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Issue of July 2003 
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Cover Story: Business Intelligence

From raw to intelligence

Business Intelligence tools can help a company analyze, strategize, and forecast. A look at how it can help your company achieve cost and strategic benefits, and the ways in which it helps businesses in different verticals derive more value of the data already present in its systems. by Soutiman Das Gupta

In the fiercely competitive banking and financial marketplace, the issues faced by Standard Chartered Bank (SCB) were not different from those faced by other banks in India. It needed to generate more profit, surpass competition, and survive. The bank realized that it could derive a large amount of relevant and intelligent information out of the customer data it had accumulated through its OnLine Transaction Processing (OLTP) systems.

"We wanted a solution that could perform analytics on our valuable customer data to help us proactively service customers, ensure customer loyalty, and retain them. This exercise is a must for survival in a fiercely competitive environment," said Sedjwick John Joseph, Head-Business Intelligence Unit, SCB.

SCB deployed Business Intelligence (BI) tools and carried out a variety of analyses, and delivered the results to various business users throughout the company. Using BI tools the bank can now effectively manage and optimize profitability of the products in its retail portfolio. The tools have made it easier to run targeted campaigns, and elicit substantially higher returns since BI can perform profit modeling for each account.

"The bank knows the likelihood of customers to take a new product. And this has resulted in more focused marketing campaigns and reduced costs, with improved customer satisfaction," explained Joseph.

Not only banks

SCB is not the only organization in India to benefit from the use of BI tools. Other banks and financial institutions, telcos, airlines, and manufacturing companies in India have used it to their benefit.

Typically, companies with large amounts of data from various sources like customer relationship, supplier management, and distributor management can use BI tools. The idea is to derive intelligence from the data already generated by the system—to help the business user make vital analyses, strategies, and forecasts.

“Airlines claim a three to eight percent revenue increase by using yield management systems” M.S.V. Rao, Director, Department of Information Technology, Air India

M.S.V. Rao, Director, Department of Information Technology, Air India says Airlines claim a three to eight percent revenue increase by using yield management systems (a kind of BI solution).

Business Intelligence tools can help a company translate vast amounts of data into intelligent insights to help further the business cause. The company can identify new customers and new market segments, conceptualize a new product for a particular market area or niche, optimize cross-selling practices by creating a consolidated view of the customer across all touch points, and offer the ability to react and plan with knowledge, insight, and confidence.

From raw to intelligence

Indian companies today are set to enter the 'intelligence' age. Before the days of computerization, companies had a lot of 'raw' data in the form of accounts ledgers, registers, and various reports. After computerization this data was fed into basic office automation/financial accounting applications, and databases to bring the company into the 'information' age.

Companies started using ERP, CRM, and other enterprise applications, and collected the data into a repository or data warehouse. This was the 'knowledge' age. Now, companies can use this knowledge to derive 'intelligence.' And this 'intelligence' will drive companies and profits forward, and be the service differentiator in today's competitive world.

Why BI for me?

"Data on its own is not of very high value. It is only when it is instrumental in better decision-making, strategic or
tactical, that it becomes impor-tant," explained Pranav Kumar, Gartner Research Director (APAC)-Enterprise Application Software (EAS).

The BI applications and utilities can be used to perform tasks like forecasting business conditions, improving operational efficiencies, managing supply chains, enabling analysis of customer behavior, and market segmentation. These tools perform the vital functions necessary for an enterprise to analyze, strategize, and forecast.

Traditional enterprise applications like ERP, CRM, and SCM can provide access to a single piece of data, like monthly sales figures. The goal is to turn the mountains of relevant and related data, already present in the systems, into useful information.

Tata Yodogawa, a steel roll manufacturer and supplier runs Baan's ERP and Supply Chain Scheduler. It gathered a large amount of valuable operational, customer, and supplier data from its systems.

It identified a number of areas in its business, which had a huge potential of offering better business value. It felt that BI was necessary for fast, intelligent, and knowledgeable decision-making capabilities.

BI tools from Baan were deployed at its plant in Gamharia, Bihar. The company expects benefits like quicker and accurate strategies, better analysis of historical data, and the ability to forecast market figures.

Maruti Udyog in India uses solutions from Business Objects, and hopes to achieve benefits like warranty claims analysis. This can help reduce the return of components from its nationwide dealers. The company can also figure out which component is returned the most and how it impacts accounts or sales, and accordingly create its business forecasts. This reduces cost of operations.

The use of BI and a warehouse at ICICI Bank has provided benefits like:

  • Consistent, reliable, and accessible information.
  • Revenue enhancement: The bank is generating more business from existing customers via cross-selling, up-selling, and retention initiatives.
  • Improved time-to-market: Campaign execution was reduced from an average of 10 days to
    3 days.
  • Decision-making: BI has aided strategic decisions like new product development and staffing through analysis of aspects like channel usage patterns, value migration, and product baskets.

Analysts say this

“Data on its own is of little value. It is only when it helps in better decision-making, strategic or tactical, that it becomes important” Pranav Kumar, Gartner Research Director APAC, EAS

Pranav Kumar, Research Director (APAC) - Enterprise Application Software (EAS), Gartner, feels that BI as a process, (as opposed to BI software) is the product of analyzing quantitative business data usually generated from business transactions. But other sources of data like human resources data can also be used.

It provides insights that will enable business managers to make tactical decisions, as well as establish, modify, or tune the business strategies and processes in order to gain competitive advantage. BI also helps improve business operations and profitability, and generally achieve the goals management set by the management.

Alok Shende, Industry Manager IT Practice, Frost & Sullivan feels that companies have realized that the vast amount of data stored across their value chains can be utilized in a productive manner to understand customer behavior and study sales patterns. The vast repository of information that rests within the enterprise database will drive the demand for BI tools.

Increasing competition in the banking, finance, and the telecommunications sectors will also propel the growth of BI. Using BI tools, organizations can get minute-level details about their customers. On a strategic level, firms will be in a better position to understand customer purchasing patterns for products and services across geographical and time boundaries. The true benefit arises as firms use this information on a customer-to-customer basis, allowing firms to retain profitable customers while screening those that do not directly add value to the company's top line.

Soutiman Das Gupta can be reached at

Business Intelligence Architecture

Click on image for larger view
BI benefits in different verticals

Here are examples of how companies in different verticals can benefit from the use of BI tools.

A telecom company
A mobile telecom with thousands of customers usually maintains a large data warehouse that serves as a knowledge repository. The warehouse keeps information like monthly itemized bill for each customer, information about roaming into other networks, number of complaints made at the help desk, the nature of complaints (like bad reception, high tariff, limited service), and seasonal variance in billing amounts.

“We wanted a solution that could perform analytics on our valuable customer data to help us proactively service customers, ensure customer loyalty, and retain them” Sedjwick John Joseph, Head-Business Intelligence Unit, SCB

It can use BI tools to:

  • Suggest new tariff schemes.
  • Understand which customers need more services like GPRS and MMS.
  • Identify the unique problems faced by each user.
  • Identify those users who show sign of 'shifting'.
  • Reduce churn rate by offering focussed solutions to these customers.
  • l Plan better profit-generating measures from low yield customers.

Hutchinson Max Telecom Limited uses BI tools to perform impact analyses of new pricing initiatives; actively track key indices like usage and churn; predict customer traits like usage behavior, tariff plans and product performance; and acquire in-depth insight into pre-purchase and post-purchase behavior of the customer.

BPL Mobile uses BI tools to perform Customer Asset Management. The company can implement specific marketing campaigns, run special programs to retain customers, measure the impact of customer turnover, and identify opportunities for cross-sell.

A Bank
A bank connects its legacy database with departmental databases, and gives branch managers and other users access to BI applications.

This helps to:

  • Determine who the most profitable customers are.
  • Identify customers who are ideal to try cross-selling techniques on.
  • The possibility of a new product or service to a particular market segment.
  • Identify the time of the year when customers get raises or bonuses; they can be targeted with other financial schemes like bonds and term deposits.
  • Frees IT department staff from the task of generating analytical reports for the departments and it gives the personnel autonomous access to a richer data source.

ICICI Bank uses BI tools to create nationwide enterprise business strategies and increase the revenue of the customer. It can decide which customer can be targeted for cross-selling assets and third-party assets. It can also create a strategy to migrate a customer to a lower cost channel of banking.

Standard Chartered Bank uses BI tools to effectively manage and optimize profitability of the products in its retail portfolio. The tools have made it easier to run targeted campaigns and elicit substantially higher returns, since BI can perform profit modeling for each account. The bank now knows the likelihood of customers to take a new product.

A hotel
A hotel, which may be a part of a large hotel chain, uses BI applications to:

  • Compile statistics on average occupancy and average room rate to determine revenue generated per room.
  • Determine its competitive position in various markets by gathering statistics on market share and data from customer surveys.
  • Analyze such trends every day, week, month, and year to provide the parent corporation, a picture of how each individual hotel is performing.
The BI architecture

BI uses a well-organized source of information from where it can draw out intelligent responses for business users. A data warehouse is a good source of data for BI.

A range of technologies and products are used to generate BI. The most common tools are simple query and reporting, OnLine Analytical Processing (OLAP), statistical analysis, Decision Support Systems (DSS), and data mining. These tools are used in a variety of ways.

To better understand the role played by the various tools, and the scope of BI in an organization, let's take a look at the architecture of a typical BI implementation at a large company that also has legacy data.

Data is stored in an organization in separate OLTP systems like ERP, CRM, SCM, financial packages, HR packages, and even legacy systems. These are the primary sources of data and can be called 'primary systems.'

Extract, Transform, Load (ETL) tools are run on these systems and organized data is stored in a data warehouse.

The data warehouse can be called 'secondary systems.'

The 'Extract' process reads data from the various sources. The 'Transform' process converts the extracted data into a scripted and defined format, which is fit for the warehouse. The process standardizes the various data structures so they can be accessed and analyzed with high accuracy. This is done with the use of rules, lookup tables, and by combining the data with other data.

The 'Load' process writes the data into the warehouse. The efficiency and performance of a BI solution mostly depends on the effectiveness of the ETL tools. The idea is to provide a rich and aggregated source of data.

Intelligent information is now delivered to the users or 'information consumers' throughout the organization to help in analysis, strategy, and forecasting.

If users are located in remote locations, a Web server can be deployed on the warehouse.

If the size of data is very large, smaller data marts, which focus on a particular subject or department, can be used for easier information delivery.

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