZTRAL

- Ability to capture opportunity - Reduced risk and liability

Range Forecasts and Performance Management

1. Create “menu” of performance alternatives for key stakeholders 2. Agree on best choice and establish alignment and accountability

Demand Demand

Vs.

“Risk aware” S&OP process:

“Range” performance management

Plan

Demand

Today: Flying blind

Service level 98%

Inventory $2M

Cost $11M

Gross margin $3M

Liability $1.2M

Low Plan High

?

?

?

?

?

?

Service level 98%

Inventory $2M

Cost $11M

Gross margin $3M

Liability $1.2M

Low Plan High

?

?

?

?

?

?

Service level 100% 99% 97%

Inventory $2.2M $1.8M $0.3M

Cost $8.3M $11.3M $13.7M

Gross margin $2.5M $2.9M $4.1M

Liability $2.1M $0.8M $0.3M

Low Base High

Service level 100% 99% 97%

Inventory $2.2M $1.8M $0.3M

Cost $8.3M $11.3M $13.7M

Gross margin $2.5M $2.9M $4.1M

Liability $2.1M $0.8M $0.3M

Low Base High

Service level 100% 99% 95%

Inventory $3.1M $2.0M $0.1M

Cost $8.0M $11.0M $13.4M

Gross margin $2.6M $3.0M $3.8M

Liability $2.5M $0.8M $0.3M

Low Base High

Service level 100% 99% 95%

Inventory $3.1M $2.0M $0.1M

Cost $8.0M $11.0M $13.4M

Gross margin $2.6M $3.0M $3.8M

Liability $2.5M $0.8M $0.3M

Low Base High

Benefits of including forecast uncertainty in performance management: - Quantify and manage performance risks and trade-offs - Ensure “no surprises, no excuses” alignment and accountability

AZTRAL