Revealing Success

Some organisations making strides in the technology are prepared to speak out. Take US organisation Ace Hardware, which recently had to integrate wholesale and inventory data with point-of-sale data in real time from thousands of stores to support a change in focus from wholesale to retail. Wu says the company has used Informatica to build a best practice analytics solution that is improving pricing structure and creating more effective and regionally targeted marketing campaigns for individual items sold from stores. It also lets Ace track the items its stores buy from other vendors - an ability that helps it negotiate better deals for retailers through aggregate purchasing.

Ace is also able to analyse customer behaviour, store purchases and customer reaction to business decisions. "For instance, Ace wanted to effectively increase store profitability and sales, and so it did a test where it took a wheelbarrow typically priced at $80, and dropped the price down to $50," Wu says. "They found that while the profit on those wheelbarrows declined, they sold more of them, and when someone buys a wheelbarrow, they don't just buy a wheelbarrow, they buy tools with it, and so they are increasing their sales. They were also able to go out to their competitors to look at competitive pricing, ideally with the goal of increasing the dollar sale per transaction."

Enterprise analytics also stopped Logitech - a Base Consulting client - from making a crucial mistake in the wake of the September 11 terrorist attacks. Wu says the gut reaction of Logitech executives in assessing the likely impact of the disaster was to reassess manufacturing runs on the assumption that demand for product on the US East Coast was likely to slump in the short term. That would have meant announcing to Wall Street that the company was now unlikely to meet earning expectations, which in turn would have had a significant impact on the price of the stock. Worse, had those revised earnings expectations then proved wrong, the share price would likely have taken another hit, with buyers seeing the shifting views as a reflection of management incompetence.

Fortunately, after a couple of days of updating and aggregating data, Logitech was able to take a detailed look at its sales channel and start to understand better the position. It found that in defiance of all expectations, sales in the New York/New Jersey corridor were actually increasing to the point that the company had to push more products out to the market to avoid shortages.

Wu notes that before it began using enterprise analytics it would have taken Logitech roughly 25 days to accumulate the information needed to make such an analysis and roll it out. Now the process of aggregating the data, translating it into common business terms and definitions and applying business intelligence to it takes just two days.

"So there is a lot of value associated with enterprise analytics, and we're not just talking about quantitative value; there's qualitative value as well, like better business decision making," Wu says. "You're no longer making decisions based on gut reaction, and you're now aligning some of your business objectives according to these measures. If you want to increase sales that's one goal, but where are you struggling with respect of your sales? Is it in the quotation process? If that's the case what can you do about it?

"I think this is an area that is beyond the bleeding edge," says Wu. "It's maturing and I think that these organisations that are slow to adopt this are going to find themselves in a very difficult environment because you're having more and more organisations adopting this very quickly - they realise that there is a tremendous competitive advantage behind it."