UK: THE LATEST INTELLIGENCE.

UK: THE LATEST INTELLIGENCE. - Too much data lies hidden and unexploited in filing cabinets and PCs. But the power and sophistication of today's IT is at last producing systems that let managers drill down for key information and analyse their business i

by Jane Bird.
Last Updated: 31 Aug 2010

Too much data lies hidden and unexploited in filing cabinets and PCs. But the power and sophistication of today's IT is at last producing systems that let managers drill down for key information and analyse their business in whatever way they choose.

Monitoring sales in the market for fast-moving consumer goods is a bit like trying to keep track of individual grains of sand as they slip through your fingers. The more products you have, the harder it gets: add special offers and discount schemes and the sales monitoring task can quickly become a nightmare. It may be impossible to spot a flopped promotion until several weeks after its launch.

But at HP Bulmer, the UK's largest cider-maker, sales managers will soon know the precise profit position for some 200 products. Whether they want to find out how 440ml cans of Strongbow are doing at Tesco, or how bar sales of Woodpecker are matching up to anticipated demand in Whitbread pubs, the answer will be available via a few clicks of their computer mouse. Special offers that have failed to attract buyers will be clearly visible on-screen. The innovation is not so much in having the data as in being able to access it, says Martin Wynn, Bulmer's IT director. Many companies have this type of information somewhere within their organisation, but typically it is buried in someone's filing cabinet or on their PC, says Wynn. The problem is retrieving and making sense of it to spot trends and changes in your business.

Computer experts have long striven to develop software tools that would help users access hidden data, but so far most of their efforts have only appealed to a small number of managers. Decision-support systems and financial modelling packages, introduced in the 1970s and '80s, were too narrow and technical for general purpose use. Then, in the early '90s, the Executive Information System (EIS) appeared with its snazzy graphics, touch-sensitive screens and colourful highlighting. The EISs aimed to filter corporate data and present relevant information to busy non-technical senior executives. But they were still too inflexible for most managers and when Microsoft's Windows caught on, the graphical screens of EIS began to look old-hat.

The software industry's latest answer to the hidden data problem is On-Line Analytical Processing (OLAP). This time, experts believe, the technology could be capable of delivering what users have so long been waiting for. OLAP gives fast, friendly access to potentially colossal stores of data sliced and diced however you want. You can view and analyse your businesses in whatever way is most convenient, totting up totals as you wish. For example, sales can be aggregated for any period, product, customer, salesman, or invoice date. This lets you make comparisons between this year's output and last year's, your product and your rival's, or one factory's performance with another's. If you want to examine a specific area in more detail you can 'drill down' to see how the figures are made up.

It is the tremendous power and sophistication of today's hardware and software that have made OLAP possible, says Nigel Pendse, author of The OLAP Report, published by Business Intelligence. 'In the past, there simply wasn't enough number-crunching power to handle all the variables.' Pioneering OLAP-users seem to agree, and sales are soaring. According to Pendse, the worldwide market for OLAP packages and consultancy this year will be around $700 million, an increase of 40% on last year. Commercial applications range from deciding whether to close down factories to spotting which products are so lucrative that they are vulnerable to attack from rivals. In the public sector, OLAP is being used for manpower and budget planning and to measure the effectiveness of products and services.

For companies in the consumer market, where there is a constant pressure to reduce margins, OLAP can provide a sharp focus on profitability. This has been its key role at Bulmer. 'It gives us a greater understanding of shelf value, product positioning, and profitability by individual item,' says Wynn who is using an OLAP package from the US-based software house IRI. Sales managers can examine the profitability of individual product lines for each of the company's top 60 customers, that is, 80% of its business. They can also perform a host of comparisons such as examining promotional volume as a percentage of delivered volume or looking at actual performance versus targets. The system is expected to continue to help Bulmer boost profits which have increased from £10.4 million in 1988 to an expected £24.5 million this year, during a period when most of the alcoholic drinks market has been in decline.

Similar benefits have been achieved at Sony Broadcast & Professional (UK) which has implemented an OLAP system to improve the forecasting and measurement of business performance. 'Previously, almost all management reports were being compiled from data copied and re-keyed from other reports,' says Lorraine Wright, IS account manager at Sony. Not only did it take a huge amount of time, it produced around 15,000 pages of reports a year for each sales manager to plough through.

Using the LightShip Professional OLAP package from Pilot, Sony has achieved huge time-savings and improvements in screen presentation. 'Suppose I'm a sales manager looking at invoiced sales to a specific customer and I want to check back orders,' says Wright. 'I can display them with a click of the mouse. Then I can flip the screen to see how many other customers have back orders for the same product.' Clicking to another part of the system, the sales manager can check how well the group is doing in helping achieve the company's gross profit target. Flipping the screen again shows which sales staff have achieved the highest gross profit in their deals and where margins have been too low. A magnifying-glass icon marks where further detail is available, helping make the system intuitive. Switching between pre-defined screens takes about four seconds. But if none of the screens exactly define the information users want, they can put together their own ad hoc enquiries and expect a response just as quickly. It had to be quick, says Wright. At first, off-the-cuff enquiries could take nine seconds to appear on-screen. 'Users complained even though previously it could have taken them two days to get the information.' For Sony's managers, the main benefit of OLAP has been time-saving. For example, the dealer sales manager used to take two days at the end of each quarter to work out discounts for dealers for the previous three months. Now the task takes two hours. OLAP has also helped Sony's sales teams switch their focus from products to customers. Newly-appointed account managers can catch up on the history of individual customers and identify gaps in their product ranges. 'We are spotting business opportunities that we never previously knew about,' says Wright.

One of the main challenges in setting up any OLAP system is getting everyone in an organisation to agree on the data and iron out inconsistencies. 'The figures have to be perfect otherwise people will lose confidence in the system and nobody will want to use it,' says Wright. The benefit is that once you have been through this process, you have one central undisputed repository for all your organisation's data.

The benefits of OLAP are not confined to commerce: they are also being realised in the public sector as it copes with shrinking resources and tighter budgets. Hereford & Worcester Family Health Services Authority (FHSA) is using OLAP to compare the performance of the 400 GPs in its area. The idea was to encourage GPs to manage themselves better by showing what other practices had done. For example, the system can track the rate of night visits per thousand population. A relatively low rate might call into question how well a specific doctor handles requests for night visits while a high rate might trigger an investigation into whether daytime services are being adversely affected. John Gregory, director of primary care for North Worcester, says the system, which is based on a relatively inexpensive package from Acuity, has helped him spot the less well managed practices and focus assistance on them. For instance, a practice might show a poor record with contraception services, perhaps because it has only male doctors. 'Now we can direct resources where they're really needed rather than the previous "decibel planning" - doctors can be very vocal.'

The system tracks trends in the immunisation of young children, cervical screening, contraception services, blood pressure monitoring, surveys of drinking habits and smoking advice. It can also highlight places where expensive branded drugs are being used rather than cheaper generic drugs which may be just as effective.

Soldiers too are deploying OLAP. The British army is using Holos, a relatively affordable OLAP package from London-based Holistic Systems, to help manage its resources. Holos lets military strategists simulate the potential formations of units simply by moving icons around the screen. They can investigate the man-power, capacity and financial repercussions of calling up specific units, reserves and equipment, and assess the effects on other parts of the army. Even emergency operations can be accurately costed before they begin.

But choosing a package is no easy task. There are now more than 30 software houses in the business and assessing the merits of their offerings can be mind-bendingly difficult. Moreover, mistakes are expensive. Even a modest OLAP package will probably set you back more than £100,000, and a large-scale implementation can top £1 million for software alone. Pendse is convinced that costs will come down as more mainstream software houses enter the market. But in the meantime suppliers don't make things any easier by fighting about issues such as which type of database software should be behind the OLAP and how much data their systems can handle.

One small hint to minimise implementation costs is to get suppliers to demonstrate screen display options in advance. You can soon see whether you want to view data in the form of graphs, charts or tables, for example. Also check that the package is fast and simple to use for your type and quantity of data. 'Users have got to be able to get the information they want rapidly or you might as well forget it,' says Pendse. Even so, you need to be prepared for a long period getting people to use it. At Bulmer, Wynn gave the sales managers a year to experiment on their PCs with word-processing packages, electronic mail, spreadsheets and graphical presentation tools before he let them anywhere near OLAP. They have also had to adapt to different management techniques. They are still adjusting to their new role and the extra activities they can perform. 'Now that they are focusing on profit rather than volume, they have had to become business managers rather than just sales staff,' says Wynn.

While OLAP may not be simple to implement, it could be crucial to the success of IT in many organisations where chief executives have become disillusioned with technology. Board-rooms often express the view that IT has cost a fortune and yielded few benefits. Users, meanwhile, are causing anarchy by setting up systems on their PCs, duplicating data, introducing inconsistency, and creating islands of information.

'OLAP could prove key to the credibility of IT in the boardroom,' says Wynn. 'Information is what everyone is screaming for right now and patience is running out. OLAP could prove the answer everyone is waiting for.' His view is echoed by Wright, whose MD had used an EIS in his previous job and found it to be highly inflexible. He took a lot of convincing about the new system and at first he was not keen on the idea. 'Then I did a rough prototype and he began to get really excited,' says Wright. 'Now I train users and they can't believe it is possible to have such a leap forward compared with what they had before.' There's still time for OLAP to fall from grace like so many other IT innovations. But, for the moment at least, it looks like a technology whose time has come.

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