Business Intelligence and the SME Company Part Two

Part 2 – Case Study

The reports that management were receiving were from their accounting software, their operational system. The organisation had 6 other databases. Management believed that each of the 6 databases were giving them the same information and that the information is within the boundaries of tolerance, IE the reports can be trusted. This organisation is in manufacturing and is a SME.

When we were engaged to implement BI tools to assist management with “new” reports (they were not called BI tools then), management was much attached to their current reports and how they “look and feel”. This was hard to “win” managers over to the new reports as they want their old reports (how they look and feel, even the font and where information are needs to be exact) back using the new system.

One of the first projects was to centralise all the data from the 6 different databases. The project team needed to make sure that the data in each of the databases were centralised and not redundant. It became very evident that the data were not related and each department who owns their own database were inputting data from their own department and the information is not shared with the other departments. Another huddle that arises is that the data in the respective databases did not match that in the accounting package (at that time they did not have an ERP system). This created some delays for the project team. We needed to ensure which data is the “true” data. Since we have the issue of management wanting their own look and feel and further to that, they were the gate keeper of their own data, the project team realised that when the databases are centralised, users may not readily trust the new reports because we now have a “one version of the truth”. We are no longer using their data but that of the ERP system (which is also being installed).

The project did have a very strong sponsor and with his help, a change manager position was created. We then had to “wash” the data and this project becomes a relatively large data cleaning project. A lot of the figures that have been used in the respective databases were inputted over 3 years ago and most of them are now out of date. Figures like cost per item and unit of measures had changed a few times over the past 3 years. The realisation of this error in effect created an unfavourable variance of approximately $250,000. Most of this was stock related and the company had to take a hit for this error as it is now realised (in accounting terminology).

The new BI tools when they was finally implemented, was rolled out in stages. The reason behind this was to gain the trust of the users of the tool. Since the project ended up to be more like a discovery type project, the existing reports could not be used as the “controlled” reports to check for accuracy. There were discussions that the new reports are not correct but it was difficult to quantify this. For this reason, the roll out of the project happened in stages.

The first BI tool was a stock levels report which is a dashboard look and feel. The inventory manager could analyse their stock levels on a daily basis and make the necessary judgement call to order additional stock or not. This could only occur when the inventory manager had just finalised her stock take and the figures have been entered into the ERP system. This was a quick win for the project as we could use the stock levels report from the transactional system as a control report. Once this was signed off the next was the manufacturing station reports. Each of the manufacturing station had their own task to perform based on their respective work sheet. A lot of the work station operators did not follow the manufacturing flow process. These stations did bulk process work instead and the outcome was an oversupply of particular parts that might not be use. The initial reasoning is that the setup time required to reset each station is approximately 30 minutes.

Once the systems were running it was easier to monitor and see what the “truth” really is. The BI Tools provided the organisation an immediate ROI as they were able to reduce wastage and over creating items that would not otherwise be used during their manufacturing process. Their holding area were reduced as the systems were also able to calculate reasonable the time taken to manufacture the product from end to end providing their customers with up to date time schedule when their product will be ready for shipment or had been shipped.

To determine where costs can be reduced, the organisation will need to know and be informed of their operational and business divisions. The GFC has created opportunities for Business Intelligence (BI) vendors and consultants to assist companies in the design and implementation of Business Intelligence Tools which may assist the companies make better decisions. The cost to implement such a BI tool might not be significant. However to the organisation the perception of such costs might be significant as the users who would be using the system will be limited to decision makers. The success of any implementation is a team that can map the implementation journey well and a sponsor who will work alongside the project team.

Business Intelligence and the SME Company Part One

Part One – Organisational requirements to make money

The current discussions regarding “Global Financial Crisis (GFC) has been going on now since mid 2007. The GFC has caused the global stock market to fall and large banks to be either taken over or collapsed when governments are not able to support or “bail” them out. Due to this GFC, many companies have had their income source either been terminated or re-negotiated by their customers / clients. The termination and re-negotiation of contracts saw many companies collapsed overnight and others are struggling to restructure their organisation such that they are able to "ride the wave" out of this GFC.

In stable market with good revenue sources, companies concentrate more on building revenue as some of them are mandated in keeping their shareholders happy. In a bear market, in this instance, the GFC, companies are striving to stay afloat by restructuring their business or businesses. Restructuring is another word for cost cutting. Each company and their management teams could have differences of opinion in how a restructure would look like. In general terms, some of the strategies that a organisation could adopted are; reducing labour, inventory, entertainment , and travelling expenses just to name a few. The key word here is reducing cost, since increasing revenue might not feasibly during the GFC, organisations are now looking at the other side of their profit and loss.

Organisations that had been focusing on revenue, some of these organisations might not have concentrated on their expenses. They have been complacent with where they are at with the organisation and believe that the expenses have been reduced as best as possible. The justification of this argument is that the percentage of expense increased is in line with the increase percentage increase of revenue. I had managed such a project in recent years (not during the GFC but the principals are the same) and until BI tools were implemented, the management of this organisation did not fully understand how much wastage was happening in their own organisation.

This will be continued as a mini case study in Part 2.