Markets
Leveraging BI to elevate financial performance
Cheah Chor Sooi 
Listed companies which leverage cognitive computing and data analytics tend to be ahead of the curve, says Lee
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OFTEN perceived as a hype, business intelligence (BI) has often been overlooked as a platform to get value-targeting right in the effort to monetise product or service offerings.

If applied correctly, BI is able to spur the financial performance of listed companies. This is through the identification of high-value data sources such as the customers’ transactional and behavioural information; prospect data from unstructured browse and click streams (digital footprint); financial data; data and indicators of asset health as well as suppliers and vendor data, among others.

This would pave way for industry-specific solutions in the form of predictive asset management in the energy and utilities industry or intelligent underwriting for the insurance industry.

“A functional solution could be customer monetisation for consumer goods or services industry, dynamic pricing, category management, or digital cost take-out in the finance or supply chain,” Accenture Strategy’s managing director Coreen M Bathman tells FocusM. “Other interesting applications of BI include video analytics for product placement or security alerts.”

In its recent third quarter  report on BI Platform Implementation Service Providers in the Asia-Pacific, Forrester Research provides 10 recommendations leading to the shortlisting and selection of BI service providers, ie separating hype from reality by demanding to verify the BI provider’s product road map such as net scheduled releases (in the case of software) and added functionality in each release.

“The BI vendor landscape in the Asia-Pacific is extremely difficult to navigate for several reasons. Firstly, there are literally hundreds of vendors to choose from,” noted the report. “Secondly, the leading providers have honed their methodologies, training, and knowledge dissemination to the point that it’s next to impossible to differentiate between them.”

 

Playing catch-up

IBM Malaysia chief technology officer Freddy Lee says that the success of listed entities today very much hinges on the technologies they adopt and deploy. In this regard, he observes that listed companies which apply capabilities such as cognitive computing and data analytics tend to be ahead of the curve.

“Cognitive computing is a next generation information system that can understand, reason, learn, and interact with humans in natural language,” he says. “While traditional analytics can provide data-based insights, cognitive [computing] turns these insights into actionable recommendations to help organisations make informed business decisions.”

On this note, Lee sees the need to create a new role – that of a chief data officer (CDO) – who will be charged with enterprise-wide management and use of data as an organisational and strategic asset.

“The CDO can begin to acquire and manage the capabilities needed to drive innovation and transformation within the organisation and sharpen competitive advantage through the use of data and analytics,” he points out.

Malaysian listed companies lacking on data governance, data accuracy and data-gathering speed, says Loo

Ernst & Young Advisory Services Sdn Bhd executive director (advisory) Freddy Loo says business capabilities most lacking among listed companies centred largely on data governance, data accuracy and data-gathering speed.

“The majority of local listed companies are still addressing the basic needs of operational reporting with minimal BI,” he says. “Predictive analytics and optimisation are still perceived as luxury.”

Moreover, Loo reckons that there is an initial inertia in absorbing new technology which is somehow similar to the adoption of all other prior technologies in the likes of Enterprise Resource Planning, Customer Relationship Management or e-commerce etc. “Organisations know ‘what’ they want; what’s missing is the ‘how’,” he asserts.

Loo deems industries that would benefit most from the adoption of BI as those with a large number of transactions or customers such as telcos, banks, insurance companies, airlines and retailers. The same applies to any sector that monitors technology, eg transportation, production and networking.

 

Leadership role

In the quest to encourage listed companies absorb the multiple benefits of BI, it is vital to make the BI journey both a board-sponsored agenda as well as to provide structured leadership and guiding principles to the BI delivery teams, according to Accenture’s Bathman.

Key roles that support and promote the drive to an insights-powered organisation include the role of the CEO/chief operating officer in setting the business goals and request for data-driven decisions; a chief data steward, an analytics centre of excellence, a value-based program office that delivers small successes in batches to maintain momentum for the change, and the role of the chief human resource officer in developing a specialised career or track for future BI or analytics talent.

In Lee’s view, the creation of a role within or transitioning a member of the C-suite into a CDO is a tangible step to ensure the success of BI implementation. In fact, the annual analytics study by the IBM Institute of Business Value (IBV) in 2015 found that 422 of 1,255 organisations (or 34%) have adopted the CDO role.

“The CDO is increasingly the C-suite’s solution to navigating today’s disruptive, dynamic and data-intensive world,” he points out. “At the same time, the CDO is responsible for enabling the organisation with a core set of capabilities engineered to sense and respond to changing.”

For EY’s Loo, other than quality, performance and good design, openness to change and change management is pivotal to ensure a successful adoption of BI strategies. “Many projects fail because users do not accept new ways of doing things or changes in their data logic,” he rationalises.

Other positive factors include:

▶ Source system readiness in that the data must be clean and ready to be ingested. Many projects fail because the existing data needs too many exceptions to be handled properly;

▶ Aligning the company culture to fact-based decision-making; and

▶ The various departmental heads, ie chief marketing officer, chief financial officer (who consumes analytics and BI) and the chief information officer (who produces analytics) must work closely to generate actionable insights.

BI adds value to small-cap firms

WHILE business intelligence (BI) has been proven to add value to their overall business operations, many small-cap and family-owned businesses remain reluctant to subscribe to BI in view of:

▶ They do not understand the potential benefits of BI.

▶ They feel BI is too expensive and takes too long to build.

▶ They feel BI is too difficult to implement.

One way to convince both business categories to embrace BI is to educate them on what BI really is, what its applications are and what BI tools are available in the market, according to Accenture Strategy’s managing director Coreen M Bathman.

Awareness for suitable BI tools available in the market is poor because it is dominated by expensive enterprise solutions, says Bathman

“Many companies do not realise that BI is essentially the analysis of data to generate an insight that can be used to support a decision,” she tells FocusM. “BI can be as simple as analysing a customer’s shopping basket at checkout; retailers can identify trends in the combination of products bought and develop product bundles.”

Furthermore, awareness for suitable BI tools available in the market is poor because the BI market is dominated by expensive enterprise solutions offered by global players. There are, however, several cloud-based niche BI tools targeted for the SME market.

A cost-effective method is to break down the entire BI journey into bite-size pieces by focusing on specific business objectives or functions. Each sprint could be as short as three months, allowing enough time to deliver small (but compelling) proofs of value.

“The adoption of BI can start from front office sales [eg target marketing] and move towards back office functions [eg product innovation and development, pricing strategy, and customer services personalisation],” suggests Bathman. “As the business completes each sprint and moves on to the next, there are potential synergies and economies of scale that can be taken advantage of.”

The last method is a little radical – do nothing and let nature take its course. As increasingly more BI-enabled start-ups enter the market, traditional small-cap and family-owned businesses will face industry disruption.

“These new entrants will be more agile and be more competitive in terms of product quality and customer experience, and may pressure traditional small-caps and family owned business into a ‘fight or flight’ situation,” adds Bathman.



This article first appeared in Focus Malaysia Issue 253.