BI offers a number of benefits to
enterprises. But how does a company know it's time to
use BI. And does it need a separate BI team and an enterprise-wide
BI strategy? Answers to these and more. by Soutiman
Business Intelligence (BI) tools
allow companies to automate its functions of analysis,
strategy, and forecasting to make better business decisions.
Companies generate raw data
from various sources and touch-points within the organization,
and from external entities like suppliers and distributors.
And this raw data is stored as 'information' in OLTP
systems like databases, ERPs, SCMs and CRMs. This information
can be stored in a central repository like a warehouse,
to help extract knowledge. A BI solution can then draw
'intelligence' from the warehouse.
|“You know you have to use
BI when the cost of coordination outgrows the cost
of BI tools and centralization in the warehouse”
Anup Bagchi, Head Retail Strategy & New Product
Group, at ICICI Bank
Why do companies need BI?
"Looking at it broadly, enterprises
need to derive intelligence for two main purposes. First,
for performing analyses to help make decisions. The
analyses can help identify sales trends, and provide
alerts about important customers and complaints. Second,
to help predict future customer behavior and market
demand," explained Arun Rangaraju, Solution Manager,
CRM/BI, of SAP India.
"Enterprises need to refine
data into meaningful information so that business users
can analyze it. Users tend to look at information in
different perspectives. The information has to be thus
presented in the
right context," added Balaji Jagannathan, National Manager,
Information Management, of Computer Associates.
Survive without BI?
Can an organization survive
without using BI tools? The answer is, yes. An organization
can collect data from multiple sources and create the
usual reports like monthly sales, profits, number of
new customers, and inventory levels.
But for a large organization
like a bank, insurance company, and teleco, which has
close to a million customers, is it worth the effort
to collate the sheets and reports? It's difficult to
track patterns and behavior changes, peg growing segments,
and understand market potential. Decision-makers also
need cross-tab information to create strategies, analyses,
Moreover, as the size of the
company grows and it's geographical spread increases,
the nature of the reports becomes lengthy and complex.
Simply running 'eyeballs' over them will not provide
the macro picture.
Time for BI
"You know you have to use BI
when the cost of coordination outgrows the cost of BI
tools and centralization in the warehouse," explains
Anup Bagchi, Head Retail Strategy & New Product
Group, at ICICI Bank.
The business heads see that
there is an explosive growth of data across nationwide
systems. Reports are generated at various stages of
the business at various departments and locations, and
the business and product heads find it difficult to
extract the relevant information needed to make business
strategies and forecasts.
Mahesh Ramakrishnan, CTO of
Reveleus, which is an i-flex business, points out three
indications for an enterprise that says it's time to
use a BI tool.
- A business realizes it needs
BI when there are large isolated islands of data.
It takes a lot of time and effort to put information
- Typically, this organization
will have an army of people collating data from various
sources, and providing information to those who need
it. This is because no one can really source it from
- These complex scenarios
cause a lot of pain since a lot of time is taken to
acquire and publish information. And very often, important
business decisions are made based on an approximation.
The enterprise perspective and
Companies have always used technology
that manages and stores enterprise data. BI is the technology
that will manage the information, which has been provided
by the data.
ICICI Bank has 5 million retail
customers, 1.1 million credit card customers, and numerous
other customers for other products like loans and bonds.
If a bank of this size is able to identify an emerging
need from a small fraction of its customers, it amounts
to a lot of revenue.
Anup Bagchi of ICICI Bank says
that 25 percent of the bank's asset business grew over
the last 12 months through cross-selling. The asset
business includes auto loans, home loans, and credit
"Airlines claim a three to eight
percent revenue increase by using yield management systems,"
said M.S.V. Rao, Director, Department of Information
Technology, Air India.
Standard Chartered Bank (SCB)
used OnLine Transaction Processing (OLTP) systems, which
captured transaction-oriented applications. It answered
the financial queries and generated reports at a broad
portfolio level, which included total earnings, debt
situation, interest income, cost, fee income, and profits.
"The system was reliable but
provided little scope for in-depth customer analysis,"
said Sedjwick John Joseph, Head-Business Intelligence
This was the critical point
at which the bank decided it needed to analyze the huge
volumes of data captured by its OLTP systems. The idea
was to search for crucial nuggets of information from
the vast amounts of transactional data to get the right
information, to the right executive, and at the right
BI teams in companies
"BI tools are used by companies
to increase business and gain competitive advantage.
Since this activity is very important to an organization,
it's a good idea for a company to have a separate BI
unit. This unit will analyze the results thrown up by
the BI tools and fulfil the information requirements
of departments across the organization. This is an emerging
trend in the BFSI and telecom industries in India,"
said Bill Gibson, CTO-Asia Pacific, SAS International.
"Even with the BI data
a CIO cannot take a marketing decision randomly without
consulting the various division heads from Sales &
Marketing, Finance, Product development, Operations,
and Customer service. For example in a sales and marketing
scenario, BI helps to understand customer needs and
responses to new market opportunities. The CIO with
his sales team can gauge the effect of pricing and promotions,
target customer segments more accurately, analyze buying
patterns to take advantage of cross-sell opportunities,
true real-time one-to-one marketing activities,"
said Tarun Malik, Product Manager-Business Tools Division,
Indian organizations like the
RBI, BPL Mobile, ICICI Bank, and SCB have teams dedicated
to the study of analysis of information and the ways
in which it can generate value to the organization.
All these companies have benefited from their respective
However, Tariq Farooqui, Country
Manager, JD Edwards India has a different view on this.
"The results of BI are for the direct consumption of
personnel in the functional teams. It should enable
the business/functional personnel to analyze the information
themselves. The analytical information can be used to
find out information like the most profitable customer
on which products are performing the best vis-à-vis
competition," he explained.
BI enterprise strategies
A very important aspect an enterprise
should understand when it comes to BI is that, BI is
a business project aimed at business users for business
benefits. BI is not essentially an IT affair.
Data warehousing and relevant
tools enable the use of BI. Business users should formulate
the parameters for transforming the data in a warehouse,
and an IT person should code it. The BI team at the
enterprise should then formulate a strategy to use the
findings from the BI tools effectively.
SCB used BI tools to discover
that a significant proportion of its business came from
the upwardly mobile Indian woman. And business was likely
to grow substantially from this section in the coming
months. This gave the bank's BI team an impetus to launch
a product, which catered to the needs of this segment.
SCB launched DIVA, an international
credit card targeted at the Indian woman and bundled
it with several features. It includes discounts and
zero interest rates on categories like jewellery, cosmetics,
apparel, consumer durables, leather products, and mobile
BI must be treated like a business
initiative. It's function, use, and benefits must percolate
down to all levels in an organization. The deliverables
must be tracked and finally it's all about action.
An enterprise must act wholeheartedly
and quickly with the help of the information from BI
systems. The information might lose relevance in a matter
of weeks, or even days.
Alok Bansal, Solution Architect,
Baan Info Systems India talks about BI strategy in enterprises.
"The right strategy for an enterprise will be determined
by many factors. They are industry business drivers,
the company's perceived strengths, weaknesses, opportunities
and threats. Whatever the final choice, the goal will
be the same for all enterprises, namely to create, increase,
and maintain an elusive quality known as competitive
Soutiman Das Gupta can be reached
Organizations may have spent a lot of money to
buy BI solutions and hire consultants. And it
may have invested in quality hardware and software
to build a warehouse.
But even then, some may not be satisfied with
the performance. They may feel that the tools
do not show the desired results, and the business
is not able to derive the expected benefits. What
could have gone wrong?
tool and the data warehouse should be trained
and re-trained dynamically so that it's ready
to provide intelligence for tomorrow” Deepak
Verma, Senior Vice President and Chief Operating
Officer, BPL mobile
Here are a few possible reasons:
- The BI project and activity is construed
as an IT project. The team running BI may not
be a business team. It may be a team of IT personnel
with very less representation from the business
- The data warehouse and BI tools, and technology
are implemented for technology's sake, and not
with specific benefits in mind.
- The implementation phase of a BI project
is neglected. Implementation of a warehouse
and BI requires blood and sweat. It needs an
enormous amount of detailing and customization.
- There are not enough inputs from various
departments in an organization. The BI project
needs big organizational involvement. It cannot
run by itself.
- The IT personnel do not understand the organization's
business aspects. To make BI successful, IT
personnel must understand business over a period
- The ETL (Extract Transform Load) script has
been made entirely by IT personnel. The business
user must formulate/create the ETL parameters,
and IT personnel must script it.
Deepak Verma, Senior Vice President and Chief
Operating Officer, BPL mobile added to this:
- The vendor was not asked for the 'proof of
concept.' This can be explained with an example.Findings
from a BI tool should provide actionable and
relevant data. The BI tool shouldn't churn out
data that is voluminous and irrelevant. It should
list the most probable cases for up-sell, cross-sell,
or turnover. It should help the operating teams
with a focused list that can help them act in
a cost effective manner.
- The BI is not evolved at the company. Markets
and environments change. To keep pace, a company
must re-train its knowledge. The BI tool and
the data warehouse should be trained and re-trained
dynamically so that it's ready to provide intelligence
M.S.V. Rao, Director, Department of Information
Technology, Air India
Business Intelligence (BI) covers the functions
of gathering, processing, and analyzing large
volumes of data from the internal system and external
sources. And this is possible because BI uses
sophisticated tools of analyzing and forecasting
at a speed, which helps an enterprise take real-time
decisions to achieve organizational objectives.
Enterprises use technology to achieve the following
basic orgnizational objectives :
- Reduce costs
- Improve productivity
- Improve the product
- Improve customer service
- Improve revenues
BI derived by analyzing the internal and existing
data can contribute significantly to achieve these
objectives. And the use of enterprise applications
like ERP and technologies like Intranet have facilitated
the use of BI.
|“Using Yield management,
airlines forecast the class-wise demand at
departure of a particular flight”
The increase of digitization enables enterprises
acquire phenomenally high quantities of data.
This gives them an opportunity to convert this
data to information, and knowledge. BI is pedagogically
recommended to help improve revenue and customer
service. At this stage, enterprises need to cross
boundaries of their organizations, acquire and
analyze data from the external world, including
customers, competitors, and environment.
BI allows enterprises to exploit large quantities
of information by analyzing it to find behavior
patterns of their customers and competitors. This
can significantly help an organization suitably
modify its plans in various aspects of business
like production, distribution, pricing, and capacity
planning. Online access to such information can
help decision-making and bring dynamic changes
to help improve a company's bottom line.
BI in airlines
BI is very relevant to a service organization
and the airline business is no exception. Due
to high use of IT in an airline, these companies
can use BI to their advantage. The very nature
of an airline business makes it necessary to exploit
BI to survive in the highly competitive and price-sensitive
market. Two major applications of BI have taken
root among airlines. One is of yield Management
(YM) and the other of Market Intelligence (MI).
Using YM, airlines forecast the class-wise demand
at departure of a particular flight. This is done
by analyzing the booking and cancellation pattern
on that flight using data of the past 12 to 18
months on similar flights. This coupled with the
fares offered in different classes will optimize
the number of seats offered in a particular fare
class on any day for a future flight. Airlines
claim a three to eight percent revenue increase
by using YM systems.
The second well established application in airlines
is the processing of MI Data Tapes (MIDTs) supplied
by Global Distribution Systems (GDSs). GDSs connect
thousands of travel agents to hundreds of airlines
and therefore have millions of transactions stored
in their systems. Airlines buy this data at very
high costs and analyze it to understand the distributors
(agents) and the marketing segmentation.
Stiff competition and similarity of operational
characteristics between airlines have seen airlines
identify customer value as the major discerning
factor. Customer value is best understood by analyzing
the numerous CRM transactions and effecting changes
At Air India
Air India has implemented a Revenue Management
System in 2001-2003 and has experienced increased
revenues by being able to adjust the fare levels
dynamically. We will also obtain MIDT data and
analyze it to derive MI. On a smaller scale, we
have implemented a data mart to store uplifted
coupons (tickets sold) to help the marketing team
analyze the pattern of our actual flight load
Advice for companies
Individual data marts can help different business
units analyze the data and take effective steps.
But the ideal growth path is to develop an enterprise
This can help collect data about customers,
competitors, and the environment through various
channels and make this information available to
all the units of an organization. Such availability
of data aided with technologies like OLTP, statistical
analysis, and data mining will give the full benefit
of enterprise-wise exploitation of BI.
In the recent Infrastructure Strategies 2003
survey conducted jointly by Network Magazine and
IMRB, Indian companies in different verticals
were asked what their top IT priorities in 2003-2004
32 percent of telecom and ITES companies, and
24 percent of Banking and Financial Services Industry
(BFSI) companies said that Knowledge Management
(KM) was the area of highest priority in 2003-2004.
This opens up a lot of opportunity for the introduction
of BI in these companies.
A Frost and Sullivan Business Intelligence report
(2001-2008) says India is still in the adoption
phase of enterprise applications like ERP, SCM,
and BI. BI, which is a much more mature application,
is likely to be deployed once the primary applications
are in place. BI's effectiveness is hampered if
the information infrastructure of the organization
is not in place.
However, the Indian market is likely to witness
high growth rate during the period 2002-04. The
demand is likely to be fuelled by large and medium-sized
enterprises, and MNCs. A positive trend is that
many organizations are going in for data warehousing,
data mining, OLAP on transactional data, and some
data mart suites to address the needs of specific
business units or departments.
Head Retail Strategy & New Product Group
at ICICI Bank Ltd
Organisations have since time immemorial been
using information to make faster and better decisions.
The genesis really has been with management wanting
answers related to business performance. Management
may ask questions of the why variety.
For example, why have dipped this
quarter as compared to the last?
Banks broadly use Business Intelligence (BI)
to drive strategic organic growth through leveraging
information assets to optimise costs, strengthen
customer profitability, and new product development.
In order to increase customer profitability, a
bank can cross-sell a multitude of owned financial
products like bank bonds, loans, and investment
solutions as well as a mix of third-party products
like stocks and Government bonds.
BI enables enterprise strategies tailored towards
up selling, campaign management, channel and value
migration. The quest is to identify segments of
customers that show common investment patterns,
and plan new products and services.
Using BI tools, an analysis of transaction patterns
could give important insights into consumer behaviour.
Customer behavior, payment pattern, and transactions
can be used to assess customer profiles.
For example a bank can analyze customer segments
who predominantly use branch banking channels
to carry out transactions which, could ordinarily
also be carried out at low cost electronic delivery
mechanisms. Strategy could then be formulated
to migrate such segments through a process of
consumer education and motivation to ATMs, phone
banking, and Internet banking.
Analytics assist banks to leverage knowledge
to manage customer value. Banks need to know aspects
like the segment of customers whose deposits grow
over a period of time, and the segment whose balances
decrease or stagnate over a period of time. Based
on this understanding banks can take steps to
arrest downward migration, accelerate upward migration,
and move a stagnated user profile to an upward
An organized source of data and the use of BI
tools can help a bank achieve these objectives.
In Core banking applications the focus is to
facilitate daily operations and manage transactional
integrity. A data warehouses on the other hand
not only is an integrated source of historical
data of customers across products and channels
but is also geared towards the running of complex
Using BI tools, one can access relevant information
and present it to business analysts or decision-
makers in a form, which is intuitive, user friendly
The need for integrated, automated BI tools
is accentuated when the cost of coordination outgrows
the cost of technology and centralization in the
warehouse. For example, a bank may have to build
MIS teams of 5 people for each product or service.
A product-centric approach of this nature will
mean that with every new product launch, there
will be linear additions in people doing MIS.
In addition to this, maintaining information consistency
and arriving at a single version of the
truth becomes a real challenge.
A simple thumb rule for gauging the impact of
BI on the organisation is to analyse marginal
value i.e. what has been done with BI, and what
could not have been done without using these tools.
We can attribute a large part of the benefits
accrued by cross-selling, identifying transactions
behavior, channel-migration, and value management
to the use of BI and a warehouse.