BI for strategic management: 5 examples of solutions from real practice

Functionality of the systems of the class Business Intelligence (BI) is beyond far widespread idea of them only as about means for creation of reports. In combination with other IT applications BI tools can become a basis for creation of full-scale business solutions, for example, for budgeting, the analysis of attractiveness of investment projects and management of them, planning of logistics, customer relationship management. At the same time BI remains demanded and for formation of the analytical and obligatory reporting.

The SAP Business Intelligence complex (SAP BI) belongs to number of the functionally richest and widespread BI systems on the basis of which such solutions can be developed. Components which help to take a maximum of useful information from the primary data which are available for the company and the saved-up statistics are its part, to reveal the hidden patterns and trends, to create analytical reports in different cuts, to construct predictive models. In other words – create a qualitative basis for creation of difficult managerial IT systems.

It is not the theory. Information analytical systems for the solutions of different problems of strategic management created by EPAM Systems on the basis of the SAP BI complex successfully are used in the largest companies and government institutions of Russia and the CIS countries.

Example 1. Budgeting systems

The important sphere of management where creation of the solution using BI tools is more productive, than application of a normal transaction system, it is possible to call budgeting.

There are different methodologies of creation of a budgeting system in the company. For example, budgeting can be built  as planning of activities and the movement of resources of the enterprise during the set time frame. As the volume of resources is always limited, the question of their rational and effective distribution is among key for any company. However when planning top management quite often faces a number of problems. Often the situation when resource planning is carried out in a separation from planning of activities (actions, projects) for which these resources are intended meets. At the approval of the budget there is a mechanical reduction of separate articles without what activities it affects. Difficult planning process and approvals of the budget does not allow to react to change of an economic situation quickly. As a result budget planning from powerful managerial technology turns into something formal and the braking business development.

Award enforcement of SAP BI in combination with the systems of business planning (for example, SAP SEM, SAP BPS) allows to use budgeting as a management tool fully. For the account it is reached?

Thanks to BI the managed development process and the approvals of the budget is possible to create. Special means help to build the sequence of approval, to appoint responsible persons, to block change of data, to store several versions of the budget, to model different situations of succession of events by the principle "that if".

Besides, use of BI technologies gives the chance to use budgeting methodology which will be based on planning not of just separate articles of the budget, but certain activities. For this purpose as a basis when forming budgets the list of actions undertakes - it is activities which are directed to achievement of the strategic objectives set for the company. Through actions budget items of income and expenses and the budget of cash flow communicate among themselves. If top management makes the decision on an activity exception of plans or cost reduction on it, then the corresponding items of expenditure automatically are removed from budgets or decrease. Similarly – using actions - each item of expenditure and income corresponds to key tasks of the company and the interrelation between financial and material flows is established.

The budgeting system includes not only planning, but also the analysis of budget implementation. Timely obtaining the corresponding reports will allow to make necessary corrections to plans in time. The enterprise has an opportunity to work actively with several versions of budgets – taking into account the changes in price for products and raw materials, different versions of the production program, volume of investment projects and other factors that is impossible without application of BI.

Such methodology of budgeting implemented using the SAP BI complex allows the enterprise to receive the budget, reasonable and relevant during every time frame, and to control its execution tightly.

Example 2. Logistics schedule systems

Using actions (activities) as planning bases, the system of the logistics (L) can be built by broad application of analytical means. For this purpose the SAP BI complex is used in combination with a project management system (for example, cProjects) and integrated with the ERP system.

The list and structure of actions is formed on the basis of production programs, investment projects, plans of carrying out repairs of the equipment and other documents which prepare divisions of the company. Then data on actions are entered in a project management system. For holding an application campaign, formation of plans and plans adjustments the functionality of SAP BI is used. Control over the course of approval of plans is exercised using the built-in system of the statuses and trackings which provides mailing of adequate notices by e-mail to all participants of planning process of MTS.

Possibilities of the solution allow to automate all processes of MTS. Requests about the planned resource requirements for quarter, half-year, year form with a binding to specific actions, for each of which the limit of costs is set. When calculating planned dates normative delivery date is considered. The cost of required materials is determined on the basis of the price of the last purchase of the same MTR taking into account the size of tax deductions, the index of a deflator, coefficient of transportation costs. Besides, automatic recalculation of the ordered amount of materials is in case of need carried out to alternative units of measure (for example, often at requirements planning in pipe products are designated in meters, and when purchasing – in tons).

When forming a vista shot of MTS and its statement compliance to the set financing limit is checked. When calculating purchasing amounts of materials the current volumes of warehouse stocks are considered. Also the possibility of operational planning with adjustment and final approval of data is supported – it allows to reduce if necessary materials requirement or to replace them with analogs. On all process steps of formation of plans of MTS its participants are provided with the reliable information arriving including from the ERP system. After a statement data are automatically transferred to a transaction system for operational accounting and carrying out other logistic transactions.

Distinctive feature of the solution – existence of functionally saturated analytical tools. With its help different reports which help to control planning process at all its stages as at the level of separate divisions, and in general on the enterprise are prepared. For example, reports on a remaining balance of MTR, summary reports on partners and performance of agreements, reports containing contrastive analysis of the prices of materials at different suppliers and others.

Planning of MTS becomes more exact, transparent, reasonable and controlled. Cases of exceeding of the selected amounts of money are excluded: a system will not allow to approve the request or the plan if the required amount exceeds the set limit. There is an opportunity to quickly analyze the course of an application campaign and to make management decisions on its change.

Example 3. Management systems for investment projects and analysis of their attractiveness

The question of investment soundness is among especially important in any business. If the amount of funds is limited, then from that, it is how correct and the directions of investments are reasonably selected, the question of survival of the company often depends. Problems of formation of the transparent budget of investment projects and control of their implementation have not the smaller importance. Use of the SAP BI tools in combination with project management systems, maintaining the project documentation and the ERP application allows to construct the solution which will help to compare and analyze investment options, to create different versions of project budgets, to calculate terms of their payback and other investment indicators, to build an optimal investment portfolio by different criteria. The main advantage of the similar solution consists in its complexity: end-to-end accounting of all transactions which are executed by different divisions of the company at all stages of management of investment projects - from the idea before commissioning.

By drawing up project budgets the solution gives the chance to automatically calculate necessary indicators. For example, term of achievement of a point of payback, planned costs for the project, target profit and others. At change of external conditions a system allows to define the current balance and to estimate whether an opportunity to keep within the set limits remained and also to quickly re-plan project implementation.

Control of the course of projects in terms of terms and resources can be conducted by two methods. At operational control from the solution for project planning target figures – values of the most important parameters of the project are loaded into the ERP system. At their exceeding a system will deliver prohibition on accomplishment of any actions on the project before resolving the situation. At analytical control (monitoring) in SAP BI planned and actual targets are compared that gives the chance to carry out the detailed multidimensional plan fact progress analysis of the project.

One of features of the solution – a possibility of modeling of versions of projects by the principle "that if". It allows to predict expediency of project implementation at approach of these or those events in advance, to estimate their efficiency and payback at change of external conditions.

At last, using the solution it is possible to carry out the analysis and optimization of an investment portfolio of the company, to compare projects and to select the most important and priority for accomplishment. Automatic calculation of key parameters – both on separate projects, and on all their set is for this purpose provided (for example, the forecast of liquidity of an investment portfolio). The list of parameters of projects and algorithms on which optimization of a portfolio of investments is performed are flexibly configured taking into account features of business of the customer and his current demands. As a result top management obtains all necessary data for determination of those investment projects which accomplishment will bring the greatest benefit to business of the company.

Example 4. Analytical CRM system

The SAP BI complex can be used for creation of the analytical CRM system supporting accomplishment of business processes in the field of sale, marketing, customer service and providing information for formation of strategy of the company. Use of BI tools allows to integrate, arrange and analyze data which are collected on customers in IT solutions of company (CRM, SCM, ERP), to compare them with data from the external environment (analytics on the market and competitors, marketing researches, etc.) and to simulate a possible customer behavior.

The solution on the basis of SAP BI provides different analytical data on clients. For example, it is possible to define the most valuable of them in terms of the made profit and to reveal the main trends in their behavior. Besides, there is a possibility of the analysis of claims from clients and determination of basic reasons of claims. The solution also supports accomplishment of tasks of service maintenance planning, monitoring and income analysis from services and costs for their providing.

Other scope of an analytical CRM system is connected with marketing - it is optimization of planning of marketing budgets and campaigns, the analysis of the reasons of success or a failure of advertizing and sales campaigns.

In respect of the analysis of sales a system allows to define products which are bought best of all, to calculate their profitability, to analyze cross-sales in terms of benefit for the company. At the same time there is an opportunity to look at efficiency of all channels of customer interaction (the Internet, sales departments, retail network, etc.). Monitoring of income and cyclical analysis of sales will allow to estimate more precisely potential transactions and to use the acquired information at the subsequent planning.

When carrying out the analysis in the CRM system on the basis of SAP BI different technologies of informative and predictive modeling are used. In particular, for identification of trends in a customer behavior, segmentations of the customer base are applied such methods as:

• clustering – entering of customers with similar signs in one group. For example, in banks it helps to reveal deception chances from clients: all cases of atypical behavior are automatically selected in special group that allows to carry out an additional inspection quickly;
• association – detection of the hidden patterns (in particular, cases of the interconnected purchases are selected: at acquisition of one product with high probability then another will be purchased);
• scoring -  forecasting  of a customer behavior using calculation and application of different coefficients;
• decision tree – calculation of a final result on the basis of the analysis of input values (can be such result, for example, "will purchase this product with the probability of 75%");
• ABC-classification – customer segmentation on their profitability (And – the most profitable, In – averages, With – the least profitable);
• Value Modeling is the analysis of profitability of the client throughout all his cooperation with the company. It is especially important, for example, for the B2B-sector;
• RFM (Recency, Frequency, Monetary) is selection of customer groups on the basis of parameters of their behavior. As a result there is an opportunity to develop address marketing campaigns for different customer groups, to use a key word which will be suitable as much as possible for the selected target audience.

As a result due to use of broad set of analytical means the company management obtains information which helps to understand and predict better a customer behavior, to quickly define expediency of work with potential customers and to calculate their possible profitability, "classify" processes of marketing and sales and to reveal the most successful and problem elements. It means reduction of a planning cycle and sales, increase in the service level of customers and strengthening of their loyalty, and in a long-term perspective for the customer-oriented companies - growth of profitability of business and expansion of the occupied market share.

Example 5. Systems of the analytical reporting

Using BI as a basis for creation of business solutions, it is impossible to forget also about the traditional opportunities of this tool connected with formation of the analytical reporting.

The situation when reports on the separate block of tasks (for example, sale, production, finance) are prepared by means of the corresponding modules ERP systems or even several different IT solutions is characteristic of many companies. It is inconvenient for several reasons. Process of collecting and data processing can seriously "slow down" system operation. The received reports are separated and do not allow to see the broad picture of the current situation. There is no opportunity to understand interrelation between separate operations which are performed in different fields of activity of the company, and to predict, what will be farther. As a result the reporting does not bring that benefit which could bring.

Creation of information analytical system on the basis of SAP BI allows to receive difficult multidimensional analytical reports using which it is possible to look at a situation as on separate activities, and in general on the company. Data for preparation of reports gather from different sources. There is an opportunity to connect among themselves relevant and historical (the saved-up statistics) data and on their basis to simulate possible options of succession of events. The staff of the company can look at analytical information with the different detail level – the data access will be automatically differentiated. At last, systems capabilities will provide rapid development and implementation of new forms of the analytical reporting with the minimum costs.

As a result considerably load of the used transaction IT solutions will decrease, the speed of formation of the analytical reporting will increase. Specialists of the company will get simple access to business information which will be submitted to them in the fullness of time in necessary cuts and volume that will allow to increase quality of the made management decisions. It means that the main task of the BI solution will be carried out – to give the chance to pass from mitigation of consequences of what is made yesterday, to development of the action program for tomorrow.