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Source : SAP
Business Intelligence for Process Industries:
Actionable Insights for Business Decision Makers
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Executive Summary
FIRMS IN PROCESS INDUSTRIES have made significant
investments in information technology to increase the
efficiency of their operations and supply chains. One side
effect of these investments has been the creation of vast
stores of valuable data. But most firms are overlooking or
underutilizing this potential goldmine: theyre missing
opportunities to analyze and redeploy their data to drive
the next stage of innovation and competitive advantage.
To take full advantage of this data, firms need a new
generation of business intelligence (BI) tools and
applications to integrate cross-enterprise, inter-enterprise
and externally available information with processes to
achieve insight, transparency and competitive advantage.
Enterprises that effectively harness the vast quantities of
information that IT systems generate?both within the
corporation and outside its walls?are poised to gain
competitive advantage.
1.0 Value Proposition
Firms in process industries such as oil and gas, chemicals,
pulp and paper, or mining today face multiplying business
challenges driven by phenomena such as globalization,
unpredictable input costs, fluctuating exchange rates and
geopolitical instability. In this rapidly changing
environment, companies can't afford to be satisfied with
traditional business intelligence systems that merely report
on “what happened.” BI systems need to answer more
timely questions: “what is happening now?” and “what
will happen in the future?” Accurate answers to these
questions for all stakeholders, both inside and outside the
organization, will drive superior performance and
competitive advantage in the future.
In addition, todays business imperatives mean that BI
has to go beyond its traditional role of helping to control
and cut costs. BI data is now the basis for new growth
strategies. This is true even in the process sector-think,
for example, of global industrial leader Rohm and Haas.
Mike Masciandaro, business intelligence director, agreed
that “our main imperative is growing profitably. Of
course, controlling costs is not off the table, but its too
much of a short-term proposition. Eventually, you'll run
out of ways of cutting, unless you also grow the top line.”
In this paper we discuss how technological advances are
enabling improved decision making across three broad
axes: (1) simplicity and relevance, (2) agility and (3)
integration.
First, new user-friendly interfaces and approaches to
business intelligence provide easier access to relevant data
and empower more decision makers. Second, new
technology advances such as in-memory BI are providing
new levels of performance and helping users gain real-time
insights into their data. Finally, in a world where the
logistics of a distributed, global supply chain have created
new opportunities to tighten up alignment between supply
and demand, BI needs to be integrated into business
processes and be more widely distributed. All of these
systems must rest on a solid data foundation with aligned
master data: only then is that data trustworthy, and only
then can decision makers be confident that they have a
single version of the truth.
2.0 Simplicity and Relevance
Effective business intelligence is simple and relevant:
simple so that a large number of users have access to the
information through an interactive, user-friendly interface
(regardless of the type or source of information), and
relevant so that users can deploy the information to
address immediate issues and support business decisions.
2.1 Simplicity
In the past, BI implementations were often driven by
sophisticated “power users” in the IT department who
created reports on behalf of business decision makers.
These power users were technologically sophisticated and
were accustomed to working with complex data systems.
Their efforts, in conjunction with first generation business
intelligence tools, brought real advantage to their firms.
But this approach also introduced new challenges.
First, the few power users were rapidly overwhelmed by
demand for their services. As organizations became more
data-driven and users began to see the value of their
business intelligence systems, they began to clamor for
various new reports they required. This increased demand
for reporting combined with complex tools created
untenably long wait times for BI-driven information.
Secondly, the power users creating the reports often
misunderstood or didnt know the context of the requests
they received and often made inaccurate assumptions
about the needs of the business decision makers. As a
result, internal clients were unhappy with BI's
inappropriate solutions and producers of reports felt
overworked and underappreciated.
The solution to the problem is to democratize BI: create
easy-to-use visual and interactive tools that the average
business decision maker can use themselves without IT
support. We live in a world where literally billions of
users interact on a regular basis with the simplified
interfaces of Google and other search systems. These
systems work because they present information in a visual
way and make the interface as simple and accessible as
possible, so that any user can ask questions and get the
desired, context-sensitive answers. Business intelligence
systems are building similar easy-to-use visual and
interactive tools so that all users can create their own
reports.
One simple to use, next generation tool is Polestar,
available from Business Objects, an SAP company.
Whereas new reporting solutions once were only suitable
for technically-savvy software developers, Polestar
enables business users to explore data without prior
knowledge of data structures or content. Polestar brings
together the simplicity and speed of search capabilities
with the trust and analytical power of BI tools, giving
immediate answers to business questions. Users employ
familiar keyword searches to find information hidden in
data sources, and then navigate and explore directly on
data—no existing reports and metrics are necessary. By
increasing self-service BI and maintaining IT control, this
technology empowers business users to create their
content thereby reducing IT report creation backlog. It
reuses existing security, metadata, and other services from
Business Objects Enterprise, meaning its easy to
administer and quick to deploy, often in a matter of days,
thereby abbreviating time to market and expediting
decision making.
2.2 Relevance
In addition to the improved insight and effectiveness that
better tools deliver, many software vendors are using
industry-savvy BI experts to create templates specifically
focused on solving an industry's business challenges.
These templates include pre-defined data models, queries
and metrics that incorporate industry best practices.
In process industries, for instance, virtually all firms are
interested in how variations in energy prices, input costs,
exchange rates and shipping rates will affect business
outcomes. Although the relative importance of these
inputs may vary by firm, there is no doubt that all firms
will be affected and pre-defined templates can shorten the
decision making cycle. The amount of data available in BI
systems both inside and outside the firm today is
staggering and it is easy to be overwhelmed by the
challenge of synthesizing the data to drive advantage.
What matters most is not the quantity of data, but its
relevance.
One way to increase the relevance of data is by utilizing
“best practice” templates to help bridge the gap between
IT professionals and the business units they serve. These
templates include pre-defined data models, queries and
metrics while incorporating industry best practices into the
implementation process, which not only saves time, but
also helps the BI initiative deliver on business needs.
Business Objects customers that exploit the power of
user focused tools can also access “business blueprint”
templates. These data models and templates solutions
include a bundle of technology and industry knowledge
that leverages SAPs and Business Object's substantial
business knowledge, which was developed over many
years while delivering software solutions to the world's
largest companies. By leveraging these “packaged”
industry best practices, customers increase the likelihood
of a successful BI deployment. At the same time, they
shorten development cycles and lower costs. The business
blueprint templates can act as a foundational solution that
individual organizations can extend to meet their specific
requirements. Specific components of business blueprint
templates include: pre-defined “extractors,” large
quantities of pre-defined data models, master data objects,
authorization roles, query views and reports-all of which
are delivered in the software.
The simplicity of business user oriented tools like
Polestar and the enhanced relevance enabled by bundles
such as business blueprint templates are enabling solutions
for competitive advantage. The ease of use and enhanced
relevance of these solutions build on the capabilities of
existing BI systems, thus increasing their value to the
organization.
3.0 Agility
The recent global economic environment makes it clear
why process industries must be agile. In the Rohm and
Haas example we saw how one firm uses over two million
tons of raw materials and 23 million BTUs of natural gas
each year in an environment of rapidly changing prices
and exchange rates. How do companies grow revenue and
profits in a world where so many input prices are
unpredictable, and yet so little of that price volatility can
be passed along to their customers? One answer is to use
data to make rapid decisions and stay one step ahead of
the competition. Unfortunately, the large and growing
quantity of electronic data can slow traditional BI systems
to a crawl.
Traditional reporting solutions rely on a painstaking
two-step process: first, model the end-user requirements;
second, optimize the system to meet those requirements.
This method was once dependable but it can also be
inflexible and result in deteriorating performance when
business needs divert from the original assumptions. New
technologies such as “in-memory” BI help solve this
problem; with more (and more affordable) memory now
available, todays BI solutions can process reports on the
fly by loading data sets into memory, and eliminate some
of the old bottlenecks.
SAPPI's recent implementation of in-memory
technology was a huge success. SAPPI is a global pulp
and paper company with 16,000 employees that does
business in more than a hundred countries around the
world. The company is a leading producer of coated fine
paper and chemical cellulose and follows an innovation
strategy. Understanding their customers business models
and challenges are key to innovative responses and
success in the marketplace.
Didier Magnien is a BI director with SAPPI:
“We implemented in-memory BI because we did have
some issues with the response time of our previous
system. It was a huge success. We had significant
improvements on all of our queries, ranging from two
times faster in the smallest improvement to seven to ten
times faster on average, and in some extreme cases
over three hundred times faster. We were somewhat
skeptical but the implementation was smooth and the
system is stable. People now have access to multiple
scenarios and can dive through daily, weekly, monthly
data, by region, etc. Senior managers even use it at live
meetings instead of paper reports to review different
situations. It makes a big difference not just to the way
we access data, but how we run the company.”
Another major global firm that implemented in-memory
technology had an unusual problem. The performance
improvements were so significant that they were worried
that users would not believe the results. “We actually had
to warn users about the upgrade, so they wouldnt think
there was an error, as queries that used to take 10 to 15
minutes were now delivered under a minute. For the first
time in my career, we actually had a honeymoon phase
with the business unit.”
4.0 Integration
Business intelligence is moving beyond the “end-of-line”
analysis and reporting function to an integrated system
embedded within business processes. In the past, the
reporting mechanisms that reached the end user came at
the final stage of a tedious “in series” approach to business
intelligence. Data was processed, stored in the production
system, and then extracted into a data warehouse in a
linear sequence. Only then was the information the end
users require ready for analysis and reporting. The new
approach injects business intelligence “in parallel” with
the business processes, providing business clients with
more timely access to better information about critical
business processes.
The ultimate benefit comes from a complete integration
of the information across systems and across departments.
Planning for day-to-day activities and significant events
such as new product launches can now be integrated
across marketing, sales and other departments. The
benefits of tighter integration include-to start-consistent and accurate information and customer
messaging. Ultimately, it delivers substantial
improvements in revenue and profitability.
Business intelligence is not limited to senior managers;
smart companies are distributing business intelligence
more broadly across their organizations. Every business
process requires a certain amount of insight and analytics,
which should be delivered to the right individual at the
right time.
ThyssenKrupp is one of the worlds largest
manufacturing and technology groups. The group's
190,000 employees worldwide are distributed around core
focus areas of steel, capital goods and services. The group
reached sales of more than €51 billion in fiscal 2006/2007.
Alongside product manufacturing, the company also
provides system solutions and services in five segments:
steel, stainless, technologies, elevator and services.7
Martin Denker is in charge of business intelligence for
Rasselstein, part of the ThyssenKrupp steel group.
Rasselsteins 2,400 employees turn out about 1.4 million
tons of packaging steel yearly, serving over 400 customers
in 80 countries. Says Denker:
“We use BI extensively for planning purposes, and our
planning process is very tightly integrated with our
sales team and financial profit analysis. Our division
decided to run one plant instead of two, so we have
been at near-capacity for over five years, but we
manage what products we produce when and for what
profit margin extremely closely. We have an
optimization process that integrates the sales process
and forecasts (tons), exchange rates, cost data (direct
and overhead), input from material groups and based
on all of these variables we build scenarios to
determine which orders are most profitable. So BI
touches every aspect of the business and this tight
integration enables us to be successful.”
As business intelligence is integrated with business
processes, companies can also revisit and refine existing
processes. After all, accurately documenting and
measuring an ineffective process does nothing to improve
the business. Most effective business intelligence
solutions will provide industry-specific resources, in the
form of expertise (e.g. consultants) or specific technical
resources (e.g. templates, queries).
5.0 The Payoff
The challenges that process industries face are
compounded in todays volatile business environment.
Trends such as globalization, changing input costs,
complex supply chains and fluctuating exchange rates are
here to stay.
To maintain competitive advantage, organizations must
leverage internal and external information into an
accessible, usable medium and provide business
intelligence to a wider array of employees. Business
intelligence solutions will continue to evolve as exciting
new capabilities such as in-memory arrive and are adopted
broadly in the market.
Organizations that enable business intelligence solutions
that are simple, relevant, agile and integrated have the
potential to sustain competitive advantage in an ever changing
world. Simple and relevant BI tools can
empower employees to make effective decisions faster. By
integrating real-time decision making with mission-critical
business processes, smart businesses can set a path for
industry leadership.
Moving from legacy BI solutions to these next
generation solutions represents a giant step forward and
corporations will continue to face a choice: execute these
best practices or fall by the wayside. The leaders will see
empowered employees, rapid execution and adjustments
to plan, resulting in bottom-line growth.
A message from the sponsors…
Today's competitive environment is fast and fierce, marked by
complex supply networks and increased consumer power. In order to
succeed, companies in the consumer goods industry need to fully
leverage the power of information to their advantage. No longer is it
enough to leave information access to a select few; every business
person needs to be empowered to access, analyze and act on trusted
information, wherever and whenever needed, and in the context of the
relevant business activities
That is why leading companies worldwide rely on solutions from Business
Objects and SAP to provide end-to-end solutions for better Business Intelligence (BI).
The business user is in the focal point, with an intuitive and system-agnostic
solution set that delivers on
even the most demanding needs. Embedded into the context of business
activities and work environments, information is immediately
relevant and actionable. At the same time, IT can focus on being an
enabler of innovation, rather than just working overtime to just
"keep the lights" on.
With solutions from Business Objects and SAP, companies in the consumer
goods industry get:
- More effective business decision making. Simple and intuitive user interfaces foster broad adoption, while reducing IT backlog.
Business users quickly access any type of information, regardless of its source. And with BI accelerator technology, response
times are consistently fast, independent of data volumes analyzed or question asked, allowing IT to meet the increasing demand
for real-time BI embedded into business operations.
- More efficient IT, freeing up resources for innovation. The broadest
solution set in the industry, combined with best-in-class capabilities,
dramatically reduces the need to deal with multiple vendors. Due to
inter-operability with any systems, applications or databases,
investments are protected and don't require expensive
custom-integration. And by providing the right level of controls with
an agile infrastructure, IT can focus on managing service levels, and
does not need to manage individual users.
- Faster realization of value from IT investments. Out-of-the box content and templates, across both SAP and non-SAP data
sources fosters accelerated deployments of BI solutions while significantly increasing the chance to "get it right" from the
beginning, as compared to pure custom-built approaches. And alternative delivery models (e.g. on-demand, appliances) provide
drastically reduced setup time and lower maintenance.
The result is that IT is better able to meet the information needs
of business users thus becoming a strategic partner to the business.
To learn more about how solutions from SAP and Business Objects can
help you empower your employees to make the best-informed
business decisions, visit www.sap.com/businessobjects.