The Value of Intuitive Decisions in Your Organization
every organization, employees make hundreds of decisions each day. They can
range from whether to give customer X a discount, whether to start producing
part Y, whether to launch another direct mail campaign, whether to order
additional materials, etc. These decisions are sometimes based on facts, but
mostly based on experience, accumulated knowledge, rule of thumb, and the
continuing daily events related to the organization’s success or failure.
poses a problem because experience, knowledge, and rule of thumb can take years
to develop. Some employees never acquire these skills and they cannot afford
avoiding the repercussions of events. Those who do may still fall prey to
decision traps or biases in judgment. Improving the quality of business
decisions has a direct impact on costs and revenue. For instance, giving a
customer a discount may or may not help the bottom line, depending on the
profitability of the client over the duration of the relationship. To improve
the quality of decisions, managers can:
Option: Do critical tasks themselves.
This leads to burnout,
bottlenecks, and opportunity costs of not doing more strategic work.
Option: Hire additional skilled staff.
Result: This increases costs
Option: Attempt to define a policy for
all possible decisions.
Result: This leads to decisions that do
not meet with the rapidly changing needs of the business.
Give existing staff the tools to make intuitive decisions, based on their
ability to enter time-critical event information on correctly formatted event
forms: this, combined
with a continuously up-dated event history creates
an intuitive computer system capable of suggesting time-critical tasks.
Result: Properly inputted e, combined
with a continuously up-dated event history creates an intuitive computer system
capable of suggesting time-critical tasks.
creates an agile enterprise and is the most cost-effective solution.
The Means to
Making Intuitive Decisions
The ability to input event information is
the key to allowing employees to utilize computers to make rapid intuitive good
is a good decision? A good decision can be defined as one that helps the
organization move closer to its goals. But how do employees know if the
decision they are about to make will help the enterprise meet its objectives?
They need tactical and strategic information: defined by correctly inputting
events, event histories, along with an intuitive computer system.
All employees can utilize event information
to adapt tactical and strategic planning.
example, how do you define the work of a stonemason?
he placing stones side by side and cementing them together?
he building a wall?
he building a cathedral?
job description is also an event. But by focusing on the third definition, the
mason will understand the goal and the context of his task, not to mention find
his work more interesting. Give him up-to-date event information on how the
rest of the building is progressing, how many stones he has left, and how other
masons did his job in the past, and he will be able to utilize event history
and an intuitive computer system to make better on-the-fly decisions in
response to changing work conditions. This observation holds true for any type
information presented in the context of tactical and strategic planning is a
powerful motivator and enabler.
Are we meeting our objectives?
managers’ incentive plans are based on quantifiable objectives, such as
profitability, percentage of on-time deliveries, proportion of satisfied
customers, etc. However, managers often have limited ways of knowing whether
they are progressing toward their objectives. At the end of the year, they
receive their bonus, and are told how well they did. They may be pleased or
disappointed, but they have little way of predicting the impact of their
actions on corporate welfare.
by objectives (MBOs) only works if the employee has a
way to monitor his own progress in reaching his objectives. With intuitive business
intelligence (IBI), each user having access to event forms and event histories
has the means to see how his or her actions impact the overall corporate
profitability. Complex incentive plans may not be as necessary if employees, at
any time, can see which of their actions improve or hurt overall performance.
The Case for Intuitive Business
understand the value of making a better decision and how giving your employees greater access to event information can empower
them and yield even greater results. Now it’s just a matter of finding out how
an IBI solution can make that notion a reality. This
document will supply you with the knowledge you need to gain a complete understanding
of all the issues you will face when implementing a IBI
brochure is divided into three sections. The first section gives you a clear definition
of the term intuitive business intelligence and highlights the characteristics
of an IBI deployment. The second section outlines the three most common
benefits you will gain from an IBI solution. The third section looks at the
issue of measuring the benefits of IBI and explains how you can justify your IBI
this document, you’ll find numerous examples of current INQUIL customers who
are using IBI in a wide variety of creative ways to make their organizations
more responsive, productive, and profitable.
What is Business Intelligence?
account manager, on her way to a client visit, looks up past proposals, as well
as the client’s ordering, payment, delivery, support, and marketing history. At
a glance, she can tell that the client’s ordering volumes have dropped lately.
A few queries later she understands that the client has a support issue with a
given product. She places a call to her support department, and learns that the
defective part will be replaced within 24 hours. In addition, the marketing
records show that the client recently attended a user conference and expressed
interest in the new product line. The account manager is now fully prepared for
a constructive sales call. She masters all aspects of her client’s relationship
with her firm, understands the client’s issues, and can confidently address new
quantities of data...
businesses increase their reliance on enterprise systems, they are rapidly accumulating
vast amounts of data. Every interaction between departments or with the outside
world is an event; historical information on past transactions, as well as external
market information, is cumbersomely entered into information systems for future
use and access.
very few answers
all this data available, it’s surprising how difficult it is for managers to
get a clear picture of relevant fundamental business information, such as
inventory levels, orders in the pipeline, or client history. In most
organizations, it would take the account manager, in the example above, hours
or days to get answers to her questions.
organizations contain disparate silos of information. Client orders and payment
records are kept in the accounting system; installation and support information
is stored in the customer service database; contact management software tracks
the proposals and sales call history; and marketing contact history is kept by
marketing. Rarely do these systems speak the same language, and there is no
simple way for a non-technical user to get answers quickly.
The Solution—Intuitive Business
Intuitive Business Intelligence refers to
the use of our unique technology that collects and effectively inputs event information
to improve business effectiveness.
The different information systems described in the previous
section may be successful at helping users accomplish specific tasks, but
they’re typically not well suited at providing information to end users. With intuitive
business intelligence, users will be able to reconfigure daily event
information and event histories to fuel an intuitive computer system. This will
create true objective business knowledge, and translate this knowledge into
anticipation, control and profit.
So what is intuitive business intelligence? IBI enables
your organization to track, understand, and manage your business by
successfully entering event information in order to maximize enterprise daily performance.
With IBI, organizations are able to improve operational efficiency, build
profitable customer relationships, develop differentiated product offerings,
and predict trends.
In enterprise networks, IBI provides employees the ability
to input time critical event information to help make better business
decisions, and can be used in environments ranging from workgroups of 20 users
to enterprise deployments exceeding 20,000. In an extranet environment, IBI is
available on demand: this allows organizations to deliver new services and build
stronger relationships with customers, partners, and suppliers via the
In enterprise performance management (EPM), organizations
must understand and have constant visibility into their key performance
indicators and metrics that span across their organizations. By doing this,
organizations ensure their strategy is aligned from top to bottom and across
the organization from marketing to sales to manufacturing to human resources.
Providing this enterprise insight is a key strength of IBI.
The Characteristics of an Intuitive
Business Intelligence Solution
Single point of access to event information
systems, organizations can unlock event information held within their databases
by giving authorized users a single point of access to event data—a IBI
portal—in both intranet or extranet environments. Wherever the event data
resides, whether it is stored in operational systems, event data warehouses, event
data marts and/or packaged applications, users can prepare reports and drill
deep down into event information history to understand what drives their
business, without technical knowledge of the underlying data structures. The
most successful IBI on-demand applications allow users to do this with an easy-to-understand,
non-technical, graphical user interface.
Using IBI in all departments of an
are many different uses for IBI systems. Our example at the beginning of this section
focused on one specific application: sales. However, as illustrated below,
systems can be used at every step in the value chain.
Pressed4Time: The company
uses IBI to track, understand, and manage event data in every department—from
finance, production, and development, to research, sales and marketing, and
purchasing. Users at all levels of the organization access supplier and
customer reports relating to online requests and negotiations, marketing
launches, and franchisee customer capacity management and tracking, all via our
on demand platform.
Timely answers to business questions
key to unlocking the power of event information is to give users the tools to
quickly and easily find answers to their questions. Some users will be
satisfied with standard reports that are updated on a regular basis, like
current inventory reports, sales per channel, or customer status reports.
However, the answers these reports yield, can lead to new questions. Some users
will want dynamic access to event information. The information that a user
finds in a report will trigger more questions, and these questions will not be
answered in a prepackaged report.
users may spend 80% of their time accessing standard or personalized reports,
you will find that for 20% of their tasks, they need to go elsewhere to obtain
additional information not available in the original report. To address this
need and to avoid end user frustration (and related report backlog for the IT
team), an IBI system offered on demand is required that lets users autonomously
make ad hoc requests for information from corporate data sources.
Making the most of the internet by creating
can open up IBI system access to users outside the organization through extranet
applications with clearly defined security limits. For example, customers may
want to consult their ordering history to analyze their buying patterns and identify
cost-saving opportunities. Or suppliers may be interested in gathering sales
International: For merchants, access to IBI offers the opportunity to
monitor their businesses more closely on a day-to-day basis. Advertising agencies
are able to use information from the extranet when developing campaigns for
merchants. On the authorization side, a call center can pull up cardholder
authorization transactions to cut down on fraud. MasterCard expects that in the
long term and as business partners increasingly demand access to system data,
the system will support more than 20,000 external users.
The Benefits of Intuitive Business
Because of the wide applicability of IBI in both enterprise
and extranet deployments, the business benefits are numerous. These benefits
can be grouped into three main categories: lowering costs, increasing revenue,
and improving customer satisfaction.
And this list is far from exhaustive, since empowered users
continue to find new ways to implement IBI.
Improve operational efficiency
By giving internal or external customers access to
real-time event data over the web, customers can track their own accounts and
answer their own questions. As a result, customer satisfaction is improved
while reducing support costs. A significant, added benefit to real-time event data
access is that data becomes much cleaner. By reviewing the data themselves,
customers can spot errors, and help improve the quality of the information in
the event data warehouse.
A leading dry cleaning delivery company: Today, the organization's customer care extranet allows
customers to access their account information over the internet; however, it
used to be that the company would send paper reports to all of its customers.
Any errors in the reports would take one to two months to correct because
customers would first have to receive the report, catch the mistake, and then
notify the company of the error. Now customers spot the errors themselves in
real time and notify the insurance company directly through the extranet,
usually within a couple of days or less.
Eliminate report backlog and delays
Intuitive Business Intelligence allows business users to
design their own queries and reports, allowing organizations to redeploy the
programmers who formerly performed this task. This can generate significant
cost savings in human resources, since sought-after staff can be reallocated to
projects that add more value to the organization.
Handspring, Inc.: “The
Company receives event data from such partners in multiple formats and a
variety of systems, so it needed to consolidate and analyze data to give
employees better information for decision-making. [With IBI, Handspring] can now
generate reports on items such as web orders, bookings, billings, backlog, and
shipping activities in less than one day, versus weeks before.”
Do 20% of your products account for 80% of your
sales? If you don't know, intuitive business intelligence can give you
Negotiate better contracts with suppliers
A solid grasp of facts and figures is invaluable when it
comes to negotiating contracts with suppliers and customers. For instance, by
analyzing event histories, supplier performance, on-time delivery trends,
percentage of rejects, and price changes—you are in an excellent position to
discuss all aspects of the contract as well as possibly negotiate volume
discounts. And identifying a customer's spending patterns could qualify him or
her for a particular packaged deal.
Shell Services International: With its IBI solution, Shell was able to access event information
about revenues between fuel and non-fuel business. Seeing that
20% of their products were delivering 80% of their sales,
Shell made significant improvements in margin and turnover. They also
negotiated better deals with suppliers and improved product master file
management, which helped them reduce working capital.
Find root causes and take action
If one division is doing better or worse than others, identify the root cause and either implement a best practice
or fix the problem. Was the problem caused by better/worse management? A regional market trend?
A new sales
With IBI, you can find root causes both to problems and to
best practices by simply asking “Why?” The process is initiated by analyzing a
global report, say of sales per quarter. Every answer is followed by a new
question, and users can drill deep down into a report to get to fundamental
causes. Once they have a clear understanding of root causes, they can take
highly effective action.
IBI can turn open questions into specific answers.
Identify wasted resources and reduce
You can use IBI to apply activity-based costing methods to
identify hidden costs or missed opportunities. From these findings, resources
can be allocated to highly profitable products, customers, and projects,
thereby increasing the bottom line.
Also, referring to event histories, one gains
a clearer understanding of success of promotions can help to effectively
monitor inventory levels.
TruServ: The parent
company of True Value Hardware “has used IBI software to improve efficiency of
its distribution operations and reap a $50 million reduction in inventory
costs.” “The marketing department uses [IBI] to track sales promotion results
such as which promotions were most popular by store or by region. Now that
TruServ is building promotion event histories in its databases, it can ensure
all stores are fully stocked with adequate inventory during an event.” TruServ
“was able to achieve a return on investment in about five to six months.”4
Leverage your investment in your ERP or
While the bulk of the investment in your IBI system is probably
in enterprise resource planning (ERP) applications or your event data
warehouse, it is very difficult for non-technical users to take advantage of
available event data without a good reporting and analysis tool.
IBI helps unlock the event data in your company’s event data
PRESSED4TIME: One of
the nation’s leading suppliers of dry cleaning delivery services uses IBI to
make ad hoc queries against its SAP system. Thanks to PRESSED4TIME’s IBI
system, franchises can access reports that are tailored to their needs and that
hold a lot of detailed event information. Working offline on their laptops,
users can drill down to the required level of detail on product or customer
Sell information to customers, partners,
Leading organizations are using IBI to differentiate their
product and service offerings from competitors through value added, web-based
services. In the past, many departments generated zero revenue, but now with an
IBI on-demand platform, they create a recurring revenue stream by selling
information to customers, partners, and suppliers.
Owens & Minor: The
$3 billion medical supplies distributor has signed up 80 hospital accounts and
six of its top suppliers, including pharmaceutical giant Johnson & Johnson,
for the service. Hospitals pay up to $1,250 per month and suppliers pay $2,000
per month. It is estimated that Owens & Minor will generate at least $2
million in fees next year.
Improve strategies with better marketing
With easy access to ordering, accounting, production,
shipping, customer service, and even external event-databases, marketers can
find answers to the most detailed of questions such as, “What was the success
rate of my direct mail campaign?” or “What was the incremental revenue
generated from the new TV ads we just ran?” or “Which ten items were most
popular across our 50 stores during the past couple of weeks?”
With this information, the marketer can precisely tailor
product launches and promotion campaigns to the targeted audience. Using IBI,
companies can micro segment their markets and gain an edge over the
Ben & Jerry’s: IBI
allows the U.S. ice cream maker to track, understand, and manage relevant event
information on the thousands of consumer responses it receives on its products
and promotional activities. Through daily customer feedback analysis, Ben &
Jerry’s is able to identify trends and modify its
marketing campaigns and its products to suit consumer demand.
Departments within an organization that
have led the deployment of IBI On-Demand have found themselves switching from
being a cost center to becoming a profit center.
Empower your sales force
Better results from your sales force can be achieved by
analyzing its selling patterns: compare results to targets, to figures from
previous years, to other sales staff results, and suggest improvements.
Encourage the sales force to focus on high profitability customers and
products. The sales force can also use IBI to analyze data on brands, clients,
salespeople went out to visit TaylorMade’s customers at golf pro shops and
sporting goods retail chains, they didn’t have up-to-date inventory reports.
The sales reps would take orders for clubs, accessories, and clothing without
confidence that the goods were available for delivery as promised,” [Tom
Collard, information systems director with TaylorMade] says. “The technology
has helped TaylorMade not only reduce costs by eliminating the reporting
backlog…it has eliminated a lot of wasted effort that resulted from booking
orders that it couldn’t fill.”5
Improving Customer Satisfaction
Give users the means to make better decisions
With access to event information, users can make better
decisions faster, without having to escalate standard problems up the
management hierarchy. This guarantees pragmatic and effective solutions since
the people directly involved in the operations make decisions. In addition,
users have the increased satisfaction of controlling their own process.
Ingram Micro: This
wholesale provider of high-tech goods to technology solutions providers is
working to create a new BI extranet in order to deliver advanced information to
the company’s suppliers and business partners.
Says Ingram Micro CIO Guy Abramo,“Today
it’s incumbent on us to provide our partners with sell-through event information
so they can see what happened once their PCs hit distribution. That’s critical
for them to do inventory planning and manufacturing planning—helping them to
understand what products are selling to what segments of the marketplace.”6
Provide quick answers to user questions
One of the primary benefits of IBI is that you can dramatically
reduce the time it takes for internal and external users to get answers to
their questions. Perpetual flow of reported, relevance determined and up-dated
event information translates to fewer delays and faster response time, users
are empowered to act quickly, based on the event information they receive when
they need it.
Principal Financial Group (PFG): PFG’s financial department has received substantial
benefits from the products’ real-time event data extraction and analysis capabilities.
The department can now rapidly review monthly and yearly relevant event data,
increasing the speed of decision-making and improving productivity and business
Challenge assumptions with factual
Almost all businesses rely on assumptions and rule of
thumb. However, it is
Worth while to challenge these hunches through detailed
analysis of operational data, because assumptions and rule of thumb are
British Airways: Peter
Blundell, former knowledge strategy manager for British Airways, and various
company executives had a suspicion that the carrier was suffering from a high
degree of ticket fraud. To address this problem, Blundell and his team rolled
out intuitive business intelligence. “Once we analyzed the event data, we found
that this ticket fraud was not an issue at all. What we had supposed was fraud
was in fact either information relevance and quality issues or process
problems,” says Blundell. “What it did was give us so many unexpected
opportunities in terms of understanding our business.”7 Blundell estimates that
their IBI deployment has resulted in around $100 million in cost savings and
new revenues for the airline.
Justifying the Investment
now, the benefits of IBI—lowering costs, increasing revenue, and improving
customer satisfaction—have been explained, and you can see why IBI is a
prerequisite to making better decisions. But you might be wondering, “How do I
justify this investment?”
The Process for Quantifying IBI Benefits
top-level management expects IT departments to justify their costs by
presenting quantified value gains, typically using ROI methods. Management is no
longer prepared to sink large sums into IT projects simply because they are the
latest and greatest technology. Information technology has come of age, and it
is expected to make a significant contribution to the bottom line.
looking at how IBI affects the bottom line, you should analyze the various benefits
you can expect to see from an IBI deployment. A practical way of breaking down these
numerous benefits is to separate them into four main categories:
Indirectly quantifiable benefits
Quantifiable benefits include working time
saved in producing reports, selling information to suppliers, etc.
et Chandon: The famous champagne producer, reduced
its IT costs from approximately $.30 per bottle to $.15.
leading risk insurance company: Because customers have self-service access
to their information on-demand in the insurance company's event-database, they
no longer receive paper reports. This one benefit alone saves the organization $400,000
a year in printing and shipping costs. The total three-year ROI for this IBI
deployment was 249%. Indirectly quantifiable benefits can be
evaluated through indirect evidence— improved customer service means new
business from the same customer, and differentiated service brings new
& Minor: A customer of Owens & Minor cited extranet access to the event-data
warehouse as the primary reason for giving the medical supplies distributor an
additional $44 million in business.
Unpredictable benefits are the result of
discoveries made by creative users.
Finance: The IBI system allowed an interesting discovery that later resulted
in significant new revenue. The customers of a particular model of the Audi
product line had completely different behaviors than customers of other cars.
Based on their socio-economic profiles, they were thought to want long lease
terms and fairly large upfront payments. Instead, event information revealed that
Audi customers actually wanted shorter leases and to finance a large part of
the purchase through the lease. Based on that insight, fed into an intuitive
computer system, the company immediately introduced a new program combining
shorter length of lease, larger upfront payments, and aggressive leasing rates,
especially for that car model. The take up on the new program was immediate,
resulting in over $2 million new revenue.
Intangible benefits include improved
communication throughout the enterprise, improved job satisfaction of empowered
users, improved knowledge sharing, and more time for all of these experiences
because of the lessening of the cumbersomeness of inputting event information
AMRO Bank: The corporate human resources department at ABN
uses IBI to gain insight into its workforce by analyzing up to the minute event
information in its event-data warehouse affecting such items as gender, age,
tenure, and compensation. Thanks to this sharing of intellectual capital, the
HR department is in a better position to demonstrate its performance and
contribution to the business successes of the corporation as a whole.
a deployment’s ROI is most accurately determined on a case-by-case basis, we
suggest the following approach for evaluating these systems. This approach has
the advantage of taking both measurable and intangible benefits into
Quantify the expected measurable benefits.
Qualitatively describe, as precisely as possible, the anticipated intangible
Estimate the total cost of ownership (TCO), including hardware, software,
personnel, consulting services, and future ongoing costs. Bear in mind that the
choice of system architecture—integrated or non-integrated—can greatly affect
total cost of ownership.
Then apply the following decision rule.
these intangible benefits, while challenging, can be done by creating a series
of assumptions to determine the impact these types of benefits have had on the
bottom line. For example, if customers access event reports directly and that
empowers the sales force to make more sales calls (because their time has been
freed up from creating the reports), how much more revenue are the sales
representatives bringing to the company because of these additional calls? Would
a realistic, conservative estimate on the amount of incremental business done
with this additional time be a 2% increase? If so, then in a $100 million
company, that would be a $2 million benefit for the company.This
process can be undertaken for any benefit acquired through intuitive business
intelligence. And while a little more time consuming than simply calculating
the quantifiable benefits, it will in all likelihood yield numbers that are
sure to create a positive ROI that would make any executive or business manager
feel that implementing intuitive business intelligence was a wise decision.
widespread use of intuitive information technology can generate tremendous
amounts of event data within an organization. This event data contains relevant
information that is invaluable to the organization’s decision makers. The
issue for most organizations is that the event data is inaccessible to all but
the IT department. While IT can run queries and produce reports at the request
of business users, a self-service approach to event information provides the
greatest benefits. With direct, easy access to event information in event data
warehouses, users can find answers to all the questions that are raised by
their activities. Armed with precise, relevant event information, users can
develop effective responses that help their organization attain its goals.
is the key to leveraging this wealth of event data that accumulates in an
enterprise. With IBI,
non-technical users can pinpoint what drives their business activity. They
can help reduce costs, increase revenues, and improve customer satisfaction. While
many of these benefits are clearly quantifiable, some of the more intangible ones,
such as improved communication throughout the enterprise, improved job satisfaction
of empowered users, or sharing of intellectual capital, can give your business
the greatest edge over its competitors.
hope this paper has helped clarify the value that IBI can deliver for your organization.
If you would like further information on INQUIL and our products and solutions,
please visit inquil.com.