Retail Business Intelligence

The importance of

Retail Business Intelligence in an economic downturn

An independent study into the use of business intelligence reporting by retailers in the United Kingdom

2008 Nov | www.manthansystems.com

Contents Why did Manthan Systems commission this survey?............ 1 Overview....................... Overview.. ........................................... ........................................... ................................. ............ 1 Key findings............... findings.................................... .......................................... ..................................... ................ 2 Manthan Systems perspective................ perspective..................................... ............................... .......... 6 How the research was conducted............... conducted..................................... ........................... ..... 9

© Copyright 2008 by Manthan Systems. No portion of this report may be reproduced in whole or in part without the prior written permission of Manthan Systems. Any written materials are protected by copyright laws. Manthan Systems offers no specific guarantee regarding the accuracy or completeness of the information presented, but the professional staff of Manthan Systems makes every reasonable effort to present the most reliable information available to it and to meet or exceed any applicable industry standards.

1. Why did Manthan Systems Systems commission commission this survey? Manthan Systems works closely with retailers helping them to capture and process data that can then be leveraged to improve planning, analyse results, anticipate changes and mine oppor tunities across the business. In order to maintain a competitive edge, retailers today have to make faster, smarter decisions based on knowledge rather than gut instinct. e key lies in getting the knowledge they need to make wise decisions, and then disseminating that knowledge across the enterprise so that everyone is on the same page. With the economy already in recession and many retailers already feeling the strain. Having access to sound business intelligence is more important than ever. is research seeks to establish what retailers see as key in terms of remaining competitive in an economic downturn, and how enterprise wide business intelligence can help.

2. Overview Nine out of ten (91%) retailers believe reacting quickly to industry trends is critical during a downturn, and 87% think having comprehensive and up-to-date business information is vital during economic uncertainty Despite this, over a third (37%) of respondents do not have any kind of business reporting system and those that do are still unable to access the appropriate business information when they need it Strikingly, one in five (17.6%) of the respondents working for the largest retailers (more than 5,000 employees) do not have access to any form of o f business intelligence system Interestingly, in light of the fact that reacting quickly is seen as paramount, when rating the quality Interestingly, of their existing business intelligence reporting, only half (53%) of those surveyed can access reports when required, and a significant 49% are unimpressed with the response time of their business reports It is the larger retailers (more than 5,000) that appear to have the most problems with the quality of their business intelligence information and getting hold of reports when required Furthermore, four out of ten (39%) retailers were unconvinced of their ability to identify problem areas, and over half (55%) are subsequently unable to drill down into problem areas ose respondents that have purchased a specialist reporting solution view these solutions as having the most impact in terms of meeting customer needs and maximising profit However, a significant number of respondents who have such a solution agree that there is a pent However, up demand from their business for more reports

Retail Business Intelligence in UK | November 2008

© 2008 Manthan Systems | 1

3. Key ndings 3.1 Which business intelligence system does your organisation use? 0.5% Manthan Systems 2.2% 1.1% Microstrategy 5.4% 3.3% Crystal 0.5% Information Builders Business Cognos Reports Objects 1.6% Others

37.0% Do not use

48.4% In-house systems

3.2 Which business business intelligence intelligence system system does your organisation use (by (by company size – employees)?

0.0%

Other

1.5% 1.5%

1 to 50

0.0%

Information Builder

1.5% 1.5% 0.0%

MicroStrategy

26.9% 67.2%

Manthan Systems 0.0% 0.0%

Crystal Reports

5.3% 0.0% 15.8%

51 to 500

Cognos

0.0% 5.3%

Business Objects

47.4% 26.3%

In-house systems

4.3% 0.0%

We do not use a dedicated business reporting/ intelligence system

0.0% 0.0% 0.0% 8.7% 13.0% 65.2%

501 to 5,000

8.7%

0.0% 0.0% 0.0% 2.0% 0.0% 5.9% 7.8%

More than 5,000

66.7% 17.6%

0%

10 %

2008 Manthan Manthan Systems 2 | © 2008

2 0%

30 %

40%

5 0%

6 0%

70%

80%


3.3 How strongly do you agree/disagree with the following statements regarding business reporting issues?

Agree

Reating quickly to changing consumer needs is critical for retailers during a downturn

Strongly agree

29%

62%

conprehensive, up-to-date business information is critical for retailers during a downturn

47%

40%

Information is useless unless it's easily accessible across a retail business

46%

37%

It is particularly important for any retail investment to demonstrate rapid return on investment (ROI) during a downturn

38%

0%

20%

23%

40%

60%

80%

100%

3.4 How strongly do you agree/disagree with the statement: reacting quickly to changing consumer needs is critical for retailers during a downturn (by company size) Net agree/strongly agree 91%

Whole sample 1 to 50

88%

51 to 500

95%

501 to 5,000

91%

More than 5,000

91% 50%

60%

70%

80%

9 0%

100%

3.5 How strongly do you agree/disagree with the statement: comprehensive, up-to-date business information is critical for retailers during a downturn (by company size) Net agree/strongly agree 87%


82%

51 to 500

95% 87%

501 to 5,000 More than 5,000

91% 50%


60%

70%

80%

90%

100%


3.6 How strongly strongly do you agree/disagree agree/disagree with the statement: information is useless unless unless it’s it’s easily accessible across a retail business (by company size) Net agree/strongly agree 83%


82%

51 to 500

84% 91%

501 to 5,000 More than 5,000

78% 50%

60%

70%

80%

90%

100%

3.7 How strongly do you agree/disagree agree/disagree with the statement: it is particularly important for any retail investment to demonstrate rapid return on investment (ROI) during a downturn (by company size) Net agree/strongly agree

Whole sample

61%

1 to 50

63%

51 to 500

58%

501 to 5,000

61%

More than 5,000

63% 50%

60%

70%

3.8 How important are the following factors, with regard to business reports

61%

Identifying and highlighting problem areas

58%

Simple and easy to understand Quality of information

55%

Addressing key performance indicators (KPIs)

54%

Getting reports when required, e.g., Monday morning trading packs

53%

Flexibility to cope with changing needs

53%

Speed of processing/response time

51%

Ability to drill down into problem areas

45% 0%


20%

40%

60%


3.9 How great are the benefits of business reporting to the following areas areas of your your business?

4.5

Buying and merchandising Supply chain management

4.5

Retail operations

4.4 4.3

Finance

4.3

Security/loss prevention 4.1

Store level management e-Shopping

4.0

Marketing 3.0

3.7 3.2

3.4

3.6

3.8

Neither great nor small

4.0

4.2

4.4

4.6

Quite great

4.8

5.0

Ver y great

3.10 How great or small have been the following benefits resulting from implementation of the dedicated business intelligence system?

Meeting customer needs

4.0

Maximising prot

4.0

Better planning

3.8

Faster decision-making

3.8 3.6

Fast ROI Reducing costs 3.0

3.3 3.2

Neither great nor small


3.4

3.6

3.8

4.0

Quite great

4.2

4.4

4.6

4.8

5.0

Ver y great


4. The Manthan Systems perspective Steve Barker, Head of UK Operations and Vikas Gupta, Chief Technology Officer, give their views on the research

Retail BI is not pervasive within Retail organisations Steve Barker: “Knowing the market, we’ve seen most BI Survey Output: deployments to be departmental and not enterprise in nature. e investment case for a BI implementation is • 37% don’t use any BI tool often tactical, driven by the need to meet the • 48% us usee inin-h hou ouse se sy syst stem emss reporting/BI requirements of a few user groups. As a result the BI strategy is not geared to scale and meet the requirements of the enterprise. is is exemplified by the responses to the ‘quality of information’ and ‘ability to drill into problem areas’ questions. However we are now beginning to see leading retailers looking at BI at an enterprise level, therefore willing to create a sound EDW and BI strategy that is scalable for growing needs of the organization.” Vikas Gupta: “Pervasive BI has eluded many retailers because of short term goals taking priority over a strategic approach to BI. Retailers have to realize that the true power of BI is achieved when it is available to everyone. Democratization of data has to be a key priority in a BI strategy. Many of the current tools and technologies out there lack in the critical areas of intuitive usability (especially for retail), data quality and performance. A highly usable and intuitive front-end design makes it easy for users to connect with, and adopt the platform. Currently we still see too many requests for additi onal analysis being handled by a specialist team or ‘power users’, who are tool competent. competent.””

Dependence on IT very high Steve Barker: “Whilst we are aware that most of the Survey Output: large retailers in the UK have purchased a BI tool set, the survey bears out our view that there is still a large • As business grows, dependency on dependence on IT and that in relative terms only a few in-house systems grow users actually use the system. Why is this? Today, typical • On Onee in in 5 res respo pond nden ents ts who who wor workk for for business intelligence solutions offer tools like large retailers do not use a BI system dashboards, drill-down analysis, business alerting, and • 2/ 2/3r 3rd d of of the the re repo porti rting ng ne need edss of of mid mid other exciting features. It is quite often the breadth of to large sizes retailers are delivered the toolset that convinces businesses to invest in such via in-house systems tools. However, when it comes to implementation, the fact that the toolset needs to be applied to both their business data and business processes produces a much larger implementation than what was initially anticipated. is leads to, in many cases a reduction in initial scope and therefore groups of users having little or none of the planned usage.”



Vikas Gupta: “Retailers have to understand that a sound BI strategy covers the entire spectrum of the BI environment including business processes, decision making people & roles, analytic applications, BI front ends, data warehouse, and data integration. As Steve says, purchasing decisions today are largely centred on BI front ends like dashboard, reporting and alerts. Retailers should look beyond toolsets to consider a BI application. e right applications for retail organisations are solutions that are pre-configured for retail. Where a significant amount of deployment and customization is pre-built for the sector. ese applications significantly improve speed of deployment, deliver self service capabilities, whilst reducing maintenance costs.”

Performancee is a major issue Performanc Steve Barker: “We were not surprised that half of Survey Output: respondents aren’t happy with the performance of their systems. With the advent of cheaper and cheaper • 91% agree that quick reaction to technology on the face of it you would expect that market opportunities is critical in a performance should not be an issue with regard to any IT downturn system, business intelligence included. If the system is • Mor Moree tha than n 50% 50% of re resp spon onde dent ntss are are running slowly, buy more technology. However, this does unhappy with performance not solve the root cause of the problem, as is borne out in the survey. In our experience, many large deployments using leading BI tools are constrained by long delays in complex reporting, inability to distribute ‘Monday morning report packs’, crashes & missing data during peak season, and delays/crashes in SKU-level reporting.” Vikas Gupta: “Performance is not only a function of the data management infrastructure, but also of the robustness of the data warehouse architecture. is includes many aspects like aggregation algorithms, data caching, querying performance and data integration processes. HOLAP technology, which is an optimal hybrid using both MOLAP and ROLAP processing technologies along with smart aggregation algorithms optimize response times. Retail data model driven warehouse architectures are performance tuned and highly optimized. Its pre-configured approach preserves architecture integrity and robustness even as data volumes, number of users or additional data sources increase.

In addition, Performance Oriented Architecture (POA) is an emerging discipline that is becoming widely recognised as the next evolution in performance management by forward thinking industry leaders. Unlike tactical performance management, which operates from a bottom-up approach, a POA approach views performance from a top-down approach. POA addresses questions such as:

• Who are your most critical users? •

How is the system being used?

• What data is being accessed most frequently? •

How is that data being used or consumed?

•

How is my IT infrastructure infrastructure being used by by different lines of business?



•

Is my IT infrastructure infrastructure performance being maximized on an an ongoing ongoing basis? basis?

•

Is my organisation able to make their most critical critical decisions in a timely fashion?

• When will I run out of capacity capacity and what are are the financial implications? • What are my my alternatives alternatives - both in terms of performance and investment?

Tactical products, specifically in house systems don't provide these answers because they focus on discrete elements (CPU, disk, network, SQL, data, etc.). A good business intelligence system, using a POA approach, should allow a retailer to understand performance as it relates to different lines of business within retail. Knowing which users belong to various lines of business, how they are using the system, what data they are accessing and how that data is being used are paramount considerations to improving performance. is research demonstrates that there is still a long way to go in terms of retailers having access to all the business intelligence they need, especially at times like these. these.””

In challenging times, focus more on BI Steve Barker: “Whilst there is strong agreement in this statement, the real question here is - how many can actually do it? e Christmas season will test the abilities of many retailers to quickly maximize sales and profitability in the short window of opportunity. ey will need on-time information, action oriented analysis, accurate data and all this tied into a culture of data decision making that can act on insights and opportunities. e ones with a sound BI environment are likely to emerge winners in the end.”

Survey Output: •

87% agree that comprehensive up-to-date information is critical during downturn

•

91% agr 91% agree ee th that at qui quick ck rea reacti ction on to to consumer needs is critical during downturn

Vikas Gupta: “Retailers need a BI environment that drives collaborative decision making capabilities. Today the boundaries of BI are being redefined with an integration of new analytics capabilities like business process workflow interventions, competitive analytics with external data integration, specialised analytic applications like clustering (which are traditionally done out of the system or with different solutions), supplier collaboration through vendor BI portals, predictive modelling and demand forecasting, to name a few. It is our opinion that retailers should broaden their assumption on the purpose of BI, re-define their strategy and roadmap for BI. BI.””



5. How the research was conduct conducted ed e research was conducted online by Spectrum Consulting with retailers of all sizes from across the UK. is included directors, senior managers, heads of departments and supervisors. In all, 192 respondents answered the survey survey..

Sample by size of organisation 13% Not sure

26% More than 5,000

13% 501 to 5,000 37% 1 to 50


11% 51 to 500


Manthan Systems is a producer of analytic solutions for global retail and CPG organizations. Manthan's breakthrough solutions help retailers become more profitable by improving their decision-making process, practices and technologies. Manthan's portfolio of solutions covers the entire spectrum of decision-making technologies from cutting edge products in retail business intelligence, to specialized analytics services. Manthan's experience spans a range of retail segments and formats, having worked with many high profile retail organizations like e Game Group, Woolworth, McDonald’s, Channel Islands Co-operative Society, Haggen Supermarkets, Loblaw, Novartis and Gianfranco Ferre. For more information about Manthan Systems, please visit www.manthansystems.com visit www.manthansystems.com and and www.arc-bi.com www.arc-bi.com..

Retail Business Intelligence

Recommend Documents