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The Face of IntelligenceBy David Baum
Learn how companies get the right information at the right time with Oracle Business Intelligence.
As Published In
March/April 2006
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Business intelligence (BI)
applications traditionally have been the province of
highly trained analysts responsible for financial
reporting and analysis activities. No more. Today's
organizations are deriving more value from their BI
investments by extending actionable information to many
types of employees, maximizing the use of existing data
assets, and embedding the results in highly accessible
portals and dashboards.
"BI is no longer focused on just
a small number of power users and producers of BI
applications," says Keith Gile, a principal analyst
covering BI at Forrester Research. "Large audiences of
business decision-makers are learning to take advantage
of BI applications in the context of their everyday
jobs. These casual users don't have the time or
inclination for data mining and OLAP [online analytical
processing]. They want to obtain reports, they want to
use dashboards, they want to see visualizations—ideally
through self-service applications."
Value in Information
Gile makes a distinction between
"BI professionals," who are trained in ad hoc reporting
and analysis, and "information consumers," who simply
need information to complete a particular task. The more
consumers of information an organization has, the
greater the value it obtains from its BI
initiatives.
For example, Etos, one of the
largest retail drugstore chains in the Netherlands,
depends on an operational BI system to help buyers at
430 retail stores make informed merchandising decisions.
The Oracle-based system improves coordination among
personnel at its head office, delivers inventory
information to warehouse managers at its distribution
center, and supplies sales reports to many types of
employees within its stores and at its headquarters.
Etos previously depended on a
fragmented BI system that only a few dozen professional
analysts could use. Its new BI system—called
Entrée—expands the user base to more than 500 people
throughout the Netherlands. "Managers at headquarters
now have an up-to-the-minute picture of how every part
of the retail business is performing, which has aided
accountability and helped shape strategy," says Harm
Harmenzon, manager of business information solutions at
Etos.
Etos created Entrée using Oracle
Warehouse Builder, Oracle Database, Oracle Portal,
Oracle Reports, and Oracle Discoverer. The company
maintains 48 months of historical data in a data
warehouse created with Oracle Database 10g.
"Because all the data is accessible through a central
portal, we now have far more information available to us
about our retail business than ever before," says
Harmenzon. "This has led to precision trend analysis
while making it easy to control access to confidential
information."
For example, Etos' category
managers are better able to compile product ranges for
each store or to see which products are selling well in
any particular region. Store managers can see how shelf
position affects sales. The logistics department has
greater insight into stock history and weekly turnover
rates, which enables the purchasing department to refine
its buying policies. What's more, by including employee
information in the data warehouse, the personnel
department can monitor statistics such as absenteeism by
product category to make sure that they always have
floor coverage in high-value departments.
"Competition is very fierce in
the health-and-beauty sector in the Netherlands," notes
Harmenzon. "When prices drop, we can maintain
profitability only if we keep costs in hand. By
carefully monitoring inventory and turnover, we are able
to save several million euros in stock value."
Leveraging Data Assets
Etos is just one of thousands of companies that has turned to BI technology to analyze a growing volume of information. And while data warehouse projects sometimes involve huge investments in proprietary technology, smart organizations find ways to work with their existing information systems to minimize capital expenses.
The City of Charlotte, North Carolina, is a good example. Like most local municipalities, the City has a tightly constrained budget for new development initiatives. "Cost plays a paramount role in systems and tools selection, and all IT projects are subjected to a rigorous needs analysis," confirms Jim Raper, manager of data administration at the City of Charlotte. "If an alternative is very costly, it will most likely not be selected."
Raper believes that tight budgets make for innovative IT solutions. Using low-cost software components and existing databases, he is helping the City migrate from an obsolete reporting strategy into one where BI is provided in a self-service model to decision-makers in multiple departments and agencies. Data extraction, transformation, and load (ETL) tools from Oracle make it possible.
"We have a very open architecture for data warehousing and BI, partly because Oracle Warehouse Builder 10g works so well with third-party databases," Raper says. "Oracle Warehouse Builder performs the heavy lifting with our ETL processes, and it minimizes costs by delivering data to a variety of end-user tools."
Oracle Warehouse Builder 10g is a complete environment for the design, population, and management of data warehouses. As a heterogeneous ETL platform, it allows organizations to work within the constraints of their existing information systems. For example, the City of Charlotte depends on large, mission-critical Oracle-based applications, many smaller Microsoft SQL Server-based applications, financial data stored in Virtual Storage Access Method (VSAM) files, and other file-based data systems.
Oracle Warehouse Builder reads data from these data sources, extracts the desired records, transforms the data into the required form according to user-defined data and process flows, and then automatically builds an infrastructure for reporting and analysis by leveraging the unique features of Oracle Database, such as dimensions and star schemas. It's a mature ETL offering that's considered a leading ETL solution by industry analysts.
Getting All The Information
As the City of Charlotte has learned, ETL processes are essential and continuous, since accurate reporting and analysis requires data to be continually refreshed. Taking care to set up a flexible data architecture pays big dividends in the long run. "Our data warehouse is populated from multiple sources, and we have three business-specific data marts that are in production," explains Raper. "We picked Oracle Warehouse Builder for our ETL tool and Oracle as the database for our central data warehouse for both technical and cost reasons. In our evaluation testing, the total ETL throughput rate, using Oracle Warehouse Builder and an Oracle target, exceeded our minimum requirements by a factor of 10."
Another reason the City picked Oracle Warehouse Builder was the ease of developing and managing ETL procedures. "Our DBAs can schedule jobs through Oracle Enterprise Manager, so they don't have to worry about learning a lot of new procedures," Raper adds.
The City of Charlotte looks forward to deploying Oracle Warehouse Builder 10g Release 2, mainly for its enhanced profiling capabilities. "This new version of Oracle Warehouse Builder will help us scope out the transformation requirements up front, such as how much data cleansing we will have to do and what kinds of transformations will be required," Raper says. "This will allow us to accurately estimate how much work will be involved in pulling new data sources into the data warehouse."
Improving the Bottom Line
In an October 5, 2005, CIO Insight survey, four out of five BI users said that BI technology has had a measurable impact on their bottom line. While all of the respondents said that BI is critical to business strategy, a third of them admitted that they were not satisfied with the information gathered from their BI systems. About half of those surveyed said that BI boosted their revenue by optimizing pricing, identifying business opportunities, or improving cross-selling scenarios.
Translated: BI is working, but there's room for improvement.
One of the ways to improve usability and reduce costs is to leverage internet standards to distribute and display information, such as focusing on generating HTML production reports rather than performing client-side interactive analysis. Web-based BI portals further reduce infrastructure costs and make it easy to control access to confidential information-two factors that motivated dthree, an online marketing management company, to adopt Oracle Database 10g Enterprise Edition with the OLAP and Data Mining options.
dthree's charter is to find alternative ways to build brand awareness and nurture customer relationships using the internet. Within this emerging market, where the online experience is married with information, dthree's BI expertise is a calling card for attracting premium clients such as global beer and soft drink company InBev and global manufacturer Johnson & Johnson.
"Online marketing is exploding while traditional channels such as television advertising and direct mail are in decline," remarks Paven R. Bratch, chairman of dthree, which is located in Mississauga, Ontario, Canada. "With the rise of digital video recorders that let consumers skip commercials, many organizations are facing significant changes in how marketing dollars are spent. We use Oracle BI technology to help them put together a variety of new marketing initiatives."
According to Igor Nesmyanovich, dthree's CIO, traditional marketing organizations typically don't have the expertise to devise truly interactive Web sites-let alone to effectively use the data they gain from their customers' online experiences. dthree helps these clients create, manage, and promote online experiences that build lucrative, long-term relationships with these customers.
"On the internet, we can not only reach a wide audience for a comparatively low cost; we can also deliver different messages and formats to different segments," explains Nesmyanovich. "We use Oracle Business Intelligence technology to personalize the message and deliver it selectively, as well as to understand how different groups react to different content."
dthree helps clients design and implement personalized marketing campaigns, deliver them through multiple channels, and analyze the results. The foundation of dthree's services is a software platform called IntelliMaxx that uses Oracle BI technology to acquire and employ consumer insights. Within IntelliMaxx, Oracle technology underpins the back-end database and ETL activities as well as front-end reporting, analysis, and identity management functions.
"BI is the heart of the IntelliMaxx system," says Bratch. "Customer insights are the fuel that drives the total value cycle-anticipating consumer needs, presenting a client's business proposition, and closing the deal."
For example, dthree helps InBev manage a popular global Web site for its Stella Artois brand. "We manage the traffic, online experience, and relationship-building aspects of the site," says Bratch. "Business intelligence tools allow us to make decisions about how to present certain information to specific viewers."
Among registered users-and dthree always creates a hook to encourage registration-dthree can analyze click-stream data and apply what it learns to tailor its clients' marketing messages for distinct demographic segments. It has used this technology successfully not only to sell beer and pharmaceuticals but also to help telecommunications clients sell digital phone systems to certain segments of their customer bases. For example, by comparing certain data streams with certain business results, dthree can deliver targeted pitches based on demographics-say, small-business users or seniors living at home, both of whom seek a digital phone system for different reasons.
"We use business intelligence to figure out how to get consumers to a site as well as to determine what information to feed them once they get there," explains Bratch. "The trick is to consolidate all that we know about the consumer from online and offline data sources and then tag the consumer with a likely persona."
Evaluating the Trade-Offs
Of course, the real test of the value of any technological system is simple: How long does it take to pay off? Analysts at Forrester Research point out that even as companies spend more for BI technology, they insist that they get measurable value associated with the BI purchase-not merely technological advances ("Business Intelligence Driven By Compliance, Standardization, and Performance Initiatives," Forrester Research, April 5, 2005). "The message we're hearing from end users is loud and clear," says Forrester's Gile. "They want BI to help them do their jobs, not just report on the data."
The City of Charlotte is already seeing a payback from its equipment management division, which maintains fleets of trucks and heavy equipment for trash pickup, roadwork, park maintenance, and other activities. "We have a mandate from our city council to keep costs competitive with the private sector," explains Raper. "We have to do it better and cheaper to get the contract. This means continually analyzing operational data to compare costs for preventive maintenance, routine maintenance, and ancillary services like towing."
Each night, Oracle Warehouse Builder accesses new information about maintenance tickets logged by the City's equipment management division, so that everyone from equipment managers to mechanics can view operational expenses through a BI dashboard. In the future, the City plans to pull data from its PeopleSoft HR applications from Oracle as well, so managers can calculate exact labor costs for mechanical services. Another Oracle product, Oracle Application Express, enables users to assign particular vehicles to specific contracts.
"Formerly, we could obtain equipment management reports only about once per quarter because it was extremely time-consuming to get at the information," says Raper. "Now our managers get updates on a daily basis. They can ask questions like, 'why is Vehicle One costing twice as much to maintain as Vehicle Two?' The sooner they can identify these issues, the sooner they can take remedial action."
Thanks to business innovations such as its improved BI, the City of Charlotte's equipment management division was recognized as the fifth-best division of its kind in the country among thousands of local government agencies. "Our driving force is to do an extremely high-quality job for the lowest possible price," says Raper. "Ultimately, that saves our taxpayers money."
Adopting BI Standards
In an era of increasing scrutiny into information technology investments, business leaders are continually challenged to eliminate overlapping functionality and reduce the amount of money spent on vendor licenses and training. CIOs want to consolidate their software assets, a trend that is encouraging the adoption of corporate standards throughout nearly every sector of the software industry.
BI software is no exception. According to the previously mentioned Forrester Research report, one recent survey of 2,000 companies and large government organizations revealed an average of between 5 and 15 BI solutions in active use. Most of these reporting and analysis solutions were either purchased at a departmental level to solve a single problem or included within enterprise applications such as enterprise resource planning (ERP), customer relationship management (CRM), or financial budgeting and planning. "This myopic approach to technology spending has created an overabundance of redundancy that costs companies millions of dollars and often leads to inconsistency and frustration on the part of end users," Gile says.
A desire to quell this frustration is motivating some companies to adopt BI platforms that make it easier for diverse groups of users to access information. In a 2004 Unisys study, 92 percent of all large organizations said they have standardized or will soon standardize on a single BI platform ("Business Intelligence Trends Study," August 20, 2004, Unisys). These organizations understand the benefits of eliminating redundant >functionality-namely, freeing up money, resources, and systems previously dedicated to supporting disparate information systems.
A BI platform such as Oracle Business Intelligence 10g is more than just a set of isolated BI tools, but a complete architecture upon which developers can "layer" BI functionality. It addresses the entire spectrum of analytical requirements, including query, reporting, analysis, data integration, data management, desktop integration, and application development. Thanks to its foundation in Oracle Fusion Middleware, these BI capabilities can take the form of services that are invoked by a service-oriented architecture, often through highly flexible portals and user-friendly dashboards.
The Power of Portals
Etos understands these concepts well. Before Oracle came on the scene, users at this Netherlands retail chain had to contend with so many sources of information, accessible through so many tools, that integrating data in a meaningful way was difficult. By standardizing on a well-integrated BI platform, the company now has a centralized way to collect and present information on point-of-sale purchases, product ranges, pricing, and special offers-each of which formerly had its own interface. Etos uses Oracle Discoverer to reduce the cost and complexity of building and deploying BI solutions, and it uses Oracle Portal to present the results-integrating information from procurement, logistics, and sales, and then making it accessible to a large group of users with graphs and tables.
What's the upshot? Etos has a better overview of the performance of its 430 retail shops. "We get concise, relevant information every day rather than once per week," says Harmenzon, "This enables management to take action much more quickly. Because all the information is available in the data warehouse and accessible through Oracle Portal, questions from the board can be answered right away."
By making a portal-based communication system with instantaneous information available at all its retail locations, Etos has been able to cut costs substantially in several areas. Now that all the outlets are linked to the system by broadband internet connections, store personnel spend less time and money tracking down reports.
The Web-based BI architecture also simplifies IT tasks, since system administrators can correct mistakes and perform software updates instantly at one central location. Further savings are expected now that hundreds of weekly reports no longer need to be sent around by fax or mail. According to Harmenzon, making this same information directly accessible via the corporate intranet will save more than ?00,000 per year.
Etos enjoys additional savings in the IT department. "Oracle's well-integrated BI solution saves us a lot of money on software licenses, and it simplifies maintenance activities," says Kees Vlek, business intelligence consultant at Etos. "Because all the tools work together, we only need two employees to keep the data warehouse and portal environment up and running."
What do all of these benefits have in common? Gile sums it up in a word: integration.
"Companies are telling us they want an enterprise solution that transcends functional areas like OLAP, query, reporting, data mining, and visualization," he concludes. "They know that the real value of BI is derived at the consumer level-among business users, partners, and even customers. Everybody who has a vested interest in your company should be able to access relevant information in a secure, useful way."
David Baum (david@dbaumcomm.com) is a
freelance business writer based in Santa Barbara,
California.
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