From a BI perspective what is providing greater business leverage in these volatile times for different companies? Clearly in volatile times, companies tend to want to contract their human resources. They want to contract their activities. They want to downsize and so forth.
But leading companies around the world, and ones that are really successful, even if their revenues are declining over time, are finding that the use of information, clearly business intelligence information, is assisting them in making better decisions on how to use resources and at the same time reducing costs in processes, changing processes during a volatile time and not just hunkering down financially, but becoming more innovative.
Generally you see that in a strong economy, but when economies are weak, people have to become innovative. Pain occurs. They look for doctors and consultants to help them out business-wise. What we have seen over the past year is something very interesting. It’s an approach that says, I am going to get smarter about the way I am doing things. It’s the smart information, smart people, smarter people, smarter channels, access to data, and data warehouses.
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Assistance in Making Better Decisions
These are things that assist them in making better decisions. And when good times return, companies that have been innovative will fare better than those who were just focused on the contraction activities. There was a study done a decade ago that showed that companies that did things that were innately intelligent things like doing more integration, more widespread dissemination of information, enabling front-end people who touched the customer to be more empowered with information and also be better decision-makers. Other intelligence practices include scoring and letting machines make decisions such as approvals.
These companies far exceeded their peers in terms of performance during and after the recession. Companies should be retooling when they are contracting, and once the contraction is over, and we need to expand, then they are all set to go. In fact, what we’re hearing now from our customers is not only do they want a data warehouse, they want a true warehouse with that single version of the truth.
With integration of new companies and interactions with suppliers and partners globally and information flowing throughout the enterprise, they want better financial management, better customer management, better channel management, better relationships internally and externally. They want to extend the enterprise to make it not only smarter and better but leverage the external resources, their partners, their distributors, their suppliers, and even cooperative competitors.
Now let’s talk about specific examples. Let’s start out with some easy to understand ones. Banks are in trouble, not just in the US but around the world. Why are they in trouble? Well, clearly they got somewhat out of control in the middle and early 2000’s in giving loans in many cases to people who weren’t scored correctly or they didn’t pay attention to the scores culturally or organizationally.
Second they didn’t have a wide ranging view of the customer. Some of them relied on the customer for their customer’s information and didn’t use resources to check on it. Third they sold a lot of loans to each other in packages where they didn’t really identify the detail data, the things that were really important for valuing them.
Risk Management is the Solution
Today the solution is risk management. Risk management from the front side in terms of where do I put my assets if I am a bank or an insurance company or other financial services provider. Second how much am I going to charge for packages and repackaging. Third trying to look at risk in terms of risk-reward. How much am I willing to risk to make this certain level of reward.
And that’s extended off into different industries whether it’s airlines, rail, logistics, all sorts of industries outside of the financial services sector. In telecommunications, it has really gotten interesting. The high volatility of churn, customers going back and forth between companies in the same industry, in the same town, in the same country such as in the mobile carrier business.
The churn problem is now being addressed by very sophisticated customer segmentation that is almost down to a segment of one. I track the customer to understand the use of my product or service, the payment, the activity, the cross-selling and the offers, and then the multiple channels they use, Internet or phone, or other ways to communicate with me.