Real-Time Enterprise Stories

Transcription

Real Time
Research
REPORTS
Real-Time
Enterprise Stories
Adobe Systems
• Alliander
• ARI
• CareFusion
• City of Boston, Massachusetts
• City of Cape Town, South Africa
• Commonwealth Bank of Australia
• ConAgra
•
eBay
• EMC
• Florida Crystals
• Globus
• Hewlett-Packard
• HSE24
• Johnsonville Sausage
• Kaeser Compressors
•
Maple Leaf Foods
• Mercedes-AMG
• NFL
• Nomura Research Institute
• Norwegian Cruise Line
• Southern California Edison
• T-Mobile
•
More than 20 detailed case studies from Bloomberg
Businessweek Research Services and Forbes Insights
featuring leading-edge enterprises across industries to explore
the real value of the in-memory platform: SAP HANA.
Sponsored by:
October 2014
Real-Time Enterprises
A Research Collection
Contents
Forward: Making Decisions in the Moment.................................................. 5
Adobe Systems: “Adobe Gets Personal With Customers” (high tech)........ 6
Alliander: “Alliander Energizes Its Business with Real-Time Analytics”
(utilities)...................................................................................................... 10
ARI: “In-Memory Computing Drives Fleet Savings at ARI”
(automotive)................................................................................................ 14
CareFusion: “Real-Time Business Leads to Healthy Performance at
CareFusion” (healthcare) ........................................................................... 18
City of Boston, Massachusetts: “Boston’s Better Community Connections
Through Big Data and Analytics” (public sector) ...................................... 22
City of Cape Town, South Africa: “Real-Time Data Speeds Services in
‘The Mother City’ of Cape Town” (public sector) ...................................... 25
Commonwealth Bank of Australia: “CBA Offers More Personalized Banking
Through Big Data and Analytics” (banking)................................................ 28
ConAgra: “Real-Time Business Leads ConAgra to Profitable Insights”
(consumer products).................................................................................. 31
eBay: “Big Benefits from Big Data at eBay” (high tech)............................ 35
Page
2
Contents
EMC: “The Key to EMC’s Technology Growth: Integrated Acquisitions”
(high tech)................................................................................................... 39
Florida Crystals: “Real-Time Business Sweetens Performance at Florida
Crystals” (consumer products)................................................................... 44
Globus: “Globus Is Always in Style with In-Memory Technology” (retail).. 48
Hewlett-Packard: “HP Paves the Future with Real-Time Insights”
(high tech)................................................................................................... 51
HSE24: “Using Real-Time Insights, HSE24 Gets Closer to Customers”
(retail).......................................................................................................... 55
Johnsonville Sausage: “Johnsonville Cooks Up a Real-Time Recipe”
(consumer products).................................................................................. 59
Kaeser Kompressoren: “Kaeser Puts Customers First with Big Data and
Real-Time Business” (industrial machinery & components)...................... 63
Maple Leaf Foods: “Maple Leaf Foods Turns Over a New Leaf with
Up-to-the-Minute Insights” (consumer products)...................................... 67
Mercedes-AMG: “Mercedes-AMG: A Showcase for Real-Time Business
Decisions” (automotive).............................................................................. 71
National Football League: “The NFL’s Advanced Analytics Score with
Football Fans” (sports & entertainment) .................................................... 75
Page
3
Contents
Nomura Research Institute: “Tokyo Drivers Avoid Traffic Jams with NRI’s
Big Data and Analytics” (high tech)............................................................ 79
Norwegian Cruise Line: “Norwegian Cruise Line Sets Its Course for
Real-Time Insights” (travel & transportation).............................................. 82
Southern California Edison: “How Southern California Edison Harnesses
Big Data’s Power” (utilities)........................................................................ 86
T-Mobile: “Using Social Media to Improve Customer Loyalty at T-Mobile”
(telecommunications)................................................................................. 90
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E L E C T R O N I C V E R S I O N AVA I L A B L E
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Page
4
Forward: Making
Decisions in the Moment
Many different factors impact the decisions companies make everyday. Being a real-time business
means being able to make those decisions when they matter most. For most companies today, however, batch processes must run before any decision can be made. In retail, for example, personalized
offers in stores aren’t common. Instead, stores offer a generic 25 percent off. But what if something
personal and relevant for individual shoppers could be delivered when they walk in the door?
There will be a time when
we walk into a store and our
experience will be radically
different. That’s why the SAP
HANA platform exists: to
enable companies to do business in the moment.
Steve Lucas,
President
Platform
Solutions,
SAP
For large companies, three
main drivers deliver value.
First, simplify: Reduce the
complexity of the systems
required to produce existing results. In fact,
massive IT simplification was one of the key
design motivations behind SAP HANA. You
can use the platform to feed data from all
different sources into one system. Second,
enable agility: Give customers insights in real
time to aid decision-making. Third, innovate:
Unlock the true potential of real-time business
innovation through new business processes
and models.
SAP HANA deployments began more than
three years ago. Since then, companies have
added the SAP Business Suite powered by
HANA. Now there are more than 4,000 SAP
HANA customers. So far, business transformations have been process by process based on
the time it takes to get data and then analyze
it. When you eliminate the latency, you have to
think through how you want to work differently.
Real-time planning, for example, is the “game
changer” for one SAP customer. Using HANA
has reduced the time it takes to process one
financial report from 40 hours to 20 seconds—
a 7,000 times improvement.
I envision the SAP HANA platform not only
enabling customers to make today’s decisions
but also providing them a powerful predictive
engine for tomorrow’s choices. Most companies make decisions by looking in the rearview
mirror, but a rearview mirror offers only a tiny
piece of the puzzle versus the forward view
a windshield provides. Eventually, operating
models will include built-in forward-looking
decisions.
Real-time business transformations are not
just about technology, though. SAP HANA is
extraordinarily innovative, but the first thing
we do is look at where the opportunities are
to transform business processes. Then, SAP
helps customers rethink how those processes
are designed and how they can be remodeled.
You have to start at zero. If you don’t have to
wait for information, there’s an opportunity for
massive reinvention and value creation across
industries. n —Steve Lucas
Page
5
Adobe Systems at a glance
Producer of desktop publishing and graphics editing
programs as well as a wide array of products made
for creative and marketing professionals
Industry: high tech
Founded: 1982
Headquarters: San Jose, Calif.
2013 revenue: $4.06 billion
Employees: More than 11,000 worldwide
Products: Software for creative and
marketing professionals
www.adobe.com
Source: Adobe Systems
Page
6
RESEARCH UPDATE | Real-Time Enterprise Case Studies
Adobe Gets Personal
With Customers
With in-memory computing and predictive analytics tools, the high-tech company is
anticipating customer needs and developing more personalized programs.
BY JOE MULLICH
T
hroughout high-tech, long-time business models are falling by the wayside as
products become digitized, customer demands rise and the need for speed
increases. Few companies know this better than Adobe Systems, best known for its
Adobe Systems at
a Glance
} Founded: 1982
} Corporate headquarters:
San Jose, Calif.
} Revenue: $4.06 billion,
fiscal 2013
} Employees: More than
11,000 worldwide
} Products: Software for
creative and marketing
professionals
www.adobe.com
desktop publishing and graphics editing programs Acrobat and Photoshop, as well as
a wide array of products made for creative and marketing professionals.
Over the past few years, Adobe’s business model
FIGURE 1
has fundamentally changed. Instead of selling
boxed software, its business is now driven by
Changes to Adobe’s
Business Model
The company’s business model has
fundamentally changed.
cloud-based subscriptions. And instead of products
being released every 18 months, new offerings and
upgrades are a constant. The company’s customer
Past
Present
Offerings
Sold by the
box
Sold by the
subscription
Distribution
Sold through
partners
Sold directly
Product
releases
18-month
cycles
Continuously
updated
Periodic
Ongoing
relationship
interactions—once periodic and performed through
resellers or partners—are now continuous and
occur across multiple channels, including social
media, display ads, e-mail, the call center, direct
sales and the Web (see Figure 1, “Changes to
Adobe’s Business Model”).
Customer
Source:
Adobe Systems
These shifts have transformed the types of
interactions
customer, product and sales data to which Adobe
1. Prasad Bhandarkar spoke at a
recent Webinar.
FEBRUARY 2014 |
has access. Whereas customer information used to
the exact data they needed rather than sorting
be limited to name, address and billing information,
through data dumps. To accomplish both of these
Adobe now collects data on how customers use
goals, Adobe needed to enable cross-functional
its products, and in what context. Used correctly,
collaboration, integrate silos of data, deliver one
such data can lead to a better understanding of
version of performance metrics, react to customer
customer behavior and even future needs.
signals in milliseconds and enable data-driven action.
The problem was, while each of its engagement
According to Prasad Bhandarkar, director
channels provided customer insights, the views
of Adobe Information Services, these goals
were fractured and channel-specific. Adobe needed
were accomplished by leveraging in-memory
to gain a more holistic view of customers, as well
computing,1 which rapidly aggregates and analyzes
as real-time insights into their behavior to deliver a
vast amounts of numerous types of data. The
highly personalized, engaging experience. It had
use of in-memory computing and analytics tools
also become essential for the company to quickly
is the centerpiece of the company’s vision of
obtain up-to-the-moment business performance
“revolutionizing the way Adobe engages with
information so that workers could quickly find
information,” Bhandarkar said.
© Copyright 2014. Bloomberg L.P. All rights reserved.
RESEARCH UPDATE | Real-Time Business Case Studies
FIGURE 2
Respondents were asked, “How would you
rate your ability to quantify the impact of one channel’s
performance on another (e.g., online display advertising’s
impact on search marketing)?”
600 million desktops, and 90 percent of the world’s
creators use the graphics program. The company
also offers Creative Cloud, which enables access to
Adobe applications, and Adobe Marketing Cloud,
which provides analytics and other marketing tools.
Adobe’s Business
Challenges
Adobe faced many of the issues common to
} Transforming into a
cloud business
} Using real-time data
to tailor personalized
customer experiences
} Creating company-wide
performance KPIs and
holistic customer views
} Enabling consistent
messaging across
numerous marketing
channels
} Aggregating structured
and unstructured data
from multiple sources
Channel Quagmire
A Fractured Data Environment
Adobe’s Photoshop software is currently installed on
technology businesses grappling with this new age
I don’t know
7.7%
Very good
4.8%
Poor
18.8%
of producing and marketing software. Although the
Good
16.8%
Fair
51%
company could see how a customer responded to a
specific marketing initiative, for instance, it could not
easily combine that information with that customer’s
e-mail messages and social media sentiment. A
*Total does not equal 100% due to rounding
recent study found that most marketers do not
Source: The CMO Club 2
have a holistic view across channels (see Figure 2,
and dynamic access to data. Real-time data
“Channel Quagmire”).
acquisition puts instant decision-making at the
fingertips of people throughout the organization.
Further, performance reports were often
inaccurate and inconsistent. Analytics was highly
• Versatility. The platform enables employees to
fragmented across the company, with different
visualize data using a wide variety of charts and
groups producing different numbers. And because
graphs, so they can make connections in the
executives relied on IT to query data, they had to
data more easily and share their insights readily
wait for results. The time delay was increasingly
throughout the enterprise.
unacceptable for an Internet-based business in
which second-by-second customer activity can
To ensure that the dashboard optimizes
influence marketing and sales efforts.
decision-making, the team drew inspiration for
its visualization techniques from the Louvre in
Developing a Dashboard
Paris. “There is art and poetry to make this work,”
A key piece of Adobe’s data strategy is Adobe
Bhandarkar said. Users now get answers and
Dash, a business intelligence platform that connects
insights rather than tables and numbers, enabling
data across multiple sources in real time. Because
them to discover something new about the
traditional databases cannot aggregate data on the
business every time they use the system.
fly, the company turned to in-memory computing.
Adobe had used in-memory computing in the past to
Presenting data effectively is a key component of real-
analyze large data sets to stem software piracy, and
time analytics. In a 2013 study by TDWI Research,
the effort had quickly uncovered enough information
respondents named several business benefits of
about software misuse to suggest that the technology
data visualization technologies, including improved
offered significant revenue opportunities. Adobe Dash
operational efficiency (77 percent), faster response to
offers several benefits:
business change (62 percent) and the ability to identify
• Trust. Business performance KPIs are now timely,
new business opportunities (59 percent).4
3
2. The CMO Club and Visual IQ.
“Building Bridges to the Promised
Land: Big Data, Attribution
& Omni-Channel—A CMO
Perspective.” 2014
http://goo.gl/DaItYQ
3. SAP. “Adobe: HANA Customer
Testimonial Video.”
http://goo.gl/LD5Yxx
4. Stodder, David. “Data
Visualization and Discovery for
Better Business Decisions.” TDWI
Research, 2013.
http://goo.gl/xBYyLi
accurate and undisputed. With a single set of
KPIs, Adobe can now work from a single version
New Business Insights
of the truth.
With the ability to quickly aggregate information
• Speed. Business leaders now have direct
2
Bloomberg Businessweek Research Services
from all channels via in-memory computing, Adobe
FIGURE 3
Preference for
Personalization
promotions. In the past, it was necessary to wait
Consumers increasingly expect
personalized interactions.
in-memory computing, that data is available within
(Percent of respondents)
Would trust businesses more if they explained how
they are using personal information to improve
their online experience
77%
Adobe’s IT
Solutions
Get frustrated with Web sites that display content,
offers, ads, promotions, etc., that have nothing to
do with their interests
74%
} Fully integrated and realtime customer profiles
across channels
} Easy-to-use dashboard
with a variety of
visualization tools
} In-memory computing
for instantaneous data
aggregation and analysis
Are OK with providing personal information on a
Web site as long as it is for their benefit and being
used in responsible ways
57%
Source: Janrain/Harris Interactive, 2013
24 hours to ascertain a promotion’s impact. With
minutes, enabling Adobe to tweak the promotion
immediately to improve results. Knowing what is
happening with promotions within a 15-minute
window is far more powerful than having a one-day
delay, and the agility for executive decision-making
is game changing, according to the company.
The best forward-looking measure for any cloud
business is how actively customers are using
the product. For example, if a customer’s usage
of the Marketing Cloud or Creative Cloud starts
to decrease a few months before the annual
subscription ends, that is a clear warning sign,
and the sooner that Adobe can see this trend
happening and respond to it, the better chance it
can now provide more personalized customer
has of retaining customers.
interactions and a consistent experience across
channels. For instance, when customers click on
Adobe executives can easily see everything in the
e-mails or display ads, the company can create an
digital pipeline, including top customer issues, and
identity composite for them, and tailor the message
for further information, they can drill-down on the
based on that information, as opposed to providing
fly. The company plans to enable this capability on
them with generic messaging. Such personalization
mobile devices in the future, as well. In fiscal 2013,
aligns with customer preferences; in a recent
Adobe saw an uptick for its efforts. Creative Cloud
study, consumers said they prized personalized
subscriptions grew by 1.1 million, and subscriptions
marketing that catered to their interests (see Figure
to Document Services doubled to more than 1.6
3, “Preference for Personalization”).
million. Adobe Marketing Cloud achieved a record
$1.02 billion in annual revenue, representing 26
On the business performance side, when
percent year-over-year growth.
Adobe employees have questions about order
management and booking, they can slice and dice
Using in-memory computing, data visualization
data in many ways—such as by financial quarter
and advanced analytics, Adobe is able to fully
or certain geographies—and receive an answer
operate as a cloud-based company. It can see a
in three seconds. “That capability never existed
complete and updated view of customers across
before,” Bhandarkar said. “As our business changed
channels, personalize customer interactions and
to a subscription model, it’s become even more
make profitable business decisions based on in-
important for us to know on a day-to-day basis
the-moment data. By leveraging real-time big data
what customers are doing inside the product.”
analytics, high-tech companies such as Adobe are
With Adobe’s in-memory system, an order that
laying the foundation needed to compete today and
was booked five seconds before shows up in the
in the future. •
aggregated numbers.
Additionally, Adobe can quickly analyze customer
acquisition and usage patterns to optimize
3
Joe Mullich is a freelance business and technology
writer based in Sherman Oaks, Calif.
This research project was funded by a grant from SAP.
Alliander at a glance
A regional grid operator for gas and electricity
in the Netherlands
Industry: utilities
Headquarters: Arnhem, Netherlands
Business units: Alliander manages the gas
and electricity grids in many areas of the Netherlands; Liandon works on energy infrastructures for high-voltage, complex medium-voltage and industrial installations
2013 Revenues: €1,744 million
Employees: 6,000
www.alliander.com
Source: Alliander
Page
10
Alliander Energizes Its Business
with Real-Time Analytics
A Netherlands utility is using real-time business insights based on big data to boost reliability, lower
costs and transform customer relationships.
BY JOE MULLICH
A
lliander, a regional grid operator for gas and electricity in the Netherlands, is
grappling with an issue that is becoming widespread among utilities:
unpredictable demand due to rapid changes in customers’ energy consumption
Alliander at a
Glance
behavior. Energy-hungry devices such as plug-in electric vehicles (PEVs), as well as
Headquarters: Arnhem,
Netherlands
Business units: Alliander
manages the gas and
electricity grids in many
areas of the Netherlands;
Liandon works on
energy infrastructures for
high-voltage, complex
medium-voltage and
industrial installations
2013 Revenues: €1,744
million (US$2,386 million)
Employees: 6,000
www.alliander.com
unconventional energy sources such as solar and
FIGURE 1
wind, have fundamentally changed the energy
Respondents were asked in which areas they
see analytics having the greatest impact on smart solutions
deployment. (% responding)
Source: Alliander
landscape. Case in point: There are now over
1,030 public charging points for PEVs in the
regions where Alliander is active, of which more
than 300 were realized just last year.
1
Such changes are heightening the need for Alliander
to improve peak load forecasting in its networks
quickly and accurately. Failing to do so could lead to
higher operating costs or, worse, network outages
that leave customers angry and without power.
Consequently, a good part of Alliander’s future
hinges on using real-time data to make
“unpredictable demand” more predictable by
leveraging the information that smart meters, smart
grids and enhanced customer relationship
management systems provide. The utility is applying
this great mass of data to other real-time uses, as
Wide Range of Analytics Value
Grid operations
96%
Asset management
Outage management
AMI operations
92%
85%
77%
Demand response
73%
Customer operations
73%
Revenue protection/theft reduction
52%
well. Jill Feblowitz, vice president at consultancy IDC
Energy Insights, said that as utilities work to realize
Base: 54 utilities in 13 countries
Source: Accenture, 2013. http://goo.gl/mwjiLS
more value from their smart meter implementations,
“analytics will be the trend that has the most impact
Lots of Data, Big Payoff
over the next five years.”
In the utility industry, lots of data is accumulating rapidly:
Smart meters in consumer homes gather usage data;
1. Alliander. “Alliander is working
on a sustainable future.” Alliander
press release, Feb. 14, 2014.
2. Accenture. “Unlocking the Value
of Analytics.” Research report,
2013. http://goo.gl/mwjiLS.
MARCH 2014 |
Indeed, a 2013 Accenture survey revealed a broad
the smart grid collects data from the devices in the
array of business functions that utilities say would
network; and a significant amount of data comes
benefit from better analytics (see Figure 1, “Wide
courtesy of those who generate energy with solar
Range of Analytics Value”). The need to use
panels or wind power. And utilities expect a big return
dynamic and granular data to make decisions in the
from all this data. A 2013 survey by Tata Consultancy
moment is fast becoming an industry imperative.
Services found that both utilities and energy/resources
2
FIGURE 2
generating returns on investment in big data3 (see
Figure 2, “Big Data Expectations”).
Of all industries, utilities expects the biggest
returns on its big data investment. (mean percentage of
expected ROI for 2012 big data investments)
Alliander itself has been on a data quest. The utility
Utilities
dramatically increased the number of sensors
Alliander’s
Business
Challenges
throughout its grid, enabling it to gather larger data
volumes for analysis. Measurement data is sent at
five-minute intervals, and the sensors generate 3.15
} Improve forecasting of
peak energy usage.
} Provide customers with
greater insight into
energy consumption.
} Gain fast access to large
volumes of
measurement data for
analysis.
Big Data Expectations
companies have the highest expectations for
billion records every year—a huge repository to mine
for information and insights.4
To analyze the data quickly enough to apply insights
computing, technology that enables very large
volumes of diverse sources of data to be rapidly and
easily analyzed. The utility has seen a number of
benefits, including more accurate forecasting of
} Expanded network to
22,000 sensors spread
across 400 substations.
} Implemented in-memory
computing to speed
data analysis.
} Set up wireless mobile
telecommunications
network.
manual tasks, improved auditing and reduced
60.6%
High tech
52.4%
Average
45.5%
Banking/financial services
43.7%
in a timely fashion, Alliander turned to in-memory
Alliander’s IT
Solutions
Energy/resources
73.0%
Insurance
38.9%
Travel/hospitality/airlines
37.9%
energy demand, greater efficiency by automating
energy costs for customers.5
Telecommunications
37.9%
Transforming Customer Relations
Source: Tata Consultancy Services, 2013
According to a 2013 IDC Energy Insights study, the
highest business priority for utilities today is
meters send granular data on energy consumption directly
increasing customer satisfaction, followed closely by
to utility companies, and some utilities use small wireless
reliable service delivery and operational cost
displays to show people how much energy and money
reductions. Analytics helps utilities achieve this goal
they are spending in real time. A survey by uSwitch, an
by changing the customer relationship to a
energy price comparison service in the United Kingdom,
partnership. For instance, using smart meter data,
found that consumers with smart meters are more likely
utilities can work with customers on using energy
to partake in energy-saving behaviors 8 (see Figure 3,
more efficiently and reducing their bills.
“Satisfaction with Smart Meters”).
Customers can also play a role in helping utilities
At Alliander, customers who have real-time access to
achieve their own conservation goals. Robin
data about their energy usage have reduced energy bills
Hagemans, manager of grid information and control at
by 10 to 20 percent per month. “We need to help our
Alliander, noted the utility’s aggressive goals of reducing
customers at the household level to use their energy
carbon emissions by 20 percent by 2020 and boosting
much more wisely,” said Jeroen Scheer, manager
renewable energy use by the same amount. That
taskforce energy transition IT at Alliander.9
6
3. Tata Consultancy Services.
“The Emerging Big Returns from
Big Data.” Research report, 2013.
http://goo.gl/NhEUgW.
4. Tekurkar, Shailesh. “Leveraging
the ‘Smart Grid’ for Smart
Decisions on Network Asset
Replacements.” Analytics from
SAP blog, Nov. 13, 2012.
http://goo.gl/E5PD6V.
5. Shailesh Tekurkar.
6. Feblowitz, Jill. “The Digital
Utility.” IDC Energy Insights
executive summary. September
2013.
7. Koster, Stefan. “How Alliander
is accelerating its load forecasting
process using SAP Analytics.” SAP
presentation. May 28, 2013.
goal, he said, can be reached only if consumers
Forecasting Peak Loads
become more active participants in the process of
conserving energy and balancing their energy use.
7
Perhaps an even bigger advantage of analyzing data from
smart grids and smart meters in real time is the capability
2
The rapid speed of in-memory computing produces
to accurately forecast demand, which enables utilities to
the insights needed to do just that, and it helps
predict and head off likely outages, as well as to identify
Alliander better engage with its customers. Smart
leaks and fraud. Better forecasting enables utilities to plan
Satisfaction with Smart Meters
future investments that prevent network overloads.
FIGURE 3
Such forecasts are tricky, though, because the
Customers with smart meters report high
satisfaction with their provider. (% responding)
substation load depends on numerous variables—
demographic growth, seasonality, consumption
forecasts, specific events and more.
Are happy with their smart meter
Real-Time
Business Benefits
at Alliander
In the past, collecting and analyzing the enormous
Would recommend having a smart meter installed
87%
} Reduced time for
forecasting and grid
optimization from 10
weeks to three days.
} Implemented 85 new
business models to
analyze operations.
} Helped customers
reduce monthly energy
bills by 10 to 20 percent.
grid optimization once a year. With in-memory
amounts of data required 10 weeks of effort. As a
result, Alliander would only perform forecasting and
computing, that process can be accomplished in a
mere three days. Consequently, the utility can
92%
Use it to monitor energy usage and reduce
consumption
81%
Are more likely to turn off lights when not in use
51%
monitor the transformer stations, detect sensor
problems automatically and forecast future power
loads once a month. This provides a more
accurate forecast, much deeper insight and greater
opportunities to drive efficiency.10
Better understanding of which actions consume
the most energy
41%
Base: 5,057 U.K. households with a smart meter installed
Source: uSwitch, 2013
“We can optimize our grid and create new models
we couldn’t think of a year ago,” Scheer said.
Such efforts include setting up a wireless mobile
Indeed, as a result of the efforts, Alliander has
telecommunications network to facilitate the exchange
created 85 new models to analyze its operations
of all information within the utility’s grids. “The impact of
more effectively. “We found out that 5 percent of
the energy transition is becoming increasingly visible,”
the peaks determined last year were inaccurate,”
he said. “For instance, more and more renewable
according to Stefan Koster, BI & analytics solution
energy is being generated, and this will have major
architect at the utility. The new algorithms help
consequences for the networks in the long term.”14
detect more errors, leading to more efficiencies.
11
In the IDC Energy Insights report, Feblowitz
8. Martinelli, Michele. “New
research shows consumers are
happy with smart meters.” USwitch
news, Dec. 12, 2013.
http://goo.gl/0UDnUi.
9. Scheer, Jeroen. “Alliander
and SAP HANA.” SAP customer
testimonial video.
http://goo.gl/cS0CoV.
10. Courtney, Martin. “How
utilities are profiting from Big
Data analytics.” Engineering and
Technology Magazine, Jan. 20,
2014. http://goo.gl/r60uhi.
11. Stefan Koster.
12. Martin Courtney.
13. Alliander press release.
14. Alliander press release.
15. Hagemans, Robin. “Alliander
Smart Grid Analytic Use Cases
Based on a Live Mid-voltage Grid
Lab.” OSIsoft EMEA industry
session, 2013.
http://goo.gl/ubKnOy.
16. Szirtes, Tamas. “Business
Innovation Experience – a
resounding success.” Intenzz blog,
Feb. 6, 2013.
http://goo.gl/O9D3Wc.
Business Reinvention
recommended that utilities fortify their information
Market analyst firm GTM Research predicted
and telecommunications infrastructure and
global utility company expenditures on data and
applications so they can support advanced analytics
analytics will grow from $700 million in 2012 to
such as forecasting, predictive load, simulations and
$3.8 billion in 2020, with gas, electricity and water
optimization. One specific capability she cited is
suppliers in all regions of the world increasing
integrating demand information with geospatial
their investment. This will result in “a complete
visualization tools. Alliander is already going down
reinvention of the utility business,” according to
this track. 15
analyst David J. Leeds.
12
As Pieter den Hamer, manager of business intelligence
As Alliander looks to the future, it is seeking to boost
and analytics at the utility, put it: In the current utility
the insights gained from network data. Peter
landscape, “Innovation is not just something extra, but
Molengraaf, Alliander CEO, said the company’s main
it’s a necessity.”16 •
focus is “making the right choices for the future of
our networks. Whilst continuing to maintain and
replace our existing electricity and gas networks, we
are also preparing for the radically changing energy
landscape of the future.”
3
13
Joe Mullich is a freelance business and technology writer
based in Sherman Oaks, Calif.
ARI at a glance
Largest privately held fleet management services
company in the world
Industry: automotive
Parent company: Holman Automotive Group
Employees: 2,400 worldwide
Headquarters: Mount Laurel, New Jersey
www.arifleet.com
Source: ARI
Page
14
In-Memory Computing Drives
Fleet Savings at ARI
The world’s largest privately held vehicle management company is turning big data into
real-time insights and predictions that deliver unprecedented business value to customers.
BY ESTHER SHEIN WISHNOW
A
n employee driving a company car or truck may think he is doing the business a big
favor by purchasing gas at a low-cost fuel station a few miles out of his way. What he
cannot know is that the station has a higher incidence rate of accidents because it is located
at a dangerous intersection. But ARI knows. Thanks to
can be made in minutes, not months. With its data
AN EXCLUSIVE
in-memory technology, the company is quickly turning
volume doubling every 14 months, that has become an
RESEARCH REPORT
seemingly unrelated datapoints into insights its customers
ever-greater challenge, which is why ARI invested in an
FROM BLOOMBERG
can use to optimize fleet efficiency—before they make a
in-memory database. The solution has reduced response
BUSINESSWEEK
wrong turn.
times on delivering information to customers and solved
RESEARCH SERVICES
AT A GLANCE
its “data latency problem,” says Tony Candeloro, vice
ARI manages more than 950,000 vehicles in North
president of product development (see Figure 1, “In-
America and the United Kingdom. With its two million
Memory Computing: The Payoff for ARI”).
worldwide associates, the company collects up to 14,000
datapoints on each vehicle, including specifications,
Real-time analysis of very large date sets is possible with
ARI at a Glance
maintenance, fuel, safety and value. It also captures
high-performance, in-memory database technology, says
Industry:
telematics information through onboard computers,
Hyoun Park, principal analyst at Nucleus Research. HANA
Vehicle fleet management
including how fast a vehicle is moving, when it makes a
from SAP, for example, provides orders of magnitude
Company description:
left- or right-hand turn and where it has stopped.
performance increases by accelerating information delivery
and queries, he says. “A lot of processes that have slowed
Largest privately held fleet
management services
In the past, ARI used this information to provide reports
down as companies deal with huge amounts of data
company in the world
and recommendations to customers. But staying
are now being brought back to operational levels where
Parent company:
competitive today means delivering insights so decisions
companies can get data quickly again.”
Holman Automotive Group
Employees:
2,400 worldwide
Headquarters:
Mount Laurel, N.J.
Web site: www.arifleet.com
FIGURE 1
In-Memory Computing: The Payoff for ARI
Running a report or query before in-memory
Up to two hours; some reports were so complicated
technology
they would time-out after 24 hours
Running a report or query with in-memory technology
Three seconds
Number of datapoints captured per vehicle
14,000 (late 2011 into early 2012)
Number of vehicles in ARI’s fleet
Roughly 950,000 in North America
ROI
5% efficiency improvement in the call center
Source: ARI
JULY 2013 | © Copyright 2013. Bloomberg L.P. All rights reserved.
Speed Equals Value
Moving those large silos into a real-time environment was
This was the situation at ARI: the need to drive the
a challenge, says Bob White, senior vice president of
information it captured to its fullest potential—quickly.
client and fleet relations at ARI. “Before we implemented
“Once you have all the data, it’s about how you analyze
this technology, working with the data on a real-time
and correlate it to make better decisions,” Candeloro
basis to draw correlations and spot trends was difficult,”
says. “While we have always helped our clients manage
he says. The in-memory system provides employees
ARI’s Data
Challenges
their fleets efficiently and worked to deliver the lowest
with new real-time insights to create more value for
total cost of ownership possible, the time it took to
customers. “[We can] leverage that data in a timeframe
Manage data growth:
decipher all of the data and make day-to-day decisions
that meets the business need,” White says.
With 14,000 datapoints
was becoming more difficult as our data volumes grew.”
Now, if a technician is told that a brake fix on a truck
collected per vehicle, ARI’s
data volumes are doubling
For example, to manage the cost of vehicle repairs,
will cost $500, he can see 25 similar repairs on similar
every 14 months.
ARI’s technicians need to authorize the right repair at the
vehicles within an identified geographical radius. This
Speed decision-making:
right cost. “Historically, a vendor would call us seeking
information makes negotiating on the fly a lot easier.
Data volumes were
authorization for a repair. If our techs agreed with the
Before, “we were doing millions of transactions, so we
increasing the time it took to
diagnosis, they would negotiate the best possible price
didn’t even attempt it,” White says. When customers
run reports and queries.
for that repair by using their own expertise and the best
needed more granular data, it required a lot of manual
Improve insights:
information they had on hand at that time,” Candeloro says.
work. “Now, we can leverage more data to make better
decisions,” he says, “and we’ve also improved the overall
ARI wanted to arm fleet
transaction time by a little more than five percent.”
managers with real-time
As time went on, he says, ARI wanted a solution
insights so they could make
that would enable better and quicker decisions. The
decisions that optimized
company implemented a data warehousing strategy
A majority of ARI’s employees are using the system on
efficiency.
that ported data from its transactional database into a
a daily basis, and 80 customers are using it through
real-time in-memory database, built some data models
the customer portal, ARI insightsTM. When customers
and conducted a pilot with one of its customers. Then,
submitted inquiries in the past, employees would search
with the help of HP, ARI moved the system in-house in
for information in the various systems and create reports,
December 2011. By the start of 2012, Candeloro says,
which could take several days to produce. “Now, our
ARI was up and running, building queries and “data
frontline employees can run the queries themselves,”
universes” based on detailed data previously segmented
White says. “By putting the tool in a customer’s hands,
into separate silos on disparate systems.
we are empowering our clients to make better decisions.”
FIGURE 2
ARI’s In-Memory Technology: What the Future Holds
Capability
Example
Predictive data mining: Spotting trends and patterns
Recommending a repair before a failure occurs.
ahead of time to be proactive rather than reactive.
Benchmarking: Designing models that gather trend data
Calculating a cost-of-ownership baseline across
on all vehicles to create a baseline and then identifying
fleets with similar vehicles and identifying those that
outliers.
exceed the baseline.
Changing driver behavior: Finding correlations between
Discovering a link between fueling locations and
events that seem unrelated at first glance and using that
accidents.
information to make recommendations.
Source: ARI
2
ARI’s salespeople can also work more effectively with
FIGURE 3
customers and prospects, he adds. And in its call
centers, which include about 400 employees, ARI has
A Surge in Predictive Analytics
increased efficiencies by about 5 percent, White says.
Primarily using predictive analytics
12%
33%
“That one area alone has probably more than covered our
investment, and we’ve just begun to discover all of the
Elements of
ARI’s Real-Time
Analytics Solution
ways to leverage it,” he says.
Looking Ahead
In-memory database:
Candeloro says the company has only skimmed the
Using an in-memory
surface in terms of realizing the full potential of in-
database, ARI can quickly turn
memory technology (see Figure 2, “ARI’s In-Memory
data into insights that help
Technology: What the Future Holds”). ARI is planning
its customers optimize fleet
to use data mining capabilities to spot trends and
efficiency.
patterns “so we don’t just react to a phone call but
Integrated data:
get ahead of it and use the predictive angle,” he says.
Data “universes,” created
For example, White says, employees have already
within the in-memory
detected trends that predict needed repairs on a truck
database, integrate data from
before a major failure occurs. “We can recommend to
disparate systems.
our customer that they preemptively have that repair
Customer portal:
done,” he says.
A majority of ARI’s employees
Primarily using retrospective analytics
31%
29%
Using both equally
28%
2009
2012
50%
Don’t know
1%
10%
Base: 600 companies in the United States and United Kingdom
with 1,000-plus employees
Source: Accenture
station example. “If, for example, you know a driver
fuels at a particular gas station, and you also know this
use the system daily, and
Another goal is to begin benchmarking, building models
group of vehicles has a higher percentage of accidents,
select customers run their
to look at all similar vehicles managed by ARI and
once you look at those two together, you may make a
own queries using the
determining their baseline cost. This way, the company
recommendation not to fuel at that location depending on
customer portal.
can easily identify the outliers and take corrective action,
what the data actually reveals,” he says.
Data mining:
Candeloro says.
ARI plans to use predictive
According to a 2013 study by Accenture, more than
analytics to spot trends and
Keeping up with all of the variables involved in the cost
twice as many respondents are now using analytics
patterns among seemingly
of fleet management—where vehicles are used, who is
primarily as a predictive tool than in 2009 (see Figure 3,
unrelated data points.
driving them, the environment in which they operate, the
“A Surge in Predictive Analytics”). “This surge reflects
time of day, accidents, driving patterns and the amount
a growing sophistication in analytics capabilities that
of idle running time—is ARI’s main challenge. “We try
anticipate tomorrow rather than explain yesterday,”
to track and manage those variables, but a lot of them
according to Accenture.
interact with and impact each other,” Candeloro notes.
“If you’re idling a vehicle a lot, you may need to do
White says ARI is continuously thinking about whether the
preventive maintenance more often. And because we
data it is collecting can predict an outcome. “The ability
have the ability to look at that information, we can push
has always been there,” he says. Until now, “we just
out recommendations to our customers. That was very
didn’t have the tools to unlock it.” •
difficult to do in the past.”
As the company moves further into predictive analytics,
Candeloro says ARI hopes to find the not-so-obvious
correlations between seemingly unrelated events, such
as how fuel patterns impact accidents, as in the gas
3
Esther Shein Wishnow is a freelance writer and editor
whose work has appeared in several online and print
publications including Computerworld, InformationWeek, BYTE, Network Computing and CIO.
CareFusion at a glance
Makes products that help reduce medication errors
and reduce health-associated infections
Industry: healthcare
Headquarters: San Diego, California
Customers: more than 25,000 worldwide, including
hospitals, surgery centers, long-term care facilities,
outpatient and ambulatory clinics, governments and
insurance providers
Focus areas: medication management; infection prevention and surveillance; operating room effectiveness;
device connectivity; data and analytics; respiratory care
Revenues: $3.55 billion (fiscal 2013)
Employees: more than 14,000
www.carefusion.com
Source: CareFusion
Page
18
Real-Time Business Leads to Healthy
Performance at CareFusion
CareFusion employs in-memory computing to transform its business, improve operating
margins and accelerate revenue growth.
BY JOE MULLICH
CareFusion at a
Glance
Headquarters:
San Diego, Calif.
Customers: More than
25,000 worldwide,
including hospitals,
surgery centers, longterm care facilities,
outpatient and ambulatory
clinics, governments and
insurance providers
Focus areas: Medication
management; infection
prevention and
surveillance; operating
room effectiveness;
device connectivity; data
and analytics; respiratory
care
Revenues: $3.55 billion
(fiscal 2013)
Employees: More than
14,000
A
round the globe, demands for healthcare reform are causing the life sciences
industry and its customers, the care providers, to look for efficiencies. CareFusion,
the $3.5 billion maker of products that help reduce medication errors and reduce health-
Meeting the Challenge to Change
associated infections, intends to be at the front line
FIGURE 1
of this transformation, promising quality and safety
at reasonable cost.
Life sciences CEOs view data and analytics
among the initiatives that are critical to transformation.
(% responding)
In its efforts to achieve this goal, CareFusion has
Channels to market
averaged one major acquisition annually since its
spinoff from Cardinal Health in 2009. To date, the
acquisitions have bolstered CareFusion’s product
line with technologies that improve respiratory care
and deliver intravenous drugs to patients. But they
have also created management challenges.
Each of the acquired companies had its own
systems for strategic planning, which made it
difficult for CareFusion to get a global view of its
data. Yet comprehensive planning was essential for
57%
Use and management of data and data analytics
56%
M&A strategies, joint ventures or strategic alliances
55%
Customer growth and retention strategies
50%
Approach to managing risk
50%
Source: PricewaterhouseCoopers, 2014. http://goo.gl/QgoZwG
the company to reach its aggressive goals. “The first
www.carefusion.com
two years of growth we called a ‘standup’ phase,
CareFusion found a way to assemble a global view of its
Source: CareFusion
which was the separation” from Cardinal Health,
operations to improve the collection and consolidation of
CareFusion CEO Kieran T. Gallahue told analysts in
information it needs for better planning and strategic
2013. “The last two years began what we call the
decision-making. The company is using financial
‘building the foundations for growth’ stage,” which,
forecasting and planning software in combination with
he said, could only be achieved by streamlining the
in-memory computing, a new database and analytics
organization and reducing costs.1
platform that enables very large volumes of data to be
aggregated and analyzed quickly to answer any question
1. Nasdaq information on
CareFusion. http://goo.gl/1Ncrfb.
2. PricewaterhouseCoopers Global
CEO Survey: Pharmaceuticals and
Life Sciences. 2014.
http://goo.gl/QgoZwG.
MAY 2014 |
The same theme resonates throughout the life
almost instantly. Organizations frequently use in-memory
sciences industry. An annual global survey of
technology to make more accurate budget forecasts, run
pharmaceutical and life sciences CEOs by
“what-if” scenarios faster and gain better insight into
PricewaterhouseCoopers found transformation on
customer relationships.
their corporate agendas, including new business
structures, technology investments, and the use of
“The entire healthcare industry has been inefficient
data and analytics2 (see Figure 1, “Meeting the
relative to other industries,” observed Mike Zill, executive
Challenge to Change”).
vice president and CIO at CareFusion. “That needs to
CareFusion’s Complex Operations
change, and we are dedicated to being a force that
FIGURE 2
helps lead the change.”
The company needs to consolidate and analyze
data about two dozen major brands in four product areas.
A Unified View
More than 14,000 CareFusion employees around the
world manufacture products purchased by more than
CareFusion’s
Challenges
25,000 healthcare providers. That makes the
} An acquisition spree
resulted in disparate
ERP systems that could
not share data.
} Financial, employee
and customer data was
difficult to consolidate and
analyze in a timely way.
} Executives lacked
confidence in the
accuracy of the data
used to make decisions.
explained (see Figure 2, “CareFusion’s Complex
company’s operations complex to manage, Zill
Operations”). Meanwhile, the pace of business
demands that CareFusion be able to run multiple
business scenarios quickly, using the most accurate
Product area
Number of brands
Infection prevention
4
Respiratory care
6
Medication management
8
Operating room effectiveness
6
Source: CareFusion. http://goo.gl/rtgQkn
data possible.
it would take to run one, Zill said. Current numbers
CareFusion’s
Solutions
} Deployed realtime planning and
consolidation software
that automates and
streamlines planning,
budgeting, forecasting
and consolidation
activities.
} Adopted in-memory
computing to speed
data collection and
analysis.
Yet data from each unit had to be pulled out manually.
lead to better estimates, more precise analysis and
Only averaged, historical numbers were available for
improved decisions. CareFusion can determine
analysis. As a result, reports were produced slowly,
within minutes how departments are performing and
and their reliability was hard to assess. “Data is a
the potential impact of adjustments. Michael DeLeo,
reflection of the organization,” said Wayne Eckerson,
financial manager for financial systems at
director of the research, business applications and
CareFusion, said the company’s efforts are in line
architecture group at consultancy TechTarget. “If you
with an industry trend to compile and consume data
have fragmented, autonomous business units, you’ll
more rapidly.3
have fragmented data.”
More Timely Action
So the CareFusion finance team led the charge to
What is more, because CareFusion executives can
unify the company using real-time analytics. “There is
now accurately track, in real time, how their
a saying: Time kills all deals,” Zill continued. “If the
adjustments play out, they can more quickly agree on
executives are having a discussion, they won’t accept
specific actions that different groups need to take to
waiting while you pull together the data they need.”
achieve financial goals.
A survey by IDG Enterprise found improving the
quality of decision-making, making quicker decisions,
When building a budget or forecast, for example,
and improving planning and forecasting to be the top
CareFusion often needs to model changes to
business drivers for investing in analytics (see Figure
employee-related costs, like benefits, tax rates and
3, “Better Decisions Through Data”).
international currency changes. Previously, adding a
new benefit or calculating the impact of a health
During each fiscal year, CareFusion compiles and
insurance cost increase required a lot of manual
reviews several iterations of its budget, adjusting for
work. Information would be gathered from local
business results. Before the company was able to
controllers and payroll groups to determine which
quickly assemble and analyze its financial data, it
employees would be affected. The financial
was difficult to determine whether departments were
department then would forecast the impact of the
meeting their individual targets. Without this
proposed changes and apply the anticipated cost for
information, CareFusion could not make timely
each group to its budget.
course corrections.
3. “Controlling 2013 Speaker
Profile: Michael DeLeo, Finance
Systems Manager at CareFusion,
Inc.” ERP Corp. blog, 2013.
http://goo.gl/PZGAZx.
The process took a week or more, and verifying the
2
With real-time data, however, the company can run
accuracy of the data was difficult. “There was no easy
more—and more sophisticated—models in the time
method to ensure that all required employees and cost
centers have been accounted for in the adjustment,”
Zill said. If the actual costs turned out to be different
than the forecast, it was equally challenging to
determine exactly why. The variance could be due
to one or more factors—including incorrect
calculation methods or changes in expected
FIGURE 3 Better Decisions Through Data
Business drivers for investment in analytics include the following. (% responding)
Improving the quality of decision-making
Benefits of RealTime Business at
CareFusion
employee headcount or benefit eligibility.
Making quicker decisions
Now, the company can make more precise
} Increased availability:
Information to make
key decisions that took
more than a week to
pull together can now
be delivered in minutes.
} Deeper insight:
Analysts can explore
questions of profitability
in detail at both the
customer and the
product level, as well
as run more “what-if”
scenarios.
} Improved forecasts:
By using real-time data,
and gaining flexibility
to include more data
sources in its analyses,
CareFusion can
create more accurate
forecasting models.
forecasts at the enterprise level, and make them in
Improving planning and forecasting
near real time. And when variances between
planned and actual costs occur, CareFusion can
determine the reason more easily, according to Zill,
and decide quickly the best way to bring the budget
59%
53%
47%
Developing new products, services and
revenue streams
47%
Source: IDG Enterprise Big Data Study, 2014. http://goo.gl/BNImWX
back in line. That is essential to achieving the
efficiencies the life sciences industry seeks, he said.
big payoff, both to expanding margins and the
bottom line.4 Now that the company has proven that
New Perspectives and Insights
the in-memory platform and advanced analytics
Zill added that the most valuable benefit of having
models enable it to understand its costs at a greater
real-time data is obtaining new insights. For
level of detail, with more accuracy and in less time, it
example, CareFusion can model profitability down to
intends to expand these capabilities to other models
both product and customer levels, giving it a more
and other data sources, Zill said. granular view to aid decision-making.
For example, he added, for consumable products,
In the past, Zill said, the company might have only
CareFusion plans to model sales based on historical
been able to get a partial view of its relationship
trends and seasonality.
with a customer. Now that it can consolidate and
analyze all the data from different units,
“These revenue models will provide us with a basis
CareFusion will use this technology to discover, in
for forecasting manufacturing costs and profit
the moment, which units customers purchase
margins,” Zill said. “They will allow us to further
from and how best to allocate company resources
improve our accuracy, efficiency and ability to plan
to properly serve customers. for changing business needs.” “We can approach the model-making at a much
Zill envisions expanding the use of in-memory
greater level of detail,” Zill explained. “This happens
computing to many additional areas—including
because we no longer have to worry about the size
mergers and acquisitions, research and
of the data anymore. In the old days, you had to
development, sales and marketing—which will bring
think in terms of the minimum amount of data you
the enterprise-wide improvements that are needed
could bring together and still answer the question.
to propel CareFusion, and its healthcare customers,
Now we don’t have to be so smart about eliminating
to a new era of higher efficiency. •
information, so we don’t throw away nuggets. That’s
mind-freeing and time-freeing.”
Consider More Data
According to CareFusion’s Gallahue, the intense
4. Nasdaq information on
CareFusion. http://goo.gl/1Ncrfb.
business integration work has already produced a
3
City of Boston, Massachusetts at a glance
Capital of the State of Massachusetts, founded in
1630
Industry: public sector
Population: 626,000
Size: 48 square miles
City employees: 16,173
Education: 53 institutions of higher education
Firsts: U.S. public school, subway system
www.cityofboston.gov
Source: City of Boston
Page
22
Boston’s Better Community Connections Through Big Data and Analytics
With in-memory computing and analytics tools, the City of Boston is providing better service to
citizens and engaging more with the community.
BY JOE MULLICH
M
any government agencies talk about the transformational power of big data and analytics.
Bill Oates, chief information officer for the City of Boston, is doing something about it. He says
this starts with making better connections—between citizens and the community, multiple government
departments and even other cities.
Boston at a Glance
} Founded: 1630
“Business process change is table stakes at this point,”
Oates says. “The importance of the technology is its
ability to engage and empower our constituents.”
} Population: 626,000
Citizens Connect: Empowering
Constituents with Big Data and
Analytics
} 34% of citizen reports via mobile and online app
} 89% of citizens would recommend it
} 21% rise in constituent satisfaction
} Pothole repair time cut in half
} Size: 48 square miles
For Boston, a new form of engagement began in 2008
} City employees: 16,173
with the launch of Citizens Connect1, a system that
} Education: 53 institutions
of higher education
enables citizens to report potholes, graffiti, damaged
} Firsts: U.S. public
school, subway system
their smartphones. A unique twist of the technology,
then and now, is that citizens do not simply report
Like many cities, Boston has a growing number of sources
www.cityofboston.gov/
the problems to the government. Rather, reports and
of data to analyze. To help it cope, the city is ahead in
Source: City of Boston
photos are published anonymously online, spreading
taking visual analytics to a new level. For example, in 2010
word of the issues and inviting discussion and
the Boston Police Department opened a “real-time crime
participation in Citizen Connect.
center” that receives dozens of feeds from street cameras
signs and other issues through the Internet and, later,
around the city. The resulting data gives researchers
Since then, Boston has introduced Street Bump ,
the potential to visually analyze and match videos from
which enables people to use their smartphone’s
incidents to help identify suspects, mobilize resources and
accelerometer—a motion detector in the device—to
even map evacuation routes during emergencies.
2
record road conditions and send data to public works
employees. Unlike Citizens Connect, the Street Bump
Big Data Makes More Satisfied Citizens
app does not require a citizen to take action to report
Boston’s experience with in-memory computing and
issues. He simply turns on the app and, as he drives,
big data analytics reveals intriguing insights about
data is automatically collected and sent to the city.
the opportunity for collecting and using big data. For
example, residents were polled on why they failed to
Street Bump was expected to identify the location of
contact the city about maintenance issues before the
potholes—a top concern of Boston residents. Thanks to
Citizens Connect app. Their answer: When they call the
analytics, the early data has provided some unexpected
city, they feel like they are complaining; when they use the
insights: trouble spots are eight times more likely to be
app, they feel like they are helping.
“castings,” those manhole covers, grates and other cast-
1. Citizens Connect: Making Boston
Beautiful.
http://tinyurl.com/642ymk3
2. Street Bump.
http://tinyurl.com/mjeb4q8
metal lids that are supposed to be flush with the roadway
The ability to rapidly share data and analytics has had a
surface but instead heave up due to the extreme cold of
measurable effect. Today, 20 percent of citizen reports
a New England winter. Hundreds of these castings have
come through the Citizens Connect app and another
been repaired as a result.
14 percent through the city’s Web site. The number of
SEPTEMBER 2013 | © Copyright 2013. Bloomberg L.P. All rights reserved.
citizen reports has doubled, as well, from 40,000 a year
prior to the technology to 80,000 a year today. A reason
Boston’s IT Challenges
for the greater participation may be the quick results that
} Quicken innovation
follow. Since the city implemented Citizens Connect, the
} Encourage citizen involvement
response time to fill a pothole has been cut from three
} Share big data across departments
days on average to half that amount.
“We met with interested
Similarly, the original prototype of Street Bump could not
researchers, technol-
distinguish between potholes, manhole covers, bridge
surfaces and other obstacles, so the app generated a lot
ogists and community
of false positives in the field.3 A crowdsource challenge
members to figure out
enabled the city to implement a new algorithm to analyze
how we could use data
the big data coming in more accurately.
} Speed repair of potholes and other issues
Boston’s IT Solutions
} Formed the Office of New Urban Mechanics—
an incubator that pilots new ideas quickly
} Partnered with citizen groups, businesses and
universities to share data and ideas
} Developed apps that enable citizens to report
issues easily
} Developed apps that enable citizens to collect data
to improve quality of life
In Oates’ view, big data is all about information sharing in the
issues. Being able to
about road conditions automatically as they drive
public sector. He has found that the combination of the right
connect newly available
data, timely analysis and visualization is most effective when
city data with some of
information and analytics are shared across departments.
It also indicates the new thinking that is needed to
the real big data out
“In the past, an agency might crunch its own data to
leverage the power of big data. Oates points to the Office
there in the world can
get a historical comparison on how quickly it is fixing
of New Urban Mechanics, an initiative that began in
potholes,” he says. “Now, by combining data, we can see
Boston and is now shared with the City of Philadelphia
what areas of the city aren’t getting phone calls, which
and serves as each city’s innovation incubator. The
may indicate problems no one knows about yet.”
office builds partnerships between city agencies, outside
make city government
more proactive—and
more effective.”
institutions and entrepreneurs to pilot projects in the two
Boston has put significant effort into making data and
cities that address resident and business needs.5 Several
INFORMATION OFFICER, CITY
analytics available to both agencies and the community.
projects have involved data sharing and analytics, such
OF BOSTON
Oates points to the Boston Area Research Initiative4 as
as the Street Bump initiative.
—BILL OATES, CHIEF
an example. Here, the city confers with the many
universities in the area about original urban research on
“Government agencies on the whole aren’t great in
the cutting edge of social science and public policy. For
responding to unsolicited ideas and opportunities, and
us, “this is a matter of digging a little deeper,” Oates says.
they are engineered to put tightly prescribed solutions out
“We met with interested researchers, technologists and
to bid,” Oates says. But “we have a model that allows
community members to figure out how we could use data
us to respond quickly to opportunity.” The city is now
to improve quality of life issues. Being able to connect
collaborating with the Commonwealth of Massachusetts
newly available city data with some of the real big data
to deliver a Citizens Connect-like mobile app that will
out there in the world can make city government more
engage citizens and produce important performance data.
proactive—and more effective.”
Boston officials are also talking with cities around the
3. Bertolucci, Jeff. “Smartphones,
Big Data Help Fix Boston’s Potholes.”
InformationWeek, July 25, 2012.
http://tinyurl.com/a9nfkdp
4. Boston Area Research Initiative.
http://tinyurl.com/kgu2q46
5. New Urban Mechanics: a city
movement focused on civic innovation.
http://tinyurl.com/a3jodpv
Planning for Tomorrow
world about similar initiatives. “All of us in city govern-
Oates contends that what has been accomplished so far
ment are looking at ways to our data move valuable,”
is just the beginning. By using information to interact better
Oates says, “and to be part of these exciting cross-ju-
with neighborhood leaders and citizens, for example, the
risdictional initiatives.”•
city can respond faster and better to local events, enabling
it to more efficiently deploy police to ensure public safety.
“Our ability to engage in those conversations is a critical
part of successfully using technology,” he says.
2
City of Cape Town, South Africa at a glance
Second largest city in South Africa, whose government
was forged in 2000 by a consolidation of seven
municipalities into one “unicity”
Industry: public sector
Population: 3.7 million
Size: 950 square miles
City employees: 25,500
Number of police stations: 60
Number of fire stations: 29
www.capetown.gov.za
Source: City of Cape Town
Page
25
Real-Time Data Speeds Services in
“The Mother City” of Cape Town
With in-memory computing and analytics tools, Cape Town is improving public safety and
energy/water management at the same time.
BY JOE MULLICH
C
ape Town, the second largest city in South Africa, has long been called “The Mother City.”
Andre Stelzner, chief information officer for Cape Town, provides a tongue-in-cheek explanation
for the nickname: “People say that’s because everything here takes nine months” to accomplish.
Jokes aside about the slow pace of government, Cape
Cape Town at a
Glance
} Population: 3.7 million
} Size: 950 square miles
} City employees: 25,500
} Number of police stations:
60
} Number of fire stations:
29
Town realized that many pressing issues—such as
improving public safety and managing water and energy
use more effectively—required faster action than is
typical of large bureaucracies. Research by the city’s IT
team indicated that success could only be achieved by
collecting and analyzing real-time data.
Cape Town’s government, which was forged in 2000 by a
consolidation of seven municipalities into a single “unicity,”
www.capetown.gov.za/
delivers all the services that are used by its population
Source: City of Cape Town
of 3.7 million. This includes electricity, water, healthcare,
sanitation, transportation, refuse collection, libraries, and
police and fire protection, to name a few.
In 2003, the city started down a path toward better
use of information by implementing an enterprise
FIGURE 1
Tech Hit Parade
Respondents were asked: Currently, how important are each
of the following capabilities to your agency, institution or
organization now and in two years? (percent of respondents
indicating “important”)
Currently Important
Important in Two Years
Share data and analytics across organization
85% 89%
Provide field staff with data from internal systems on
apps
84% 87%
Offer constituents access to operational systems
83% 85%
Ability to understand stakeholder sentiment via social
media analysis
72% 81%
resource planning (ERP) system. It is now one of the
largest ERP deployments in any city government in the
world, encapsulating 450 business processes. Tangible
benefits include providing insight for reducing debt and
enabling Cape Town to achieve an A+ credit rating. The
need for faster response times has led the city to big
data analytics and in-memory computing, which can
analyze huge amounts of data quickly.
Ability to correlate location and other asset data
73% 77%
Communicate with stakeholders via social media
73% 74%
Real-time sensor feeds from assets
61% 71%
Base: 103 executives at small, midsize and large public agencies worldwide
Source: Bloomberg Businessweek Research Services 2013 Agency Analytics Study
It Starts with Smart Metering
Cape Town’s initial foray into in-memory computing
For example, “If we have real-time information about
will most likely come from the need to analyze large
the supply and demand for water and power, we
quantities of data gathered by smart meters that
can keep them in sync with dynamic tariffs,” Stelzner
monitor water and energy use. Currently, the system is
says. By raising tariffs in times of rising demand, the
limited to large corporate users, but over the next two
city can encourage conservation and reduce the risk
years it will expand significantly and result in a host of
of unstable power supplies that can lead to national
new services.
blackouts. “We need to find ways to get people to
DECEMBER 2013 | © Copyright 2013. Bloomberg L.P. All rights reserved.
change their behavior about the amount of water and
electricity they use,” he says.
Cape Town’s Challenges
} Improve water/energy conservation
Real-time access to water and energy data will provide
other benefits, as well. “We will be able to pick up a leak
in a main water line immediately,” Stelzner says. “In the
past, it could take us days to identify a leak in a remote
area, which resulted in a significant amount of spillage.”
} Provide better waste management to over one
million households
} Increase citizen safety and provide “intelligent
policing”
Cape Town’s IT Solutions
Cape Town’s
Government
Milestones
For waste management, trash containers will be
} Equip trash containers with RFID tags
equipped with RFID tags so the citizens can be charged
} Consolidate emergency services/data into a
} Fiscal management
for garbage collection based on the weight of their refuse.
} Implement real-time smart metering
“At the moment, everyone pays the same, so the costs
and A+ credit rating
are not divided equitably and there is no incentive for
} Use of big data
single platform
} Implement big data analytics and in-memory
computing
people to behave more efficiently,” Stelzner points out.
analysis to conserve
water and energy
Consolidating Emergency Information
are many of the types of activities already underway in
to optimize waste
Stelzner sees what may be an even bigger payoff by
Cape Town, including sharing data and analytics across
management
applying in-memory computing to emergency services.
the organization and correlating location with other data
At present, the city’s emergency services—from law
assets (see Figure 1, “Tech Hit Parade”).
} Use of RFID tags
} Near-real-time
response to public-
enforcement to disaster management—tend to operate
safety events
in silos. As a result, information from one department that
In Cape Town, the use of in-memory computing is being
could potentially be used by another is not shared. To
expanded to also enable more “intelligent policing,”
solve the problem, the city is developing an emergency
meaning the city can use more data sources to respond
control platform that will consolidate data sets, leveraging
more clinically to security events. “In some areas, security
the power of in-memory computing across agencies.
issues are a perception,” Stelzner says, “and in some
cases, they are a reality.” If by using real-time sensors
As an example, the city currently collects information
and other sources “we have the ability to get a better
on 1.5 million non-emergency events a year. “There
understanding of the true situation, then we’ll be able to
is a lot of information that is not now visible to the
apply resources more effectively,” he says.
emergency controller, even though this information is
interrelated to the work they do,” Stelzner says. He
As an example of future public safety benefits, Stelzner
goes on to explain: “A traffic probe that shows highway
uses a fireman and a burning building. The fire captain
traffic has slowed to almost zero speed could inform
back at headquarters will be able to pull up the
you of another event, like a major accident before the
building plan from the land-use management system,
accident is reported. By consolidating this information
instantly locate potentially dangerous gas cylinders in
on a single platform, we can be more proactive and not
the structure, note how to avoid them and then alert
depend entirely on the community to report events.”
the fireman on his handheld device as he enters the
building. “That is the future we envision,” Stelzner says.
The idea of sharing access to real-time public data and
“It’s a future that depends on enormous and rapid
analytics across public agencies is not unique to Cape
computing power—because you can’t wait for a batch
Town. In fact, some 81 percent of managers among
job to run when a building is on fire.”•
government entities around the world responding to
a 2013 global survey by Bloomberg Businessweek
Research Services strongly agree that big data is crucial
to meeting their mission. High on their list of requirements
2
Commonwealth Bank of Australia at a Glance
Australia’s leading provider of integrated financial
services
Industry: banking
Profits: $7.09 billion
Number of employees: 51,000
Markets: Australia, New Zealand, China, Vietnam and
Indonesia, with branches in New York, Tokyo and
Hong Kong
www.commbank.com.au
Source: Commonwealth Bank of Australia
Page
28
RESEARCH UPDATE | Real-Time Banking Case Studies
CBA Offers More Personalized Banking
Through Big Data and Analytics
With new data sources and tools, Commonwealth Bank of Australia is providing more personalized
service to customers and building loyalty within the community.
BY TOM GROENFELDT
C
ommonwealth Bank of Australia (CBA) knows a lot about its customers. That is partly because
it has a huge footprint in the country—it processes nine million transactions per day, handles 40
percent of the card transactions in Australia and maintains 12 million account profiles. More important
than company size or number of transactions is how CBA uses its wealth of customer data, along with
Commonwealth
Bank of Australia
at a Glance
} Description: Australia’s
leading provider of
integrated financial
services
} 2012 Revenue: $47.2
billion
real-time analytics, to build loyalty and provide superior
customer service.
Like CBA, “Most banks have incredibly rich data sets,
especially those derived from payments and credit data,”
notes Andy Lark, CBA’s outgoing chief marketing officer.
Far fewer have learned how to combine this “big data”
with other information resources and then put it to work to
create better products and services.
} Profits: $7.09 billion
} Number of Employees:
51,000
} Markets: Australia, New
Zealand, China, Vietnam
and Indonesia, with
branches in New York,
Tokyo and Hong Kong
What has put CBA out front in this area is a recent
Key Features of CBA’s New Web Site
} Magazine-style section provides content based
on customers’ key life events
} Integrates data from social interactions, on-site
behaviors and browsing history
} Support forum where customers seek support
and advice about the bank’s products and
services
} Uses principles of responsive Web design to look
good on all devices, including PCs, smartphones
and tablets
modernization of its IT systems, followed by strategic
investments in social media, analytics and mobility. All of
that prospect has been looking at properties, the site is able
this has unified the bank’s data foundation and “put us
to display more relevant offers—home loan, insurance and
in an enviable position,” Lark says. Thanks in part to big
other related product information. The site can even analyze
data and real-time analytics, CBA has reduced check
a customer’s Web searches to provide a very specific offer
fraud by 50 percent and Internet fraud by 80 percent.
on the spot, in real time.
www.commbank.com.au
Equally important, he says, is how analytics now “gives our
Source: Commonwealth Bank
of Australia
customer service the advantage of clarity of purpose.”
The CBA site is a good example of how customers want
to communicate with banks on their terms, when and
All banks strive to provide superior customer service.
where they are ready. According to Andrew Hagger,
CBA made real progress once it realized customers
general manager—head transformation and analytics at
want individualized attention. “I guess one of the largest
CBA, “Analytics underpins the ability to offer the right
surprises to us was the extent to which customers wanted
products to clients.”1
the site personalized to them,” Lark says of the bank’s
Web service, NetBank. “So the strategy became making
More Than a Smarter Web Site
the entire site relevant and meaningful for the customers.”
But CBA’s focus on customer service extends well beyond
the Web. The more accounts a customer has with the
1. Wisniewski, Mary. “5 Takeaways from
SAP’s Client Conference: Reporter’s
Notebook.” American Banker, October 25,
2012. http://goo.gl/noH0qI
Visitors can see the difference. For example, say a prospect
bank, the more helpful CBA can be with pricing and
has been viewing properties online and then visits the CBA
advice. If a household has its mortgage, checking, savings
site. Not too long ago, “you might have gotten a banner with
and credit cards with CBA, the bank’s analytical tools can
a standard offer for a travel money card—something far from
suggest the most appropriate products and offer pricing to
interesting at that point in time,” Lark says. Today, knowing
fit the customer’s needs, both in person and online. CBA
can even offer them a report on their spending through a
visual and interactive hub site called Signals.2
To be customer centric, it is important to provide access
to data across the enterprise to individual users at the
point of decision-making, in addition to having clean
data and an integrated analytics platform that enables
collaboration across the various departments and
processes. CBA’s IT infrastructure demonstrates this well.
“We have the strength of the relationship data and the
customer-centric architecture, which I believe will set us
CBA’s Products and Services
} Retail Banking: Home loans, credit cards,
personal loans, transaction accounts, and
demand and term deposits
} Commercial Banking: Business loans,
equipment and trade finance, and rural and
agribusiness products
} Corporate Financial Markets Services:
Securities underwriting, trading and distribution,
corporate finance, equities, payments and
transaction services, investment management
and custody services
apart from the competition on an enduring basis,” says
CBA CIO Michael Harte.3 CBA has also been working on
incorporating innovations such as in-memory computing
to power up its strategy.
that, together with analytics, runs well and looks good on
desktop, tablet and smartphone devices.
Harte says the bank has developed a strategy to collect
transaction and other data, analyze it and use it to determine
Conclusion
the right pricing and financial strategies for an individual or
As CBA demonstrates, the future is bright for banks that
an entire household. As Lark puts it, “The more information
learn to use big data and analytics to gain a competitive
you have, the more inclined you will be to make better
edge. However, dealing with all that data is not always
informed financial decisions.” The ability to forecast trends,
easy and progress can take time, says David Tanis,
model options and predict outcomes is another important
manager of information systems and frontline analytics at
aspect of gaining customer trust and loyalty.
CBA. At the Gartner Business Intelligence & Information
Management Summit 2013 in Sydney in February, Tanis
Increasingly, more customer and prospect data is coming
said every analytics project is a learning experience,
from sources outside the bank. An early and active user of
especially when it involves big data.4
social media, CBA has dedicated social media teams who
monitor social sites 24 hours a day looking for prospects
“We’re still trying to understand what the capabilities and
who might be dissatisfied with another bank and seeking
skills are in terms of pulling as much out of the big data
a new financial services home. The teams also look for
as we can,” Tanis says. CBA deals with the wide varierty
potential problems within CBA and respond to them
of big data sources every day as it tries to derive business
quickly. “I was surprised at how much benefit we could get
intelligence from that data.
from social data,” Lark says.
According to Lark, many institutions are still in the early
2. Langlois, Christophe. “BIG DATA: Top
Australian Banks Launch Social Media
Spending Comparison Sites.” Visible
Banking, March 7, 2013.
http://goo.gl/0MEoxE
3. “We’re changing the game:
CommBank.” The Sydney Morning Herald,
May 29, 2012. http://goo.gl/zEq8w
4. Lui, Spandas. “Half of analytics
investments will be a waste:
Commonwealth Bank.” ZDNet, February
25, 2013. http://goo.gl/h385jv
Skyrocketing use of smartphones and other mobile
stages “of being able to fully utilize their data” to develop
devices is also quickly filling the bank’s data coffers. CBA
insights and better meet customer needs. “It’s not just the
saw its mobile users jump from 19 percent to 32 percent
new data sets, or the size of the data, that is driving this,”
in less than a year. “Mobile is going to be even more
he says. “It’s also the awareness that in the future, you’ll
significant in the future, as more and more happens on
need to meet the customer before they start the search.
the smartphone,” Lark predicts. “Being relevant isn’t just
That’s where the winners will win.” •
going to be about the relevant offer; it also means being
contextually relevant to where I am and what I am doing.”
CBA uses a combination of ad serving, smart media
buying and personalization engines on its mobile Web site
2
Tom Groenfeldt is a freelance writer in based in
Sturgeon Bay, Wis., who has written for many financial,
business and technology publications.
ConAgra at a glance
Consumer products giant produces brand-name foods
such as Healthy Choice, Marie Callender’s and Orville
Redenbacher’s, among others
Industry: consumer products
Category leaders: 27 of its consumer brands are
No. 1 or No. 2 in their category; 23 consumer brands
generate more than $100 million in retail sales
each year
Founded: 1919
Headquarters: Omaha, Nebraska
Sales: $18 billion
Employees: 36,000
www.conagra.com
Source: ConAgra
Page
31
Real-Time Business Leads
ConAgra to Profitable Insights
The consumer products giant is reducing costs, improving pricing and forging closer
relationships with retailers using in-memory computing.
BY JOE MULLICH
ConAgra at a
Glance
Segments: Consumer
foods, private brands,
commercial foods
Category leaders: 27 of
its consumer brands are
No. 1 or No. 2 in their
category; 23 consumer
brands generate more
than $100 million in retail
sales each year
Founded: 1919
Headquarters:
Omaha, Neb.
Sales: $18 billion
Employees: 36,000
www.conagra.com
Source: ConAgra
C
onAgra, the $18 billion consumer products (CP) giant, produces brand-name
foods such as Healthy Choice, Marie Callender’s and Orville Redenbacher’s,
among others, that can be found in almost everyone’s refrigerator or pantry. Yet it
faces the same challenges that pressure the entire
food industry: figuring out the optimal pricing for its
products in an environment where consumers are
hyper-sensitive, while coping with the everfluctuating costs for 4,000 raw materials used in
FIGURE 1
How Analytics Contributes to
Business Decisions
Areas where food and beverage companies use data and
analytics to support strategic decisions (percent responding)
some 20,000 products.
Customer insights
According to a 2013 study by KPMG,1 51 percent of
Brand and product management
58%
59%
food industry executives said pricing pressures
remain the highest barrier to growth, up from 42
percent a year earlier. Volatile commodity prices—
the amount manufacturers pay for ingredients—are
another major obstacle.
“If the price of beef goes up on the commodity
Pricing decisions
56%
Operating model optimization
52%
Market expansion
43%
exchange, what is that going to do to our margin?”
asked Mindy Simon, ConAgra’s vice president of IT.
Being able to answer such questions is of
paramount interest to the company, because
commodity prices affect its earnings and its stock
Portfolio rationalization
42%
Source: KPMG 2013 Food and Beverage Industry Outlook Survey.
http://goo.gl/me3va8
price. In the past, ConAgra has warned that
ConAgra decision-makers have real-time insight into
earnings would be impacted by materials prices that
the company’s costs and consumers’ demands.
were rising faster than expected.2
“We’ve developed much better capabilities in pricing
1. KPMG. 2013 Food and
Beverage Industry Outlook Survey.
PDF. http://goo.gl/me3va8.
2. Rappeport, Alan. “ConAgra hit
by surging raw material costs.”
Financial Times. Sept. 20, 2011.
http://goo.gl/yih35b.
3. Thompson Reuters Streetevents.
“ConAgra Foods at CAGNY
Conference. ” Edited transcript.
Feb. 18, 2014.
http://goo.gl/QGrc9a.
March 2014 |
So ConAgra puts great emphasis on optimizing its
analytics as part of an overall revenue growth
prices, which in turn requires getting ever better
management approach,” ConAgra CEO Gary
prices for commodities such as wheat, corn, oats,
Rodkin told analysts in February 2014.3 Rodkin’s
soybean meal, soybean oil, meat, dairy products and
remarks echoed the KPMG survey findings: Food
sugar. The company turned to in-memory computing,
and beverage executives reported they rely more on
which loads extremely large volumes of data from
data and analytics to support their pricing decisions,
multiple sources into one database and enables
understand customers better, and support brand
users to answer questions almost instantly. Access to
and product management decisions (see Figure 1,
great volumes of rapidly processed data means
“How Analytics Contributes to Business Decisions”).
ConAgra’s
Challenges
Real-Time Data Means Faster Decisions
ConAgra has priced products appropriately when it
} Gain in-the-moment
insight into the cost of
raw materials.
} Acquire more accurate
consumer purchase
information to improve
merchandizing.
} Forge closer ties with
retailers.
FIGURE 2
Consumer Products Companies’
Data Challenges
delivers value to consumers and earns a profit. For
They want timelier information. (percent responding)
example, the company has 140 meal products, such as
Timeliness for decision-making
69%
potpies, that sell for less than $3. “Banquet potpies sell
for less than $1, and Marie Callender’s potpies are
around $2.50,” Rodkin explained.4 Having a variety of
products at different price points makes ConAgra
competitive within the categories it serves, as does
doing a better job of getting retail prices right than its
ConAgra’s
Solutions
competitors. Any price increases prompted by rising
} Implemented in-memory
technology to speed
analysis.
} Gathered new sources
of data about consumer
behavior.
} Shared data-driven
insights with retailers.
consumer expectations, observed Bob Nolan,
manufacturing costs have to take into account
ConAgra’s vice president of customer insights and
Quality
67%
Integration
57%
Availability
53%
Source: Accenture, “Building an Analytics Driven Organization,” 2013.
http://goo.gl/KBfJnv
analytics. Consumers might be willing to pay 10 percent
more for a gallon of gas, he said, but not for popcorn.5
Improving their ability to model alternative business
scenarios is becoming a critical goal for CP
CP companies have traditionally approached key
companies that want to stay ahead. A recent
business decisions, such as pricing, through a
Aberdeen Group study10 looked at how behavior
periodic planning process. However, as the cost of
differs among companies that are aware of the
manufacturing and consumer demand become more
business drivers, such as costs or pricing, that
volatile, so do revenues. Business risks also
impact their performance compared to those who
increase. Companies now realize that planning
are not aware. The results found companies that
should be a continuous activity based on real-time
take business drivers into account when creating
information. Yet the majority of CP companies are
their business plans are nearly three times as likely
failing, thus far, to put real-time analytics at the heart
to make what-if analyses a priority.
of their decision-making processes, according to a
4. Thompson Reuters
Streetevents.
5. Nolan, Bob. “ConAgra’s VP of
Analytics on Big Data & Careers in
Retail.” Video. Jan. 9, 2014.
http://goo.gl/PS1ozI.
6. Accenture. “Building an
Analytics-driven Organization:
Organizing, Governing, Sourcing
and Growing Analytics Capabilities
in CPG.” PDF. Feb. 19, 2014.
http://goo.gl/KBfJnv.
7. Henschen, Doug. “Can SAP
Master Cloud & On-Premises?”
InformationWeek. Feb. 5, 2014.
http://goo.gl/G1yJoA.
8. SAP. “SAP HANA: An InMemory Data Platform for RealTime Business.” PDF. 2012.
http://goo.gl/gDicpN.
9. Doug Henschen.
10. Castellina, Nick. “Don’t Fly
Blind When Budgeting and
Forecasting: The Value of Being
Driver-Conscious.” Aberdeen PDF.
November 2014.
http://goo.gl/7VWSGj.
11. Bob Nolan.
12. Accenture.
new Accenture study.6 The top challenge for CP
By focusing on a key pain point—costs—ConAgra
companies, cited by 69 percent, is lack of timely
has convincingly demonstrated the business value of
data (see Figure 2, “Consumer Products Companies’
its in-memory computing investment, observed Chris
Data Challenges”).
Cicarello, senior director, pricing and customer
analytics at ConAgra.11 Choosing an important
To gather more timely data and enable faster
business problem to address, as ConAgra did, is a
decision-making, ConAgra turned to in-memory
savvy strategy for CP companies that are engaging in
computing in numerous areas of its business. The
cutting-edge analytics. According to Accenture,
“most revolutionary” use now is forecasting materials
companies often launch such efforts without knowing
costs, Simon offered.
what they want to accomplish, and they end up
7
spending a lot of time—and money on technology—
ConAgra has been able to speed up the collection of
without having much impact on the business.12
its data related to commodities purchases from 9 hours
to 20 minutes8 and to reduce its month-end forecasting
Capitalizing on New Data Sources
process by three days. By collecting and analyzing the
Another reason why ConAgra needs to process
data more quickly, the company is able to consider
massive amounts of data quickly: the company
timelier what-if scenarios, giving it more ways to adjust
uses more types of data in its analysis. For
its strategies for buying materials, observed Simon
example, the CP giant is adding shopper-specific
(see Figure 3, “Better Decisions Through Data”).
data that it gets directly from retailers and
9
2
analyzing that data in new ways to better
understand consumers and respond to their
needs. That goes beyond how ConAgra uses
internal data to forecast demand and increase
sales, and speaks to how it applies aggregated
retail data to plan promotions and strengthen its
The Benefits of
Real-Time
Business at
ConAgra
include the following. (% responding)
supply chains.
As ConAgra searches these new data stores, it is
finding surprising insights that enable better
} Expanded options:
ConAgra is able to
analyze multiple “what-if”
scenarios when
considering its strategies
for purchasing
commodities.
} Better merchandizing:
Using external data,
such as consumer data
provided by retailers,
delivers real-time insight
into how to merchandize
products more effectively
and increase margins.
} Closer relationships
with retailers: Sharing
data-driven
recommendations with
retailers helps ConAgra
build trust and become
an indispensible partner.
Business drivers for investment in analytics product merchandizing. For example, the
company learned that people who buy one type
of single-serving frozen food tend to buy several
other single-serving varieties at the same time.
59%
53%
47%
revenue streams
47%
Because of that, ConAgra suggested that retailers
group the packages with smaller portions
Enhancing Relationships
together, instead of stocking single-serve pizzas
To develop a strong relationship with retailers,
with family-size pizzas.
ConAgra realized that it could not simply provide
self-serving data about its own products. Nolan
Such findings enable ConAgra to forge stronger
pointed out that data sharing requires
ties with retailers: The company is giving the
transparency: Retailers should fully understand
retailers data that, in turn, enables them to improve
why ConAgra is making recommendations about
their own operations. The deeper understanding
which products to put on the shelf. In some cases,
about prices ConAgra gains not only helps the
the company’s recommendations might even
company manage itself efficiently, it also helps
include adding a competitor’s products. “We try to
ConAgra guide retailers on how to price products
be objective and give recommendations that allow
on the shelf. That, along with controlling costs, is
[retailers] to grow their entire store, not just our
the other crucial element in maximizing profits,
business,” he said. “It’s almost like being a
according to ConAgra executives.
consultant. We want to become the indispensable
13
partner to our customers.”14
Aberdeen Group Analyst Nick Castellina said
best-in-class companies—the ones that shape
Nolan said this objectivity demonstrates to
their plans around business drivers—are twice as
supermarkets and retailers that ConAgra’s data-
likely to share information with suppliers,
driven suggestions are based on what will most
customers, resellers and regulatory bodies. But the
benefit the retailers’ bottom lines. This tactic builds
data has to be accurate and recent, or it is not
trust as ConAgra develops relationships with the
useful. The high-performing companies that
retailers. As a result, he thinks ConAgra will profit and
Aberdeen identified as sharing information are
“win the ties” when retailers debate whether to add
nearly three times more likely to have real-time
ConAgra products or those from another company.15
financial metrics.
It is another innovative way that data drives
“Having accurate demand forecasting and
inventory is important in consumer goods,”
Castellina said. “This is especially important in
the food industry because of shelf life and the
13. Bob Nolan.
14. Bob Nolan.
15. Bob Nolan.
capability for materials to go bad.”
3
ConAgra’s sales and boosts the bottom line. •
writer based in Sherman Oakes, Calif.
eBay at a glance
Leading online retailer provides consumer-toconsumer sales services via the Internet
Industry: high tech
Founded: 1995
Headquarters: San Jose, California
Brands: eBay, PayPal, eBay Enterprises, StubHub
Buyers worldwide: 145 million
Active users worldwide: 128 million
Number of items listed for sale: 650+ million
www.ebay.com
Source: eBay
Page
35
Big Benefits from Big Data at eBay
Online marketplace provider eBay uses predictive analytics and in-memory computing to better
serve customers and bolster the bottom line.
B Y L A R RY L A N G E
O
eBay at a Glance
} Founded: 1995
} Headquarters: San Jose,
Calif.
} Brands: eBay, PayPal,
eBay Enterprises,
StubHub
} Buyers worldwide: 145
million
} Active users worldwide:
128 million
} Number of items listed for
sale: 650+ million
} Revenue (fiscal 2013):
$16.0 billion
nline retailers face two big challenges: improving customer service, and keeping
partners and suppliers satisfied. Both are vital, because online competition is fierce. If
shoppers aren’t happy with their site experience—from browsing to buying—they can easily
go elsewhere; competitors are just a click away. It’s
the same for an online retailer’s suppliers. If they
FIGURE 1
Predictive Analytics:
What Is It Good For?
don’t like certain terms and conditions, or consider
(percentage of survey respondents)
technical features too basic, they won’t stay loyal.
Achieve competitive advantage
68%
The stakes for online retailers are huge. Worldwide
B2C ecommerce sales will increase more than 20
percent this year, reaching $1.5 trillion, predicts
research firm eMarketer.
1
New revenue opportunities
55%
Increased profitability
52%
Leading online retailer eBay is meeting both
www.ebay.com
challenges by deploying business analytics to provide
Source: eBay
online sellers with real-time information about their
eBay-enabled sales. Sellers can use this information
to sell more goods more efficiently and effectively.
Increased customer service
45%
Operational efficiencies
44%
Because eBay is better serving its sellers, it is able to
indirectly better satisfy buyers with a speedier,
optimized shopping experience. As for eBay’s bottom
Source: Ventana Research predictive analytics benchmark research, 2012.
http://goo.gl/k5lkGk
line? It gets a cut of every sale, regardless of which
and services that empower customers to perform a variety
customer is buying or selling. Simply put, the new
of business tasks (see Figure 1, “Predictive Analytics: What
analytics program is a win-win-win.
Is It Good For?”).
Analyzing Analytics
Many organizations use predictive analytics (see Figure
The move is significant for another reason:
2, “Predictive Analytics: What It Is Used For”). Netflix
Although many ecommerce companies find the
commissioned two TV shows, “Orange Is the New
promise of big data compelling, few have realized
Black” and “House of Cards,” knowing beforehand,
its business benefits. Now, though, early adopters
thanks to predictive analytics, that a big chunk of its
like eBay are achieving new revenue streams,
customer base would loyally watch them.2
greater speed-to-market and enhanced business
1. eMarketer. “Global B2C Ecommerce
Sales to Hit $1.5 Trillion This Year Driven
by Growth in Emerging Markets.” Feb. 3.
2014. http://goo.gl/K8l0Vt.
2. Carr, David. “Giving Viewers What
They Want.” The New York Times, Feb.
24, 2013. http://goo.gl/Tr4wAw.
flexibility. Among the approaches yielding results,
A mining company uses predictive analytics to better
predictive analytics stands out.
maintain equipment. The company, as described by Henry
Morris, senior vice president of software and services
Predictive analytics helps companies extract
research at market researcher IDC, deploys Caterpillar
information from mountains of data, forecast customer
machinery that, in the past, was manually checked and
trends and patterns of behavior, and create products
maintained only on an infrequent and irregular basis.
AUGUST 2014 | © Copyright 2014. Bloomberg L.P. All rights reserved.
Now equipment is continuously monitored. “The
FIGURE 2
company can detect a ‘signal,’ or datapoint anomaly, on
a machine that predicts when the machine is likely to fail,”
Morris explains. “Then they can send someone out to
repair it.”
Speed is an important benefit of predictive analytics. A
Benefits of
In-Memory
Computing at eBay
new, faster technology, known as in-memory computing,
} Sellers get relevant,
real-time information
about their own
customers and eBay
buyers
} More in-depth data
analysis; faster
anomaly detection and
notification
} Dashboard lets
analysts visualize
relevant information in
several categories
} Tasks that previously
took a month can now
be done in one day
} Data is delivered
to the entire team
of eBay analysts
instantaneously
“In-Memory vs. Disk: The Shootout”). In-memory
keeps data in a computer system’s RAM rather than
storing it on traditional physical disks (see Figure 3,
Predictive Analytics:
What It Is Used For
(percentage of survey respondents)
Currently using
24%
22%
45%
34%
Product offers
43%
consultancy PricewaterhouseCoopers (PwC), says
improved productivity, enhanced customer experience
and loyalty, and lower costs.”3
67%
Customer service
and analyze vast amounts of data from multiple data
in-memory computing can deliver “increased innovation,
72%
Marketing
computing helps predictive analytics systems aggregate
sources in nearly real time. Anand Rao, a principal at
Plan to add in future
Forecasting
22%
Fraud detection
34%
31%
Many enterprise software providers offer automated
platforms based on in-memory computing. These
Source: Ventana Research predictive analytics benchmark research, 2013.
http://goo.gl/1kUhOz
systems run data through myriad preconfigured
metrics, quickly send those metrics to users and
To stay competitive, eBay employs 5,000 data analysts
provide dashboards for users to disseminate data.
worldwide who sift through as much as 100 petabytes of
Researchers at audit and consulting firm Deloitte say
data. Until recently, analysts used Microsoft Excel
new in-memory platforms offer query response times
spreadsheets. But the process wasn’t scalable, and
that are thousands of times faster than more
errors were common.6 Given the huge amount of data
conventional approaches; transactions can be
and eBay’s pressing business needs, the case for
processed as much as 20,000 times faster.
automation was easily made.
These and other related benefits are making predictive
eBay’s first test project, launched in 2013, combined
analytics a serious business. Research firm
predictive analytics and in-memory computing. The
MarketsandMarkets forecasts the global market for
result empowered the North American marketplace
predictive analytics systems reaching $5.24 billion in
team of 300 data analysts to provide sellers with
2018, up from $1.7 billion last year.
forecasts, as well as relevant and real-time information
4
5
about sellers’ own customers or eBay buyers.
3. PricewaterhouseCoopers. “6th Annual
Digital IQ Survey.” http://goo.gl/1dQiyn.
Comments by Anand Rao in “Digital IQ
2014 10 Technology Trends for Business.”
http://goo.gl/IpJsLw.
4. Deloitte University Press. “Tech Trends
2014: Inspiring Disruption.”
http://goo.gl/E3f6z3.
5. MarketsandMarkets. “Predictive
Analytics Worldwide Forecasts
(2013–2018).” http://goo.gl/4fEhBg.
6. SAP. “Optimizing eBay’s Signal
Detection with SAP HANA.”
http://goo.gl/UFHy7j.
7. Schwarzbach, David. “SAP
Sapphire Conference Presentation:
Target Business-Critical Processes for
Transformation.” http://goo.gl/uIv6Zu.
Up, Up and eBay
Information was provided as actionable metrics,
eBay recognizes the value of predictive analytics and
including customer tastes and preferences, market
in-memory computing. It uses the technology to score
conditions, and timely supply and demand information.
both business and technology benefits.
Consider the popular category of collectible men’s
2
Data at eBay is certainly big: It serves some 20 million
basketball sneakers. “If we know that ‘collectible
sellers offering wares in more than 4,500 product
sneakers for the Olympics’ are selling really well, we
categories and 145 million active buyers in 100+
want to tell our sellers as soon as we know it,” says
countries. Now eBay is feeling pressure to keep
David Schwarzbach, vice president and CFO of eBay
business competitive and customers loyal.
North America. “That’s the value of speed.”7 The
sellers, equipped with this
knowledge, can then run special
FIGURE 3
promotions for those sneakers.
Keys to the Kingdom
The eBay team had worked alone on a
In-Memory vs. Disk: The Shootout
How these two technologies compare on two important factors.
Infrastructure Finding Data
In-memory
computing
Data is stored in the
machine’s main system
memory, enabling
in-line processing and
manipulation.
Streamlined data retrieval
and processing means no
mechanical parts, no
movement and no need
for alignment.
Disk-based
Data is mechanically
recorded on a spinning
disk, often on a large
array of networked
storage appliances.
For data to be read or
written, the correct
address must first be
found on the physical
disk. Overhead for input/
output activities can
cause delays to jobs that
are large or complicated.
scalable and configurable automated
eBay’s Business
Challenges
predictive analytics system for two years.
} Data analysis was
manual; the process
wasn’t scalable, and
errors were common
} Difficult to coordinate
analyst’s efforts,
diagnose problems
and make accurate
decisions on seller
recommendations
Schwarzbach’s team began working
eBay’s Solutions
eBay honed in on two core requirements: greater
a method to deliver items before a customer orders
} Deploy advanced
business analytics
} Combine predictive
analytics and inmemory computing
} Partner with in-memory
platform vendor
analysis of data, and faster detection and notification of
them. In deciding what to ship, Amazon will leverage its
anomalies—or signal detection. The platform delivered
trove of customer data—and its predictive analytics
several tools, including a dashboard that lets eBay
system—to take into account a customer’s previous
North America’s analysts visualize relevant information in
orders, product searches, wish lists and more.10
But the payoff came when
with an in-memory platform vendor.
“There was a thrilling, magic moment,”
he says, when the team knew they
could transfer their data analysis
operation over to an in-memory platform.
Schwarzbach adds: “We’d cracked it.”
Source: Deloitte, “Tech Trends 2014: Inspiring Disruption”
By deploying the in-memory platform,
several categories and that flashes data anomaly alerts.
Similarly, UPS wants to deploy prescriptive analytics on
Thanks to in-memory computing, tasks that previously
all its data feeds, including GPS tracking, driver routes
took a month now take a day. Gagandeep Bawa, a
and workloads, traffic patterns and delays, and
manager in eBay North America’s financial planning
customer delivery requirements. The goal: a real-time,
group, says this real-time speed frees up data
constantly adapting operational system that optimizes
analysts’ time, and he calls the system “inherently
any task performed by the company’s drivers.11
intelligent and configurable.”8
PwC says the future of enterprise applications will
Next, eBay will offer this data directly to sellers, either
combine predictive analytics with mindflows—basically,
on their personalized Web pages or via a mobile app.
a person’s thoughts—to create “mindful apps.” These
Schwarzbach says his team is “taking this to
apps will combine data generated by tracking what
production right now.” Morris of IDC expects this will
people think, their behavior patterns and data already
give eBay a big competitive edge. “Other auction firms
being aggregated by a firm’s predictive analytics
don’t offer this kind of data analysis as a service,” he
program. That information will help employees make
explains. “So this makes eBay very compelling for
optimal decisions, all served up via a mobile app.12
9
8. Bawa, Gagandeep. “eBay’s Early
Signal Detection System Runs Machine
Learning & Predictive Powered by SAP
HANA.” http://goo.gl/282uJB.
9. David Schwarzbach.
10. Bensinger, Greg. “Amazon Wants to
Ship Your Package Before You Buy It.”
The Wall Street Journal, Jan. 17, 2014.
http://goo.gl/Vz1U9i.
11. Hemsoth, Nicole. “UPS Delivers on
Prescriptive Analytics.” Datanami, Feb.
23, 2013. http://goo.gl/PP4GjV. Schultz,
Beth. “Inside Analytics: UPS Delivers
the Goods.” All Analytics, May 9, 2013.
http://goo.gl/iEfm4U.
12. Baya, Vinod, Galen Gruman and Bo
Parker. “The future of enterprise apps:
Moving beyond workflows to mindflows.”
PricewaterhouseCoopers.
http://goo.gl/GqCOLH.
customers to use for selling their goods.”
If you were using one of these programs, you’d already
The Future Is Predictive
Impressive as these gains are, several companies are
pushing new developments that will make data
analytics even more useful. Amazon was recently
granted a patent for what it calls anticipatory shipping,
3
know that! •
Larry Lange is a freelance business and technology
writer based in Jacksonville, Fla.
EMC at a glance
IT as a service, cloud computing. 25 distinct product
families span hardware, software and services,
addressing storage, trusted infrastructure, cloud
computing and big data
Industry: high tech
Headquarters: Hopkinton, Massachusetts
Founded: 1979
2013 revenues: $23.2 billion
Acquisitions to date: 70
Employees: 60,000 in 86 countries
www.emc.com
Source: EMC
Page
39
The Key to EMC’s Technology
Growth: Integrated Acquisitions
Integrating the systems and business processes of acquired companies is often overlooked. EMC,
with its 70 acquisitions and counting, has a winning formula.
BY ALAN RADDING
T
he rise of so-called SMAC technologies—social, mobile, analytics and cloud—
presents a new challenge to large technology suppliers. On the one hand, these
companies must respond to their customers’ rising demands for these new technologies.
EMC at a Glance
Industry: IT as a service,
cloud computing
Company description: 25
distinct product families
span hardware, software
and services, addressing
storage, trusted
infrastructure, cloud
computing and big data
Headquarters:
Hopkinton, Mass.
Founded: 1979
Revenues:
$23.2 billion (2013)
Acquisitions to date: 70
Employees:
60,000 in 86 countries
Yet on the other hand, doing so is costly, time-consuming and complicated.
To meet this challenge, many large technology
FIGURE 1
companies are turning to mergers and acquisitions
(M&A). They are buying smaller suppliers that have
developed solutions in one of these areas, and
(% reporting deal objective was “very important” and
“completely achieved”)
then integrating them into their product mix and
operations. Among the firms that have spent
millions, even billions, of dollars to acquire SMAC
suppliers are IBM, Google, Microsoft and EMC.
Rob Fisher, U.S. technology industry deals leader at
PricewaterhouseCoopers (PwC), an audit, tax and
consulting firm, said these companies essentially
have no choice. SMAC, he said, changes “the
nature of the business, especially when software is
Acquisitions Do Not
Always Deliver
Very important
All respondents
Completely achieved
All respondents
Very important
Technology respondents
Completely achieved
Access to new brands, technologies or products
56%
82%
40%
47%
www.emc.com
involved.” Acquisitions are also a way for large
Access to new markets
Source: EMC
technology suppliers to enter new markets at lower
risk. “Upstarts are prepared to lose hundreds of
millions of dollars of venture capital before becoming
profitable,” Fisher explained. “But established
players cannot absorb those kinds of losses.”
PwC recently completed a three-year study of
mergers and acquisitions in technology,
information, communications and entertainment.
As part of the study, the firm asked C-level
70%
75%
58%
38%
Access to management or technical talent
43%
59%
36%
31%
Source: PricewaterhouseCoopers, 2014 original rendering
executives to name their most important deal
objectives. Among executives in the technology
percent of the technology executives (see Figure 1,
sector, two goals came out on top: access to new
“Acquisitions Do Not Always Deliver”).
brands, technology and products, cited by more
MARCH 2014 |
than 80 percent of respondents; and access to
However, simply acquiring a smaller technology
new markets, also cited by 75 percent. The next
company is not a panacea. The acquired company
closest was access to talent, cited by nearly 60
must also be integrated into the larger company, and
that includes its IT architecture, systems and
FIGURE 2
survey identified IT integration as the number one
post-M&A closing difficulty. It was followed by the
related challenge of integrating operating
procedures and business processes.
EMC’s Challenges
} Support both current
and anticipated future
businesses.
} Manage a large number
(70+) of acquisitions,
and integrate business
and operational systems.
} Enable current products
with mobility and cloud
computing.
} Update legacy ERP
system to support
variable pricing,
especially pay-as-you-go
models.
This is essentially an information-platform challenge.
The acquiring company must meld disparate
processes and technologies, most originally
intended to support different business models,
customer bases, development cycles and product-
Transformation via Acquisition
(% of acquisition type, based on the largest
acquisition in the past three years)
applications. This work is far from simple. PwC’s
All respondents
Transformational
Absorption
44%
53%
29%
29%
Source: PricewaterhouseCoopers, 2014
release expectations. And with cloud technology
enabling a software supplier to shift its business
Originally founded as a provider of data-storage
model from licensed products to hosted services,
systems to large enterprises, EMC is today a $23.2
even the most basic accounting systems may
billion (revenue) supplier of 25 distinct product families
require major adjustments.
that span hardware, software and services. These
products address not only storage, but also what the
As a result of this complexity and difficulty, many
company calls “trusted infrastructure,” cloud computing
acquisitions fall short of achieving their goals.
and big data.
PwC’s survey found that fewer than one-third of
executives at acquiring technologies companies
EMC’s customer base has expanded to now include both
reported competence in integration. The results
small and midsize companies. As a result, it engages both
were striking: Fewer than half (47 percent) of the
direct and in-direct sales channels. But its typical order
executives said their acquisitions actually
size has shrunk. In response, EMC embarked on a leaner
delivered access to new brands, technologies and
operating strategy, methodically cut costs and adopted a
products—goals the deals were created to deliver.
high-volume/low-touch business model, much like the
As for gaining access to new markets and new
best SMAC players. And at the manufacturing end, EMC
talent, the results were even worse; only 38
operations now rely on more than 50 suppliers worldwide,
percent said their acquisition met expectations for
up from a small handful in 2004, as well as several
new markets, while a mere 31 percent said it met
contract manufacturers.
expectations for talent. “Transformational deals
are much harder due to the increased complexity
Internally, EMC is a very different company, too. As of
of the integration,” said Gregg Nahass, U.S. M&A
2013, EMC had 60,000 internal users, more than twice
integration leader at PwC (see Figure 2,
the number it had in 2004. The company now has more
“Transformation via Acquisition”).
than 400,000 customers and partners, six times the
number it had when a previous ERP system was
The Integration Hurdle
deployed. Similarly, EMC’s roster of applications and tools
Integrating systems, therefore, is a key differentiator
has grown to 500, up from 400 in 2004. Even more
between acquisitions of SMAC companies that
important, the way the company handles its workload has
succeed at meeting their goals and those that fail.
changed dramatically; EMC now operates more than more
One company aware of this challenge, and working
than 10,000 virtualized systems, amounting to 93 percent
hard to master it, is EMC. Over the past decade,
of all its servers (see Figure 3, “EMC’s Evolving IT”).
EMC has acquired no fewer than 70 companies.
2
What is more, these acquisitions have enabled EMC
With all these changes, EMC found it also needed to
to radically change the nature of its business.
change its internal IT environment. The ERP system
that had suited the company so well in 2004 was
FIGURE 3
EMC’s Evolving IT
by 2013 no longer serving the business. EMC
now needed to accommodate dozens of business
units supporting varied product families being
sold via multiple channels to different types of
customers. A new system was clearly needed,
EMC’s Solutions
one that could support myriad types of pricing,
from conventional on-premises licenses to various
} Move to an open ERP
system.
} Create six new
principles for any future
system.
} Launch Project Propel,
an enterprise system
initiative designed to
transform 125+
business processes.
} Deploy a set of
virtualized enterprise
apps that can be
adapted to changing
future needs.
} Plan to add new
capabilities, including
CRM, scheduled for
2015 deployment.
subscription and pay-as-you-go models—and
whatever might come next. And the company
would need to help its staff work seamlessly. No
matter which EMC business units they were in,
workers needed to be able to share information,
2004 2013
Internal users24,000
60,000
IT environment
5 datacenters,
~13 petabytes of storage
5 datacenters,
960 terabytes
of storage
Business~400 ~500
applications
Virtualization
2,000 physical 93%, ~10,000
servers
OS images
Source: EMC Corp.
collaborate and innovate with one another.
The EMC team began with a question inspired by one of
Beyond Integration
its acquisitions: What if the same principles that
Clearly, EMC needed a solution that went far
transformed a single acquisition, delivering
beyond merely upgrading its existing ERP system
unprecedented value for customers, were applied to the
with a few cloud or mobile capabilities. Instead, the
entire company?
company needed a system that would integrate its
acquired companies and support its new business
In answering that question, EMC officials realized they
would need to abandon their legacy ERP system. The
“Now that we’re in the hardware
replacement, they realized, would need to be based on
business, the software business,
open systems. It would need to enable widespread
and very much into mergers
virtualization. And it would need to support EMC’s
journey to cloud and mobile computing. Above all, EMC
and acquisitions, we needed
needed a system that could integrate everything and
to reinvent our ERP system to
share information, even with future acquisitions.
support not just the business
To find the right solution, EMC highlighted six key
that we had evolved into but the
principles:
businesses that we will continue
to evolve into going forward.”
—M I C H A E L H A R D I N G , P R O J E C T L E A D
T E C H N I C A L A R C H I T E C T, E M C
• Design for the future state of the business.
• Minimize customizations and commit to the vendor’s
upgrade path.
• Move fast to mitigate system risk.
• Use a phased approach to realize value as quickly
as possible.
processes, customer types and business models. A
conventional upgrade would not suffice. “Now that
we’re in the hardware business, the software
• Recognize and manage the cultural change and
transformation the new system entailed.
• Prepare the staff with new skills and competencies.
business, and very much into mergers and
1. “HANA Customer Spotlight.”
SAP, 2013.
http://goo.gl/UtnxDU.
acquisitions, we needed to reinvent our ERP system
After a careful search, EMC settled on a solution supplied
to support not just the business that we had evolved
by an industry-leading enterprise systems vendor. The
into but the businesses that we will continue to
solution would support from the outset open systems,
evolve into going forward,” said Michael Harding,
virtualization and cloud computing. To do that, while
project lead technical architect at EMC.
ensuring performance and flexibility, the new vendor also
1
3
Project Propel at
a Glance
} Overall mission:
Support both EMC’s
current and anticipated
future businesses.
} Key dates: Phase
1 launched in 2013;
Phase 2 (adding RSA
and services groups)
is scheduled for 2014;
Phase 3 (adding CRM
capabilities) is scheduled
for 2015.
} Business benefits
include: Reduced
capital and operating
expenses, improved
business performance,
the ability to leverage
commodity IT hardware,
improved security and
easy information sharing
to facilitate innovation.
} Business applications:
approximately 500.
} Transformation: More
than 125 EMC business
processes have been
added; 65 legacy
applications have been
retired.
} In-memory processing:
Four third-party
appliances.
} Product families:
More than 24, including
hardware, software and
business services.
} Training: 103 classes
have been completed,
training 1,200 “super
users.”
} Phase 1
implementation: 40,000
users at 316 sites in just
four days.
brought a slew of the latest technology advances,
acquired vFabric, GemFire, Cetas and Cloud
including in-memory processing.
Foundry). The combined service now provides data
warehouse protection, data deduplication and
Transformation Project
backup services.
The new enterprise system initiative, referred to
internally as Project Propel, was designed to
The new integration and innovation capabilities of
transform more than 125 EMC business processes
Project Propel have also helped EMC provide
by deploying 65 integrated, multi-module enterprise
real-time financial reporting. “The end-of-quarter
applications. Project Propel has also enabled EMC to
process [is] a huge amount of pressure,” Tony
deploy an integrated set of virtualized enterprise
Pagliarulo, EMC’s senior VP and chief operating
applications that can be adapted to support both the
way EMC works now and the way it is likely to work
“The key to innovation is to
in the future as it pursues ongoing innovation.
leverage technology for multiple
Project Propel’s initial rollout in 2013 involved some 20
departments. It’s being informed
modules. These included core ERP, business
that creates the basis for
intelligence (BI), supplier relationship management
sustainable innovation.”
(SRM) and advanced planning and optimizing (APO),
as well as some portals and various third-party
applications. Despite the project’s massive scale, it
was deployed to EMC’s internal users in just four days.
— G R E G S C H U L Z , S E N I O R A N A LY S T A N D
FOUNDER, STORAGEIO
officer, said at a recent investment analyst briefing.
“So it was critical for us to have real-time reporting
The effort was intended from the start as a
at a very detailed level.” Thanks to Propel, he
multi-stage rollout. The last stage, expected to go
added, “We were able to make that available to
live in 2015, will add customer relationship
users so they can make real-time decisions about
management (CRM) capabilities to bring the sales
which customers got what product. It was huge—it
groups under the same information-sharing
really saved our bacon.”2
umbrella, enabling all groups to see the same
information. At that point, information should flow
Project Propel is the largest IT transformation in
efficiently and seamlessly through major swaths of
EMC’s history. It delivers new technology, enables
the sprawling company, with innovation following
EMC to redesign key business processes and
right along.
ensures an agile approach to deployments. This, in
turn, helps EMC respond quickly and completely to
This information flow will facilitate another EMC
customer requests, provide a better mix-and-
objective, sustainable innovation, said Greg Schulz,
match of products and services, and share
senior analyst and founder of StorageIO, an IT
information internally.
consulting firm. “The key to innovation is to leverage
technology for multiple departments,” he added.
These types of capabilities are important, not only to
“It’s being informed that creates the basis for
EMC but to the entire IT industry. As the market
sustainable innovation.”
leaders continue to grow and gain capabilities with
acquisitions, the need to create open, integrated
Source: EMC Corp.
An early example of that type of innovation is EMC’s
creation of Pivotal, its agile infrastructure service.
2. “Transform Business
with an Innovation-Driven
Enterprise.” SAP Webcast,
2013.
http://goo.gl/trhTSI.
EMC formed Pivotal by combining capabilities it
gained through the acquisitions of Pivotal Labs,
Greenplum and VMware (which, in turn, had
4
systems will only grow.•
Alan Radding is a freelance business and technology
writer based in Newton, Mass.
Florida Crystals at a glance
A subsidiary of Fanjul Corp., Florida Crystals is the
world’s largest sugar refiner. A vertically integrated
company, it operates two sugar mills, a sugar refinery,
a packaging and distribution center, a rice mill and a
renewable energy power plant
Industry: consumer products and agriculture
Headquarters: West Palm Beach, Florida
Farmland: 155,000 acres
Products: organic and natural sugar; refined sugar;
organic and premium rice
Raw sugar production: 800,000 tons per year
Refined sugar production: 500,000 tons per year
Annual revenues: $5.5 billion (Fanjul Corp.)
Employees: 2,000
www.floridacrystals.com
Source: Florida Crystals
Page
44
Real-Time Business Sweetens
Performance at Florida Crystals
In-memory computing leads to more effective decision-making and energizes an aggressive
growth strategy at the world’s largest sugar refiner.
BY STEPHANIE OVERBY
Florida Crystals At
a Glance
Industry: Agriculture and
consumer products
Company Description:
A subsidiary of Fanjul
Corp., Florida Crystals
is the world’s largest
sugar refiner. A vertically
integrated company,
it operates two sugar
mills, a sugar refinery,
a packaging and
distribution center, a rice
mill and a renewableenergy power plant.
Headquarters: West Palm
Beach, Fla.
Farmland: 155,000 acres
Products: Organic and
natural sugar; refined
sugar; organic and
premium rice
Raw sugar production:
800,000 tons per year
Refined sugar production:
500,000 tons per year
Annual Revenues: $5.5
billion (Fanjul Corp.)
Employees: 2,000
E
arly in 2014, due to global oversupply, sugar prices sank to less than 15 cents a
pound on the IntercontinentalExchange—the lowest price in three-and-a-half
years.1 But unlike manufacturers in other industries, Florida Crystals cannot cut
Real Time vs. Reality
production or hold back supply to compensate
FIGURE 1
when prices fall. Sugar cane, once planted,
Many companies struggle to deliver
in-the-moment business data in real time. (% of global
companies with one-day or near-real-time visibility)
produces a crop for several years, and mills must
extract the raw sugar from the freshly harvested
cane soon after each new crop ripens.
Cash positions/liquidity
Meanwhile, in a commodity industry such as sugar
Customer information/business volume
43% that is dominated by a few large players, it is difficult
for firms to differentiate their products, noted Simon
Ellis, practice director of supply chain strategies at
IDC. As a result, profit margins for sugar companies
are tight and cost efficiencies are key to profitability.
Florida Crystals faces another challenge, too:
business complexity resulting from an aggressive
growth-by-acquisition strategy and vertically
integrated operations that cover every step of sugar
production, from planting to distribution.
What began as a family-run sugar farm in Cuba in
57%
Working capital
39%
Supplier base/spend volume
28%
Financial performance
24%
Operational risk
17%
Source: The Hackett Group, 2013
the 1850s is now the largest sugar refiner in the
could quickly deliver the real-time capabilities
world. The company is involved in planting,
necessary for increased flexibility and better
harvesting, processing, packaging, marketing and
decision-making.
www.floridacrystals.com
distribution—all within its own farms and facilities.
Source: Florida Crystals
Recently, Florida Crystals expanded operations to
A Way to Stay Ahead
Europe and Latin America via acquisitions and
Florida Crystals likes to be out front. More than a
investment. It is also looking at opportunities in
decade ago, it was the first to mill certified organic
China and Africa.
sugar to be sold in the United States. That has
been true of its approach to using information
1. International Sugar and
Sweetener Report. “Raw sugar
futures fall below 15 cents/lb for
the first time since June 2010.”
Informa, Jan. 23, 2014.
http://goo.gl/OFuOKu.
March 2014 |
To improve agility in its competitive cost-
technology, too. The company has always situated
conscious industry, as well as to better manage
itself on the leading edge of IT, from being among
its broad range of business activities and
the first to roll out an ERP system in 1995 to its
aggressive growth strategy, Florida Crystals’
early adoption of cloud computing when it rid itself
leaders looked to information technology that
of its datacenter in 2010.
Florida Crystals’
Challenges
But in 2013, Florida Crystals was like many companies
} Standardize and simplify
infrastructure and
applications.
} Create agile processes
to facilitate growth
through acquisition.
} Deliver data and enable
analysis in real time.
and analytics environment: It was running numerous
struggling with the limitations of its existing applications
batch processes that delayed data delivery and analysis,
and it had devised workarounds that further complicated
already complex business processes. Also like others,
Florida Crystals lacked real-time visibility into key
59%
53%
business information. A study of global companies by
The Hackett Group found that fewer than half have
real-time data about customers, suppliers or financial
performance (see Figure 1, “Real Time vs. Reality”).
Florida Crystals’
Solutions
Furthermore, more than 40 percent of IT managers
} Deploy an in-memory
suite of enterprise
applications to speed
information delivery to
business users.
} Move mission-critical
business applications to
a managed cloud service
with flexible capacity
to support geographic
expansion.
} Use real-time analytics
to enable employees to
make better operational
decisions.
responding to a recent IDC survey say that users
47%
revenue streams
47%
could not perform predictive analysis or work with
real-time data because they have to wait between
from re-imagining business processes to take advantage of
two and 10 days for their data to be processed.
it, noted business transformation expert Behnam Tabrizi,
2
consulting professor at Stanford University’s department of
Managers at Florida Crystals used to spend much of
management science and engineering.
their time waiting for reports to run or devising their
own spreadsheet analyses. But Vice President and
No More Waiting for Data
CIO Don Whittington chose to move the company’s
It took two months for Florida Crystals to migrate its full
most important business systems to an in-memory
stack of ERP software, from finance and materials
platform that could deliver data to employees much
management to sales and distribution, to a managed
more quickly than overnight batch processing. He
cloud service. Then the company switched over to the
also chose to run those systems using a managed
in-memory platform during a long weekend, keeping
cloud service with the capacity to process petabytes
terabytes of data in sync with no disruption to the
of data. The flexible capacity would accommodate
thousands of employees who use that data in three
the company’s expansion plans more cost effectively.
countries on a 24-hour basis. The migration began late
But Florida Crystals’ goal goes beyond merely
on a Friday and, Whittington said, “it was literally
producing reports faster. Ultimately, business leaders
business as usual on Monday.”
3
plan to transform the way the company operates.
Only it was more than business as usual. Key
2. Olofson, Carl W. and Henry D.
Morris. “Blending Transactions and
Analytics in a Single In-Memory
Platform: Key to the Real-Time
Enterprise.” IDC, February 2013.
http://goo.gl/e0vZP3.
With in-memory computing in the cloud, business
performance processes such as accounts payable
users can process reports on-demand, on their own
analysis doubled in speed. Cost center reports that used
and in real time—without waiting for IT to provide
to take minutes took milliseconds. Programs that ran for
data. Employees can now devote their days to the
hours finished in minutes. End-of-month workloads that
analysis and business decision-making that will
took three days to complete now run in about four hours.
underpin the company’s growth and differentiation
In fact, response times for most business transactions
strategy. As batch jobs are replaced by real-time
have improved by anywhere from 50 percent to 500
processing, the company can get information from its
percent, according to Whittington. “We don’t just make
supply chain faster than ever before, and thus get
work faster,” he said. “Work goes away.”
answers to customers more quickly.
3. SAP Technology. “Florida
Crystals Speeds Up Supply Chain
With Enterprise HANA Cloud.”
YouTube, July 8, 2013.
http://goo.gl/1KVrEy.
When employees do not have to download data to a
2
Eliminating batch processes is only the beginning,
spreadsheet, format it, upload it again and then
however. The greatest benefits from real-time data come
reconcile it with the four or five other reports their
Florida Crystals
colleagues have created, they have more time to
} Self-service: Business
users can process
reports on demand,
without going through IT.
} Faster analysis: Most
business transactions
are 50 percent to 500
percent quicker, so
business users have
more time to study
their data.
} Improved flexibility
to support growth:
A scalable cloud
infrastructure
helps mergers and
acquisitions go more
smoothly and reduces
IT costs.
} New value creation:
With access to real-time
data, Florida Crystals
can focus more on
value-added work,
such as improving
inventory management;
developing new
formulations, products
or packaging; or
planning expansion into
new markets.
Center for Digital Business, and his colleagues, found
FIGURE
3
Real-Time Businesses Outperform Peers
study the data and use it to make decisions.
Research by Erik Brynjolfsson, director of the MIT
Compared to other companies in their industries, firms using
advanced analytics are:
that among companies using data in their decisionmaking, productivity increases by 5 percent to 6
percent.4 Meanwhile, a survey of IT decision-makers
by publisher IDG Enterprise found that companies are
investing in analytics primarily to improve the quality
200% a s likely to be in the top quartile of financial
performance
300% as likely to execute decisions as intended
and speed of their decision-making (see Figure 2,
500% a s likely to make decisions much faster than market peers
“Better Decisions Through Data”).
Source: Bain and Company Insights, 2013. http://goo.gl/lY1IvA
A Real-Time Transformation
There have been benefits for IT, as well, in line with Florida
Now, Florida Crystals’ executives are on the way to
Crystals’ cost-cutting goals. Total cost of ownership for
transforming the company into a real-time
computing and storage is down by an average of 30
business. “Your day is no longer spent running
percent. And by embracing the cloud, Whittington’s
transactions,” Whittington explained. “It’s [spent
technology group does not need dedicated resources or
taking] the results of those transactions and [using]
expertise to manage the in-memory platform. That will
that to a business advantage.”
“empower IT groups to become that part of the business
and not worry about the technology,” he said. “We leave
When it comes to implementing new technologies,
that to our partners.”
such as in-memory and cloud computing, said
Narendra Mulani, senior managing director at
And the more flexible systems will make the technology
Accenture Analytics, “the greatest value will come
transitions for future corporate acquisitions and mergers
from the ability to enable decision-making at the
go more smoothly. In the past, some of the acquired
right time.”
companies did not come with their technology
applications, requiring Florida Crystals to get off the
It is not so much that such new business systems are
seller’s technology in as little as 90 days. “A flexible
simpler, said Robert Parker, vice president of research
analytic model and underpinning technology can
at IDC Manufacturing Insights; it is that they are more
actually be hugely beneficial by allowing the company to
flexible. The same core technology can be used to
evaluate performance even if systems aren’t fully
meet varied and changing business demands,
converted yet,” IDC Manufacturing Insights’ Parker said.
without having to reprogram them constantly. “These
approaches create the necessary resiliency that
That should give Florida Crystals a leg up in its industry.
allows a company to be more responsive to market
A 2013 global survey of 400 large companies by Bain &
conditions,” he said. They enable more data-driven
Company found that firms using advanced analytics are
decision-making at the strategic level and greater
more likely to be in the top quartile of financial
agility when responding to events in real time.
performance within their industries, to execute decisions
as intended, to use data very frequently when making
4. Brynjolfsson, Erik, Lorin Hitt and
Kim Heekyun. “How Does DataDriven Decisionmaking Affect Firm
Performance?” 2012.
http://goo.gl/Wkav0C and http://
goo.gl/9VUMG6.
In a highly competitive and constrained market,
decisions and to make decisions faster than market
having flexible technology means Florida Crystals
peers5 (see Figure 3, “Real-Time Businesses Outperform
can focus on value-added activities that will
Peers”). Said Whittington, “It’s a game changer.” •
5. Pearson, Travis and Rasmus
Wegener. “Big Data: The
Organizational Challenge.” Bain and
Company Insights, Sept. 11, 2013.
http://goo.gl/lY1IvA.
management of inventory; new formulations,
distinguish it from the rest, whether it is better
products or packaging; or planned expansion into
emerging markets.
3
Stephanie Overby is a freelance business and
technology writer based in Boston.
Globus at a glance
Globus is the premier department store subsidiary of
The Federation of Migros Cooperative, the largest retailer and employer in Switzerland. The cooperative has
more than 40 business enterprises that are divided
into five strategic business units: Cooperative Retailing,
Commerce, Industry & Wholesale, Financial Services
and Travel
Industry: retail
2012 revenue: $849 million
Headquarters: The Spreitenbach, near Zürich,
Switzerland
Products: high-end fashion, beauty, living and
gourmet products
Employees: more than 3,000
www.globus.ch/en/index.html
Source: Globus
Page
48
Globus Is Always in Style with
In-Memory Technology
Real-time insights enable Switzerland’s high-fashion department store to keep up with
fast-changing consumer preferences and optimize its supply chain.
BY JOE MULLICH
Globus at a Glance
T
he Federation of Migros Cooperative, the largest retailer and employer in
Switzerland, has long been noted for its supply chain excellence and creative
} Industry: Retail
thinking about logistics. Last year, for example, the company was honored with a
} Company description:
Globus is the premier
department store subsidiary of The Federation
of Migros Cooperative,
the largest retailer and
employer in Switzerland.
The cooperative has
more than 40 business
enterprises that are
divided into five strategic
business units: Cooperative Retailing, Commerce,
Industry & Wholesale,
Financial Services and
Travel
prestigious Swiss Logistics Award for determining the best transport routes for its
} Annual Revenue: 2012
gross revenue was $849
million using current
exchange rates1
} Headquarters: The
Spreitenbach, near
Zürich, Switzerland
} Products: High-end
fashion, beauty, living
and gourmet products
} Employees: More than
3,000
http://www.globus.ch/en/
index.html
Source: Globus
goods. It is not surprising that a company recognized
as the most innovative retailer in Switzerland,
according to a survey by the University of St.
Gallen, would also be a leader in finding better
FIGURE 1
Ready for Mobile Offerings
Respondents were asked which of the following
they would use if offered on their mobile device
while in-store.
and merchandizing techniques.2
Gather loyalty points or savings as you shop,
based on current promotions
88%
A prime example is Globus, Migros Cooperative’s
Real-time promotions
ways to leverage data to improve its supply chain
premier department store subsidiary. Founded in
1907, Globus operates 14 big retail stores that sell
clothing, cosmetics, jewelry, household supplies and
other upscale goods. The retailer’s need for continual
supply chain improvement is driven by higher
production costs, a weak Euro and rising raw material
prices. Consumers, meanwhile, are more demanding
and harder to please, which requires Globus to stay
on top of retail and fashion trends that can change as
fast as someone posts a new YouTube video.
88%
Order out-of-stock items in-store for home
delivery or put items on a wish list
82%
Shopping list, item locator and store navigator
79%
Scan products as you put them in your
shopping cart
77%
Base: 6,000 consumers from eight countries
Source: “Accenture Seamless Retail Study,” April 2013
Like many worldwide retailers, Globus operates
in a competitive landscape, in which consumer
sales performance data to identify merchandise
expectations are increasingly influenced by mobile
that is selling slowly. Such goods are a costly
device capabilities such as comparing competitive
issue for many retailers. Studies have shown the
offerings and sharing their opinions on social media
cost of owning excess inventory is approximately
(see Figure 1, “Ready for Mobile Offerings”).
2.5 percent per month, or 30 percent per year,
according to consulting firm The Retail Management
1. Globus Web site.
http://tinyurl.com/myfoz4k
2. Migros Web site.
http://tinyurl.com/m3f5o7s
3. Carter, Linda. “What Is Stock Turn Rate,
And Just Why Is It So Important?” The
Retail Management Advisors.
http://tinyurl.com/mg5urrh
AUGUST 2013 |
Insights at the Shelf Level
Advisors. Costs include interest, insurance, buying
With this relentless pressure, Globus depends on
expenses, receiving department expenses, property
timely, accurate reporting and analysis of sales
taxes, markdowns and shrinkage, the firm says.3
performance data to identify consumer trends so
Another issue is customer satisfaction—if store shelves
it can change its pricing and marketing strategies
contain too many items that customers do not want,
as the market changes. In particular, Globus uses
that leaves less room for the goods they do want.
Globus needed to find a way to track slow-sellers
FIGURE 2
so it could then discount or promote those products
to clear precious shelf space for hot products.
Enabling this type of analysis was no easy matter,
Speeding Insights with
In-Memory Computing
Globus has seen quantifiable speed benefits from its
in-memory computing system.
considering the large data volumes involved. Globus
offers roughly 800,000 products through a network
Globus’ Data
Analytics
Challenges
of some 3,500 suppliers. With increasing sales
} Speed reporting. The
retailer wanted to
generate reports more
quickly so it could
stay on top of rapidly
changing fashion trends.
decisions was spiraling out of control.4
volumes and transaction data, the amount of time it
took Globus to generate reports used for inventory
Analytics at the Speed of Business
To get quicker insights, Globus implemented
in-memory database technology. By leveraging
} Minimize excess inventory:
Globus wanted to
reduce the amount of
slow-selling inventory to
make more shelf space
for hot items.
in-memory computing, Globus can now instantly
explore and analyze data from numerous sources.
Operational data is captured in-memory as
Before
After
Data
warehouse
capacity
550 gigabytes
60 gigabytes
(due to data
compression)
Time to
generate a
report on
slow-selling
items
22 minutes
(reports did
not include all
product lines)
17 seconds
(including all
product lines)
Time to
generate a
sales report
7 minutes
60 seconds
Source: IBM
transactions occur, permitting analytics to be
} Improve efficiency: The
retailer wanted to reduce
the volume of data it
stored while increasing
the insights and
information that data
provided.
performed against rich data sources and providing
the type of real-time insights that were simply not
Sales promotion reports, which once took seven
possible before.
minutes to complete, can be produced in a mere
Elements of Globus’
Analytics Solution
} An in-memory
technology-based
analytics platform
that helps to quickly
generate insights,
resulting in better
demand planning,
merchandizing and
marketing in real time.
This approach has provided numerous benefits.
60 seconds. “Previously, if we needed sales
For example, Globus used to store 550 gigabytes
figures of our 14 big stores, [we] had to generate
of data in its data warehouse. Thanks to its in-
14 separate reports and then combine the results
memory approach, that has decreased to only
manually,” Weiss says. “Now we can simply
60 gigabytes, one-ninth the original size. “This is
create one report at the touch of a button.” He
important, because the less memory we need, the
adds, “we can now process more complex and
lower our licensing fees and maintenance costs,”
comprehensive requests within seconds, providing
says Alexander Weiss, team leader, processes and
a range of new insights that were simply not
business warehouse at the company.
available without in-memory processing.”9
Queries and even forecasts that call up archive data
The insights culled from this approach have
are now faster than ever, dramatically improving the
increased employee readiness to embrace
speed of insights (see Figure 2, “Speeding Insights
analytics. Before the use of in-memory technology,
with In-Memory Computing”). “Previously, it took
“acceptance of the company’s key performance
22 minutes to generate a basic slow-seller report
indicator dashboard was low among managers,”
that did not include the whole product line,” Weiss
Weiss says. “With the new solution, the figures are
says. “Access to these reports had to be planned
referred to and used regularly, helping the company
in advance because of the processing time.”7 But
to manage its retail business more efficiently.”10
5
6
after implementing the in-memory database system,
4., 5., 6. SAP Web site.
http://tinyurl.com/lqvgz4k
7., 8., 9., 10. IBM. “Swiss Retailer Migros
Spots Consumer Trends in Real Time with
SAP HANA.” March 21, 2013.
http://tinyurl.com/lfvruwk
Globus can generate a slow-seller report for the entire
All this leads to better inventory decisions, a
product line in just 17 seconds. Employees obtain
stronger bottom line—and happier customers. •
needed information 98 percent faster, eliminating the
wait time by two hours per employee per day, so
decisions can be made on up-to-the-minute data.8
2
Hewlett-Packard at a glance
Provides hardware, software and services to
consumers, small and midsize businesses, and large
enterprises, including customers in the government,
health and education industries
Industry: high tech
Products: computer hardware and software; IT services; IT consulting
Founded: 1939
Headquartered: Palo Alto, Calif.
Sales: $112 billion
Employees: 331,800
www.hp.com
Source: Hewlett-Packard
Page
51
HP Paves the Future with
Real-Time Insights
For the high-tech giant, in-memory-enabled speed is a business game changer.
BY JOE MULLICH
F
or the past several years, the high-tech industry has faced the challenges of
rising customer demand, shortened product lifecycles and constant innovation.
Now that technology has become a fundamental element of not just the workplace
but also everyday consumer life, however, the pressure to execute quickly against
these traditional challenges has never been greater.
Succeeding in this pressurized environment
Hewlett-Packard
at a Glance
} Products: computer
hardware and
software; IT services;
IT consulting
} Founded: 1939
} Headquartered:
Palo Alto, Calif.
} Sales: $112 billion
} Employees: 331,800
www.hp.com
FIGURE 1
requires high-tech businesses to acquire realtime intelligence—about customer tastes and
preferences, market conditions, supply and
demand—and to take immediate action. For all of
Big Returns From Big Data
High tech expects above-average
returns on big data investments.
Utilities
these reasons, the high-tech industry has become
Energy & resources
one of the leading users of big data and analytics,
gleaning insights from the huge volumes of data
High tech
produced internally, by the business, as well as
externally, from its customers and partners.
60.6%
52.4%
Average
Technology firms are seeing a payoff from their
45.5%
initiatives. In a study by Tata Consultancy Services,
Banking/financial services
43.7%
high tech was among the top four industries in
Insurance
terms of spending on big data and in the top three
for expected return on investment (see Figure 1,
“Big Returns From Big Data”).
Travel/hospitality/airlines
37.9%
Hewlett-Packard, the $112 billion technology giant,
Telecommunications
37.9%
is a leading proponent of the value of big data. “We
eat, sleep and drink very large databases and big
data as a present reality,” said Dave Carlisle, chief
architect and strategist for HP’s Enterprise Group.1
“We are under increasing pressure. Business
expectations—and particularly user experience
expectations—are increasing significantly.”
73.0%
(Mean percentage
of expected ROI
for 2012 big data
investments.)
38.9%
Retail
36.4%
Life sciences
35.3%
Manufacturing
28.9%
Source: Tata Consultancy Services.
“The Emerging Big Returns From Big Data.” 2013
Consider, for instance, HP’s supply chain. Every
1. Dave Carlisle spoke recently in a
recorded Webcast.
FEBRUARY 2014 |
60 seconds, HP delivers 120 PCs, 100 printers,
servers. Every one of those shipments is the
1,200 ink and toner cartridges, seven network
result of countless actions and decisions made
devices, seven terabytes of storage and five
throughout the global supply chain. The question
FIGURE 2
In-Memory Initiatives
HP is focused on three strategic initiatives, powered by in-memory computing.
Strategic Initiative
Business Innovation
Data Consumption
Financial planning
• Drive accelerated and sophisticated scenario
1–2 terabytes of data and 400
planning in real time
business intelligence users
• Engage users with instantaneous results when
executing simulations and what-if scenarios
Quote-to-cash
• Accelerate core ERP processes in key areas,
such as order management administration,
28 terabytes of data and 1,000
business intelligence users
month/quarter/fiscal year-end processing and
live operational reporting, delivering modern
“experience at scale” to users
Next-generation
• Drive on-demand visibility and improved
business warehouse
analytics
inventory leveling in the product supply chain
• Enable near-real-time account visibility in the
7–10 terabytes of data; 1,500
business intelligence users;
3 predictive users
global quote-to-cash process
Hewlett-Packard’s
Business
Challenges
the tech giant faces is, how to coordinate all those
After running numerous tests, HP discovered query
decisions to optimize pricing, reduce out-of-stocks
speeds had improved from an average of two hours
and shift manufacturing to align with customer
using traditional databases to just 88.23 seconds using
} Respond quickly to
changing conditions via
fast analysis of real-time
information
} Enable employees to
analyze data quickly and
intuitively
} Optimize the use of data
volumes generated by
the supply chain
demand. “To succeed, organizations need to
in-memory computing. As a result, HP employees will
make fast, informed decisions by extracting large
no longer experience radical swings in processing times
amounts of raw data from their systems to turn it
that vary depending on where data is stored. With user-
into information that is meaningful,” said Bill Veghte,
driven, powerful analysis and simulation capabilities, HP
chief operating officer at HP.2
workers will obtain immediate answers to virtually any
business question—with minimal help from IT.
To succeed in this endeavor, HP is embracing
2. Hewlett-Packard. “HP Opens
New Center of Excellence for
In-Memory Computing.” HP press
release, Jan. 10, 2013.
http://goo.gl/P80n5J.
2
in-memory computing, which enables real-time
The increased speed will have a wide-ranging impact
decisions through instantaneous analysis of big
on employee satisfaction and on meeting market demands
data sets. In-memory computing will enable HP to
and customers’ changing expectations. With built-in
take immediate action based on up-to-the-second
analytics, dashboards and reporting tools, data can be
insights into its financial planning, ERP and inventory
digested and presented intuitively, enabling employees to
processes (see Figure 2, “In-Memory Initiatives”).
quickly take corrective action and seize opportunities.
From Hours to Seconds
“At the end of the day, speed is a business enabler,”
The ability to analyze massive amounts of fast-
Carlisle said. “It’s cool from a technical standpoint
changing data in real time provides numerous benefits,
that a report that used to run in three hours can now
according to Carlisle. What HP employees will really
be done in 30 seconds. But the key is using speed to
notice is the unprecedented speed of accessing
rethink business experiences and processes in ways
information to make decisions, he said, particularly
not possible before.” For instance, employees will gain
given the vast size of HP’s underlying databases and
self-service access to financial information, enabling
the global scale of its multifaceted business.
more rapid analysis and reporting capabilities and
significantly reducing the time needed for closing
processes at the end of the month, quarter and
fiscal year.
With better—and faster—visibility into financial,
inventory and supply-chain information, HP will
Hewlett-Packard’s
IT Solutions
be able to detect and respond to issues and
} Use in-memory
computing to analyze
vast amounts of data
quickly
} Begin with a critical
system involving small
data sets
} Develop next-generation
business warehouse
analytics
managing risk and forecasting demand. HP could
exceptions more quickly, in addition to proactively
potentially accelerate inventory turns and ensure
profitable service delivery by instantly evaluating
and making granular changes in supply and
FIGURE 3
Order Management
Complexity
For each process, respondents were asked how many
IT systems are required to support it.
One System Two Systems
Three or More Systems
Order management
55%
21%
21%
Demand management
53%
15%
ERP
56% 9%
demand, reducing out-of-stocks and lost sales.
Warehouse management
34%
21%
Transforming processes and enabling new
Price management
32% 15%
capabilities are at the core of what manufacturers
are looking to achieve with analytics. “In our
research, only 10 percent of manufacturing
companies are satisfied with their ‘what-if’
capabilities, and only 24 percent of companies can
easily determine the profitability of decisions,” said
19%
28%
23%
Production planning
32% 11%
30%
Tactical supply planning
36%
17%
15%
Lora Cecere, founder of Supply Chain Insights.
Transportation planning
36% 9%
Tackling Order Management
Manufacturing execution systems
23% 15%
23%
HP’s in-memory computing efforts began with
a focus on its largest single ERP environment,
which includes order management administration,
month/quarter/fiscal year-end processing and live
operational reporting, accounting for over $41 billion
21%
15%
Product lifecycle management
34% 9% 11%
Source: Supply Chain Insights. “Go Big or Go Home?” July 2012.
http://goo.gl/p3x8B
in revenues. The HP Account Management Portal
Throughout 2014, HP will use in-memory computing
is used by thousands of HP order administrators
to provide better data visualization, and it will begin
worldwide. In-memory computing slashed the
to incorporate mobile capabilities. Taking a staged
time required to run a report from upwards of
approach to in-memory computing enabled HP to
seven minutes to 40 seconds. “Users can get their
scale out its knowledge from both a technical and a
display in real time while they talk with customers
“comfort level” standpoint. “We are starting to deliver
on the phone,” Carlisle said. What made this so
disruptive capabilities now,” Carlisle said, “while
compelling, he added, is that there was no need to
understanding and planning for even larger scale
retrain users, which increased the time to value. “It is
changes over the coming years.”
a good first step that brings material change without
disruption.”
With the combination of its real-time big data anlytics
foundation and strong 2013 performance,3 HP seems
Streamlining order management is a challenge for
many companies. According to a study by Supply
Chain Insights, order management often requires
3. Meola, Andrew. “Why HewlettPackard is Up Today.” The Street,
Jan. 13, 2014.
http://goo.gl/v8OtZs.
more than one system (see Figure 3, “Order
Management Complexity”).
3
poised to do just that.”•
HSE24 Germany, Austria, Switzerland at a glance
A leading home-shopping network based in Germany
Industry: retail
Founded: 1995
2012 sales: €515 million
Employees: 725 at HSE24; approximately 2,100
external (call center, logistics)
Customers: 8 million people have shopped at HSE24,
equivalent to more than 10 percent of Germans over the
age of 18
Products: 20,000 different products are sold each year
Product segments: fashion (35 percent), beauty/wellness (23 percent), jewelry (21 percent) and home living/
household and DIY (21 percent)
www.hse24.de
Source: HSE24
Page
55
RESEARCH UPDATE | Real-Time Big Data Analytics Case Studies
Using Real-Time Insights, HSE24
Gets Closer to Customers
With in-memory computing and predictive analytics tools, Europe’s home-shopping network can
offer a personalized experience—and solve costly issues—in real time.
BY JOE MULLICH
HSE24 Germany,
Austria,
Switzerland at a
Glance
} Founded: 1995
} Sales: €515 million
(2012)
} Employees: 725 at
HSE24; approximately
2,100 external (call
center, logistics)
} Customers: 8 million
people have shopped
at HSE24, equivalent
to more than 10
percent of Germans
over the age of 18
} Products: 20,000
different products are
sold each year
} Product segments:
fashion (35 percent),
beauty/wellness (23
percent), jewelry (21
percent) and home
living/household and
DIY (21 percent)
www.hse24.de
HSE24, a leading home-shopping network based in Germany, measures its business
in milliseconds. The 18-year-old company reaches 41 million households in Germany, Austria and Switzerland, and it has now expanded into Italy and Russia. All of its
home-shopping channnels must stay aware of customer buying patterns and behaviors and respond to them in real time. For example, if it appears that a sales spike is
depleting inventory after one of the channels
displays a red shirt, it must immediately switch to
promoting a blue shirt to encourage purchases of
stock on-hand.
Considering that a new customer call comes
through every two seconds, it is easy to
understand the company’s need for speed.
Retailers generally are moving to real-time
strategies. But because home-shopping networks
are based on “selling live,” the growing trends
of big data analytics and real-time retailing are
particularly crucial for this retail niche.
“The amount of data available to retailers is
FIGURE 1
Sharpening Insights in a
Digital Shopping World
Retailers understand the value of data but struggle to
turn it into profitable insights. (percent of respondents)
Proprietary data can help differentiate the
retailer’s products and services 67%
Harvesting customer insight from data is a
key challenge
58%
Data collection is a key challenge
52%
Active users of analytics that extensively use their
data to generate new ideas and opportunities 25%
enormous,” said Don Peppers, an author and
founding partner of Peppers & Rogers Group,
Source: Accenture. “Seamless Analytics: Three Imperatives for the Retail
Digital Marketplace.” 2013. http://goo.gl/aFFy85.
a marketing consultancy that specializes in
customer-centric practices. Retailers are working
immediate action on the insights gleaned. The
to find ways of using their data to improve
approach enables the company to engage more
operations and gain insights into what customers
personally with its customers and create highly
want at the exact moment of need (see Figure 1,
targeted marketing campaigns. Additionally, it
“Sharpening Insights in a Digital Shopping World”).
will help reduce product returns significantly—
an historically costly issue, particularly for
Source: HSE24
As HSE24 continues its rapid expansion across
omnichannel retailers.
Europe—and fortifies its increasingly omnichannel
JANUARY 2014 |
strategy, including mobile, social networks and
A Complex and Growing Business
the Web—the company is turning to in-memory
In the German-speaking market, HSE24 operates 18
computing as a foundation for success. This
call centers and four logistics centers. It processes
technology is enabling HSE24 to rapidly analyze
orders for more than 1.5 million customers each year
huge stores of customer information and take
with strong partners such as DHL. For each hour of
live broadcasting, the retailer offers two to three new
FIGURE 2
products that range in price from €20 to €150, on
On any given day in 2013, HSE24 serviced
thousands of customers.
average, and up to €35,000. In 2013, the company
fielded 14.6 million calls and shipped 11.2 million
Calls Received Parcels Shipped
packages (see Figure 2, “A Day in the Life”).
(Daily)
“We are running seven days [a week], 365 days a year,”
HSE24’s
Challenges
said Christian Schnetzer, CRM team lead at HSE24.
1
“We need our systems every minute, every day.”
} Capture, analyze and
respond to customer
data in real time.
} Build highly targeted and
personalized marketing
campaigns.
} Provide marketers with
do-it-yourself tools to
reduce IT overhead.
} Reduce costly product
returns.
} Maintain a consistent
customer experience
across channels.
A Day in the Life
(Every Weekday)
Average40,000
37,000
Peak100,000
74,000
Source: HSE24
The challenge for HSE24 is developing deep
relationships with its customers to both attend to
In-memory computing enables companies to
and even anticipate their needs, despite no face-to-
quickly analyze very large volumes of up-to-the-
face interaction. Doing so is becoming even more
second and fast-changing data from diverse
complex as the company expands (see Figure 3,
sources, including sales and customer data from
“Geographic and Channel Expansion”).
internal systems and social media sentiment from
the Web. As such, in-memory computing seemed
HSE24 increasingly interacts with customers on
like an ideal way for HSE24 to keep pace with
digital channels, including online, mobile apps
the increased complexity of doing business by
and social media. In fact, its electronic and mobile
gleaning insights from its growing data volumes in
commerce segments have grown at nearly twice the
real time.
rate of the company’s business as a whole.
Because nontechnical users can ask complex
1. Christian Schnetzer spoke at
a July 23, 2013, SAP Webinar
titled “HSE24 Runs SAP HANA.”
http://goo.gl/jTgTNq
2. Michael Kuenzl spoke at a
July 23, 2013, SAP Webinar
titled “HSE24 Runs SAP HANA.”
http://goo.gl/jTgTNq
These developments have caused an exponential
questions of current data and receive answers in
increase in customer data, as well as the need
real time, they can take meaningful action during
to keep up with dramatic shifts in taste from one
small windows of opportunity, when the chance of
country to the next. Michael Kuenzl, senior vice
success is greatest. Additionally, these users can
president of IT systems at HSE24, described
obtain a complete picture of customer desires,
the channel expansion as moving from “simple”
enabling them to provide a personalized experience
multichannel to “complex” multichannel. “They are
and avoid costly errors in how they sell or market.
a community buying with us and open to sharing
“More and more, the value of big data is finding an
their experience with the community,” whether on
immediate reaction,” Peppers said. “Retailers want
Facebook, Twitter or YouTube, he said.
to be living in the ‘now’ moment.”
2
The “Now” Moment
HSE24 applied in-memory computing to some of its
It is now critical for HSE24 to monitor customers’
most pressing challenges in campaign optimization
opinions, likes and dislikes, because the “digital
and product returns. Before, when the marketing
footprints” that Web shoppers leave behind can
department wanted to target the customer
profoundly influence marketing, inventory and
segments that would be most likely to respond to
customer service. Not to mention customers
specific campaigns, it would need the business
themselves, who express comments on social media
intelligence group to analyze this information. That
and expect service representatives to listen and
process could take a week or more.
respond—quickly. It is fast becoming a necessity to
2
develop an intimate understanding of customers’
Now, using customer engagement intelligence
diverse and changing tastes, as well as to act
applications running on in-memory computing,
instantly on these insights.
marketers can perform the analysis themselves.
Through an intuitive user interface, they can query
FIGURE 3
the data in real time to detect customer buying
patterns based on granular demographics, such
as age or where they live, Kuenzl said.
Launch
Germany
October 1995
Marketing staff can now drill down into millions
Austria
October 1996
of customer records in seconds, using recent
Switzerland December 1997
16 hours of live shopping each day
May 1998
Online store
December 1998
HSE24 Digital (renamed HSE24 EXTRA) as a
second TV station
September 2005
HSE24 TREND “lifestyle” TV channel
September 2010
Shopping app for smartphones
November 2010
Italy
June 2011
buyers intend to return a product when they order
Russia
April 2012
it, 40 percent order more variations of a product
Shopping app for iPad
November 2011
Shopping app on
Google TV
June 2013
charts, making it easy to see data patterns.
} Implement a new
in-memory customer
engagement intelligence
solution.
} Provide marketers with
intuitive and user-friendly
customer segmentation
tools.
} Implement predictive
analytics to uncover
hidden customer trends.
data from a wide variety of sources. “We can do
the selection in seconds, and we don’t need the
business intelligence department,” Kuenzl said.
“We can play with the data.”
Reducing Costly Returns
HSE24 is also looking to in-memory computing
to reduce return rates and improve margins.
According to global management consultancy
Kurt Salmon, the cost of processing a return
can be two or three times that of an outbound
shipment of the same item.3 The National Retail
Federation, meanwhile, found that 40 percent of
and 40 percent of all product returns are due to
poor product information.4
For Web and phone- or mail-order companies, the
3. Morrell, Liz. “The Value of
Returns: What Does it Mean for
your Business?” RetailWeek,
Feb. 19, 2013.
http://goo.gl/4SPGz1
4. Informatica. “How Rich Data
Sells in Multichannel Commerce.”
On-demand Webinar.
http://goo.gl/6jZkog
Source: HSE24
freight and handling costs of returned goods are
Once it detected this pattern, HSE24 could take
particularly high. For HSE24, reducing returns by
appropriate action. For example, it could improve
one percent can lead to a seven-digit improvement
its product descriptions to help customers more
in the bottom line. Given these high stakes, the
accurately select the right products on the very first
company demonstrated how it could study clusters
order. It also could develop a promotional campaign
of customers who exhibit similar returns behavior
to reward high-return customers if they lower their
with the goal of reducing return rates.
return rates over a specific period of time.
In the demo, HSE24 identified different groups of
Best of all, Kuenzl said, marketers can e-mail
customers who frequently return products. Using
information to campaign managers so insights can be
predictive analytics and in-memory computing,
translated into action immediately. This is something
it analyzed a particular group based on two
HSE24 expects to do frequently in the future, as
elements: how many products they order and
it explores more real-time uses for in-memory
how quickly they pay for those products. It soon
computing and its ever-growing mounds of data. •
became clear that these customers tend to
order products in a variety of sizes or colors to
determine which they want to keep and which
they would return.
3
HSE24 has grown by establishing businesses in new
countries, new TV channels and new digital platforms.
New Business
The tools represent the analysis in graphics and
HSE24’s Solutions
Geographic and Channel
Expansion
Johnsonville Sausage at a glance
Family owned company produces fresh, precooked
and smoked sausage
Headquarters: Sheboygan Falls, Wis.
Founded: 1945, family owned, privately held
Employees: 1,400
Presence: 6 manufacturing facilities in the United
States; products available across the U.S. and in 30
other countries; sales offices in Canada, China, Japan
and Mexico
www.johnsonville.com
Source: Johnsonville Sausage
Page
59
Johnsonville Cooks Up a
Real-Time Recipe
Real-time business enables the nation’s leading sausage brand to continuously innovate,
optimize performance and plan for the future.
BY MICHAEL S. GOLDBERG
I
nnovation and consumer products go hand-in-hand. In today’s global
marketplace, new offers, products and services need to be well-targeted,
and they need to be implemented quickly. That is the mindset that drives
Johnsonville
Sausage at a
Glance
Johnsonville Sausage, a family-owned enterprise
promotions, according to a recent study by AMG
that has built a leading brand of sausage products in
Strategic Advisors.1 Immediate insights from analytics
Industry: Fresh, precooked
and smoked sausage
Headquarters: Sheboygan
Falls, Wis.
Founded: 1945, familyowned, privately held
Employees: 1,400
Presence: 6 manufacturing
facilities in the United
States; products available
across the U.S. and in
30 other countries; sales
offices in Canada, China,
Japan and Mexico
the United States, to invest in real-time analytics.
would enable Johnsonville to track special offers, such
www.johnsonville.com
as coupons. With real-time data, Johnsonville could
To become more agile and ready to optimize
correlate the offers with sales performance and adjust
opportunities, the company is working to shift toward
the programs based on those insights.
an analytics-driven culture, says Ron Gilson, CIO and
vice president at Johnsonville. The goal, he says, is to
The IT foundation for Johnsonville’s analytics
embed real-time data-driven decision-making
capabilities, which will be built over multiple years, is
throughout the enterprise to anticipate future business
based on real-time processing, enabled by in-memory
needs rather than just respond to past events.
computing. In-memory computing allows very large
volumes of data, from multiple sources, to be rapidly
One high-profile example is trade promotions. On
and easily analyzed. The deployment also extends
average, consumer products (CP) companies spend
data visualization to mobile devices, to maximize
13.7 percent of their gross sales on trade
end-user interaction. But the strategy goes well
FIGURE 1
Most Consumer Products Companies in Early Analytics Stages
(adoption rates of new technologies, %)
Completed
100
90
26%
Implementing
4%
44%
Piloting or budgeting
7%
45%
No plans
4%
33%
80
70
48%
15%
40
AUGUST 2014 |
41%
37%
30
22%
19%
10
0
67%
44%
50
1. AMG Strategic Advisors.
“The Trend Behind the Spend:
A Study of Trade Promotion and
Merchandising Spending in the
Consumer Packaged Goods (CPG)
Industry.” Acosta, 2012.
http://goo.gl/Lnwhsg.
11%
55%
60
20
4%
19%
22%
7%
4%
Software as a
service (SaaS)
22%
Digital media
Mobile
platforms
Social network
collaboration
Base: 27 leading CP companies
Source: Grocery Manufacturers Association and The Boston Consulting Group, 2013. http://goo.gl/dFnylX
Advanced
analytics
Big data
FIGURE 2
Analytics Vision
J ohnsonville Sausage expects to gain more visibility into its operations by collecting
and analyzing data in real time for all sources. Areas targeted for improvement include:
A Quest for Growth
Johnsonville is pursuing its growth strategy
from a position of market leadership in the
Trade promotion management
and optimization
Track performance of retail promotions in real time, respond to
market trends, measure results and optimize outcomes.
United States. Three out of four bratwurst sold
Integrated data repositories
Provide sales, marketing, supply chain and other functions with a
consistent view of key performance indicators.
national brand of Italian sausage, smoked-
Mobile device dashboards
Deliver and update results quickly to encourage users to explore
data trends on devices such as tablets.
Johnsonville’s reach expands across North
Pricing
Analyze retail point-of-sale activity in real time to optimize prices
and maximize revenue based on demand fluctuations and supply.
Product launches
Collect data on new product sales to analyze sales trends and
anticipate future performance.
Supply chain management
Gain real-time visibility into inventory, tracking movement from
factory to store to consumer.
report-building efforts on preparing data for
Manufacturing operations
Analyze shop floor data to predict when machines will need
maintenance.
with limited forward-looking or predictive
in the U.S. are Johnsonville. It’s also the No. 1
cooked links and fresh breakfast sausage links.
America and to about 30 additional countries.
Even with its strong market posture, the
company was spending 80 percent of its
analysis. Data was primarily historical in nature,
capabilities. Shop floor data was collected but
not queried, analyzed or combined in an
Benefits of
In-Memory
Computing at
Johnsonville
} Improved query
performance time
} Positive executive
response to tablet-based
visual data presentations
} Ability to meet business
objectives, such as more
accurate sales forecasts
and marketing plans,
optimized promotions,
visibility into competitive
posture, increased agility
and responsiveness, and
increased profitability
beyond IT, as business leaders and managers
efficient or standard manner. Promoting business
transition from a mindset of making gut-based
intelligence reports using advanced data visualization
decisions, based on decades of experience, to what
was in its infancy. Viewed as a whole, the company’s
Gilson calls “fact-based decisions.”
analytics efforts were a collection of disconnected silos
that made it difficult to share information across
“We get new insights when we can put different
business functions.
people with different perspectives in front of our
data. That is what it’s all about: How can we
An example is Johnsonville’s efforts to understand data
generate new insights—because insights are the
about market demand, Gilson says: “When we talk about
catalyst for innovation,” Gilson says. “That can be a
demand signals, we have different languages. Marketing
new product innovation; it can be a new service. It
speaks in marketing speak. Supply chain speaks in
could be a new process innovation within our
supply chain speak. Sales speaks in sales speak. We’ve
facilities or in our support groups.”
got to get rid of that.” Unifying its approach to analytics
means creating an integrated and harmonized view of
Throughout the CP industry, businesses are
data, so everyone can examine the same data.
harnessing new IT capabilities like real-time big data
2
analytics to pursue growth and innovation initiatives,
The catalyst for investing in new IT capabilities was
notes the Boston Consulting Group (BCG). In a 2013
Johnsonville’s need to optimize its trade promotions
BCG study, 75 percent of CIOs at CP companies
program. Timely tracking of its retail promotional activities
said a top IT objective was supporting business
is essential to managing its relationships with retailers,
growth, compared with fewer than 20 percent in
analyzing revenue and spending trends, and evaluating
2010. That said, the industry as a whole is still in the
promotion effectiveness. This requires combining different
early stages of incorporating analytics into
data sets to derive insights about sales, correlated with
operations, with most respondents piloting big data
special offers like coupons and other retail promotions.
and advanced analytics projects and few having
Until recently, it has been an extremely manual and
completed their implementations (see Figure 1,
time-consuming effort to connect these dots in a way
“Most Consumer Products Companies in Early
that enables decision-makers to assess performance and
Analytics Stages”).
plan for the future.
Johnsonville’s
Business
Challenges
Gilson says the company chose systems that enabled
} Optimize spending on
trade promotions by
measuring results and
making adjustments in
real time to maximize
returns
} Create an integrated
and harmonized view
of information across
business functions
} Enable decision-makers
to assess performance
and plan for the future
relevant applications that collect and prepare data for
it to modernize existing business intelligence and data
warehouse systems with the in-memory platform and
analysis. Adding on to existing systems also enables
the IT staff to develop new skills in managing the
systems. Other business use cases add to the
expected return on investment (see Figure 2,
“Analytics Vision”).
Future Opportunities
The first phase of the in-memory platform went live in
May 2014, and Gilson says early indications are
59%
53%
47%
revenue streams
47%
positive. He has seen performance improvements in
Johnsonville’s
Solutions
} Modernize existing
business intelligence
and data warehouse
systems with real-time
analytics, enabled by an
in-memory computing
platform
} Centralize data in a
harmonized repository
to track retail point-ofsale data and provide
views into supply chain
operations
} Extend data visualization
to mobile devices
query times, and the new tablet-based visual data
processes to design, build and deliver products and
presentations are popular among executives.
services, Morris says.
Johnsonville plans to build on these early successes,
Picking Up Signals
using a more centralized approach to analytics.
Johnsonville exemplifies these trends by working to
Establishing a harmonized data repository will enable
speed the collection of market demand signals and
the company to track retail point-of-sale data, as
develop truly real-time capabilities. It can analyze
well as provide views into supply chain operations,
product and promotion performance data by collecting
such as shipments and inventory. Adding third-party
market data from sales systems, retailers’ point-of-sale
data sets, such as syndicated market data, will
systems and syndicated research data. The analytics
enable business analysts to gauge market trends. All
platform lets Johnsonville test promotions, measure the
of these activities are tied to critical business
results and improve execution to maximize returns.
objectives: improving sales forecasts and marketing
“They can continually fine-tune things,” Morris says,
plans; optimizing promotions to occur at the right
“and make adjustments based on the outcome.”
time and value; simplifying and integrating market
analysis and Johnsonville’s competitive posture;
With Johnsonville’s program underway, Gilson says the
setting prices; increasing business agility and
company believes in an “all-in” approach. “We’ve got to
responsiveness; and increasing profitability.
be able to be generating these insights daily, bring them
through the innovation pipeline and execute on them.
Efforts at Johnsonville to inject more and better data
This is a critical point,” the CIO says. “It’s not about giving
more quickly into business decision-making are
an elite few the opportunity to do the analysis and do the
emblematic of the real-time business and big data
analytics and create insight. It’s about every member in
analytics trend, says Henry Morris, senior vice
Johnsonville on a daily basis, whether that is a small
president of worldwide software and services at IDC
insight driven through some predictive analytics for
(see Figure 3, “Better Decisions Through Data”).
maintenance, or some other transactional-oriented
Companies across industries are pursuing strategies
analytics, or it’s in sales and marketing going after the big
to measure and improve the performance of
wins. Really, it’s about orienting the entire organization’s
business processes and to experiment with
analytics on the future.” •
opportunities to cut costs or drive revenue, using
data to assess value and make changes in real time.
Data analytics is being targeted at financial
processes, risk assessment, relationships and
3
Michael S. Goldberg is a business and technology writer
and editor based in the Boston area.
Kaeser Kompressoren SE at a glance
One of the largest providers of compressed air
systems and compressed air consulting services
in the world
Industry: industrial machinery & components
Headquarters: Coburg, Bayern, Germany
Year founded: 1919
Number of employees: 4,800 worldwide
Countries of operation: 91
www.kaeser.com
Source: Kaeser Kompressoren SE
Page
63
Kaeser Puts Customers First with
Big Data and Real-Time Business
The privately held German maker of air compressor systems and services taps predictive
maintenance to drive ROI and a better experience for its customers.
B Y L A U R E N G I B B O N S PA U L
Kaeser
Kompressoren SE
at a Glance
Industry: Manufacturing
and services solutions
Headquarters: Coburg,
Bayern, Germany
Year founded: 1919
Number of employees:
4,800 worldwide
Countries of operation: 91
www.kaeser.com
Source: Kaeser Kompressoren SE
Makers of heavy industrial goods aren’t exactly famous for their focus on the
customer experience. But a leading maker of compressed air systems is trying to
change that perception. Family-owned since 1919, Kaeser Kompressoren SE is
one of the largest providers of compressed air
improve after-sales service. The company
systems and compressed air consulting services
implemented a real-time business solution powered by
in the world. Its roughly 4,800 employees operate
an in-memory computing platform, which is able to
in nearly 100 countries across the globe.
analyze vast amounts of granular, real-time data
produced by a machine-to-machine (M2M) interface.
For a company that sells an industrial product in a
This platform enables Kaeser to automatically monitor air
business-to-business (B2B) environment, Kaeser
compressors in use at customer sites. Kaeser is hardly
is uncommonly focused on customers. The
the only company using this technology: Companies are
company’s Web site says its goal is to “provide
forecast to step up their investments in M2M technology
exceptional customer service coupled with
over the medium term (see Figure 1, “Global M2M
innovative products and progressive system
Market Growth”).
solutions.” Privately held Kaeser stands out in
another way, as well, as the site makes clear:
FIGURE 1
“You are doing business with a company with a
Use of the technology that underlies predictive
maintenance, machine-to-machine communication,
will expand along with maintenance analytics.
(total annual revenues, M2M tech producers)
family tradition of producing quality equipment,
not a company focused on meeting Wall Street
estimates. Thomas Kaeser is proud to put his
name, his father’s name and his father’s father’s
Global M2M Market Growth
2011
$21.52 billion
name on every product.”
The Kaeser line of air compression systems
$85.96 billion
2017
includes machines many have never heard of:
rotary screw compressors, vacuum packages,
Source: MarketsandMarkets.com. http://goo.gl/l1QTsO
refrigerated and desiccant dryers and condensate management systems, as well as
The Kaeser system is capable of running analytics
portable compressors, filters and blowers. As
against the vast amounts of M2M data generated from
important as the quality of those products is
the systems’ sensors and meters, including energy
Kaeser’s commitment to after-sale service.
consumption, operational status and compressed air
quality. The objective: to predict which equipment will
September 2014 |
Predictive Maintenance
Powered by Big Data
need service, and when. Predictive analytics gives
In fact, Kaeser recently made a significant
avoiding unexpected outages, which can cause
investment to harness the power of big data to
grievous injury to the bottom line.
customers the luxury of planning downtime and
Kaeser
Kompressoren
Business
Challenges
“Our customers simply can’t afford any
unplanned system downtime,” noted Kaeser
FIGURE 2
ABI Research forecasts predictive and prescriptive
maintenance analytics will dominate the analytics market
within five years. (advanced maintenance analytics
percentage of total analytics market)
Kompressoren AG CIO Falko Lameter in a
recent article.1 The company’s predictive
} Make maintenance and
other services offerings
more cost-efficient
and more valuable to
customers
} Streamline the supply
chain
} Innovate through new
technologies and
business models
maintenance ensures that its superior products
stay that way even after years of use. “Our
Advanced Maintenance Analytics to Rise
2014
23%
products are built for a lifetime,” Lameter said.
“But to get optimal longevity and performance,
they must be maintained properly.” Kaeser’s
60%
2019
real-time predictive maintenance services help
customers achieve nearly 100 percent reliability.
Kaeser
Kompressoren
Solutions
Source: ABI Research. http://goo.gl/9oJm67
Crucially, customers no longer have to monitor
breakdown gets to occur, so over time both
their mission-critical air compressors around the
parties can save money.
clock. Kaeser handles that chore through its M2M
} Implement a real-time
business solution
powered by an inmemory computing
platform to enable
automatic monitoring
of customer site air
compressors
} Use predictive analytics
to help customers plan
downtime and avoid
unexpected outages
} Use an M2M interface
to monitor customers’
mission-critical air
compressors around the
clock, with resources on
call to address issues
swiftly
} Establish a portal to
accelerate problem
resolution and enable
customer service
personnel to be more
proactive and more
customer-oriented
interface, with resources on call to address issues
“We’re always thinking of new ways to run things
swiftly. The system has direct, M2M connections
better and innovate new technologies and business
and real-time alerts, so potential failures can be
models,” Lameter explained. Case in point: Kaeser’s
detected before they occur, with corrective action
transformation into a real-time business that puts the
undertaken before business is affected.
customer at the center and focuses on delivering
solutions, not mere products. The services-based
Lameter believes the addition of predictive analytics
business model not only secures the company’s
for its equipment sets Kaeser apart from the
market position and keeps it one step ahead of
competition—a belief that is driving investment
increasing customer demands, it also improves
across the business spectrum (see Figure 2,
margins and revenues. In fact, total revenues from the
“Advanced Maintenance Analytics to Rise”).
sort of predictive analytics that Kaeser uses are
expected to grow sharply in coming years (see Figure
ABI Research principal analyst Aapo Markkanen
3, “A Growing Market”).
says the cost savings associated with the ability
to predict equipment breakdowns before they occur
Using real-time analytics, Kaeser can monitor
is potentially huge, both for Kaeser (or any other
key parameters in real time, including power
solutions manufacturer and service provider)
consumption, operational availability and safety or
and its customers. “From the manufacturer’s
compressed air quality at each customer air station
perspective, the key benefit is the ability to
against minimum and maximum allowed values.
transform a product business into a product-
Service engineers can analyze this real-time data from
and-service business,” he says.
a portal without having to visit the customer site.
Serving key data to the portal accelerates the
“Many manufacturers have been trying to do this
resolution of any problem, keeping customer
for years, with their maintenance and other services
operations reliable and efficient. With the
offerings, but what makes the difference here is
comprehensive view that the portal provides,
that the combination of [M2M communication] and
customer service personnel have become more
analytics can make such services more cost-
proactive and ever more customer-oriented.
efficient from the vendor’s point of view, as well as
1. http://goo.gl/VHzpWK
2
more valuable from the customer’s point of view,”
“What makes our predictive maintenance solution
Markkanen says. Maintenance is conducted only
cutting-edge is its computational complexity combined
when truly needed, he says, but still before a
with the scale on which it operates,” wrote Lameter in
Bloomberg
Bloomberg Businessweek
Businessweek Research
ResearchServices
Services
a recent blog post.2 “It collects thousands of
Benefits of
In-Memory
Computing
at Kaeser
Kompressoren
real-time data streams from customer air stations;
FIGURE 3
big data scales into the terabyte range. We
collect, analyze and act upon that huge amount of
A Growing Market
ABI Research forecasts worldwide maintenance
analytics revenues for the next five years will top
$24 billion. (projected revenues from maintenance
analytics, CAGR: 22%)
data as part of our routine operations.”
} Improved equipment
uptime
} Decreased time to
problem resolution
} Reduced operational
risks
} Accelerated innovation
cycles
} Better alignment
between Kaeser’s
products and services
and its customers’
needs
2014
$9.1 billion
The predictive maintenance portal handles these
complexities while providing service engineers
with user-friendly, Web-based and mobile access.
$24.7 billion
2019
As a result, the portal keeps Kaeser service
engineers fully informed of equipment status at
Source: ABI Research. http://goo.gl/9oJm67
customer sites so they can provide a
consistently positive customer experience.
and development of our next-generation
equipment,” Lameter wrote.
The power and scale of the system provide a real
advantage. “We had to harness the power of big
This is an important benefit, Markkanen says.
data to remain at the vanguard of our industry in
“Manufacturers are able to study their products’
the 21 Century,” Lameter said recently. At the
behavior in the field more closely than what has
same time, the company simplified its software
been possible before, so much of the analysis done
landscape by migrating its CRM application to a
for maintenance purposes can be used to steer the
robust in-memory platform. The in-memory
product development work, too,” he says. “If certain,
platform helped Kaeser accelerate its core
previously hidden circumstances prove detrimental
business processes and achieve operational
to the product time and again, it may be possible to
excellence, he wrote.
address them when designing the product.”
Running on the in-memory platform, database
In this way, product development can become more
response times are now five times faster than
of an iterative process, with manufacturers
before. “This has allowed us to bring the
continuously learning about their products and
entire lifecycle of the sales process under careful
improving them accordingly. “All this can make a
scrutiny—from lead management to requirements
manufacturer like Kaeser more competitive in its
analysis, solution planning and solution
market,” Markkanen says.
st
implementation. And with real-time information,
we have streamlined our supply chain to deliver
The big data and in-memory platform that form the
on customers’ changing needs while generating
basis of Kaeser’s predictive maintenance service have
healthy margins,” Lameter wrote in the blog post.
produced substantial benefits for the nearly 100-yearold company. According to Lameter, “We are seeing
Aligning Product Development with
Customer Needs
improved uptime of equipment, decreased time to
The predictive maintenance system has had a
innovation cycles. Most importantly, we have been able
significant, unforeseen side effect. Stored in
to align our products and services more closely with
Kaeser datacenters, the big data culled from
our customers’ needs.”•
monitoring machine operations forms the basis for
sophisticated data analysis, including insights
relating to new product development. “This helps
resolution, reduced operational risks and accelerated
Lauren Gibbons Paul has written extensively on
customer relationship management and customer
experience management for more than 15 years.
us further optimize our service processes and
furnishes highly valuable input for the research
2. http://goo.gl/iyjdoy
3
Maple Leaf Foods at a glance
A leading CP company that specializes in meat and
bakery products as well as agribusiness
Headquarters: Toronto, Canada
Founded: 1991
2012 revenues: $4.9 billion (Canadian)
Employees: 1,200
www.mapleleaf.ca
Source: Maple Leaf Foods
Page
67
Maple Leaf Foods Turns Over a New
Leaf with Up-to-the-Minute Insights
Real-time business enables Maple Leaf Foods to keep pace with fast-changing market conditions,
increase profitability and hone a competitive edge.
BY JOE MULLICH
I
n a world that moves at Internet speed, consumer products (CP) companies
face a particular challenge in responding to fast-changing tastes. And taste is
literally the issue for Maple Leaf Foods, a leading CP company that specializes in
Maple Leaf Foods
at a Glance
meat and bakery products, headquartered in Toronto. Product pricing is also a
Industry: Bakery, meat,
agribusiness
Headquarters: Toronto,
Canada
Founded: 1991
Revenues (2012): $4.9
billion (Canadian)
Employees: 1,200
make-or-break issue, with ever-fluctuating
www.mapleleaf.ca
customer satisfaction.
consumer demand and commodity prices.
FIGURE 1
Because its primary products have extremely short
shelf lives (see Figure 1, “Three Core Businesses”),
Maple Leaf needs to move swiftly to ensure its new
product introductions, marketing and pricing
strategies will translate into sales, profits and
Three Core Businesses
Maple Leaf Foods is organized into three
major groups.
Meat Products
Bakery Products
Agribusiness
Products
Packaged
meats and
meals
Premium fresh,
frozen and
specialty bakery
products
Hog production
Fresh pork,
poultry
and turkey
products
Fresh pasta and
sauces
Rendering and
biodiesel
operations
To meet these challenges, Maple Leaf needed a
real-time understanding of its complex business
operations. Over the years, the company has
grown through dozens of acquisitions, leaving it
with a multitude of systems. That is why, about five
years ago, Maple Leaf launched an initiative to
Number One in Many Markets
coordinate its diverse data volumes and is now
Open a cupboard or refrigerator in the typical
embracing in-memory computing—technology that
Canadian home, and you are likely to find Maple Leaf,
enables multiple sources of data to be rapidly and
Schneiders, Dempster’s or one of the company’s other
easily analyzed.
brands. Maple Leaf Foods ranks number one in market
share in many Canadian food categories, including
1. Canadian Financial Executives
Research Foundation. “Real Time
Business: Making The Most Of Big
Data.” 2012. http://goo.gl/TujxFE.
MARCH 2014 |
The company’s efforts have resulted in integrated
fresh bakery products, branded prepared meats,
analytics across business functions and
chilled ready-made meals, branded fresh poultry, and
instantaneous insights to support real-time
fresh pasta and sauce. Additionally, the company has
decision-making. This is a critical issue for many
operations in the United States, the United Kingdom,
CP companies, which need to respond quickly to
Asia and Mexico. To stay ahead of the competition,
rapidly changing market conditions. “Ultimately,
Maple Leaf introduces 100 or more new products
the big piece is profitable growth so we can
every year, such as its Maple Leaf Natural Selections,
actually understand what’s happening in the
a line of deli meats that contain no added
marketplace quickly and secure more profitable
preservatives, artificial ingredients, fillers or MSG.
growth as a result,” said Michael Correa, vice
president, Information Solutions, at Maple Leaf
Although an acquisition spree was key to Maple Leaf’s
Foods.1
growth, it also left the company with 65 plants and 35
Maple Leaf Foods
enterprise resource planning (ERP) systems. Because
this meant consolidating its data into a single ERP
of the difficulty connecting information among these
system, enabling integrated analytics across business
isolated systems, Maple Leaf relied on weekly
functions and developing the ability to analyze its data in
} Standardized view
across the enterprise:
System consolidation
and process
standardization have led
to improved operations
through the use of
in-memory analytics for
management.
} Faster analysis
speeds: Business users
are experiencing speeds
that are 100 to 1,000
times faster than with
traditional databases.
} Self-service: Users can
now run their own ad
hoc queries and reports.
} Real-time pricing
analysis: Maple Leaf
will be able to price
products based on the
cost fluctuations of raw
materials by combining
syndicated data with
supply and demand
information from
transactional systems.
} Future use cases: The
company is evaluating
the use of in-memory
analytics for recipe
development, demand
planning, production
planning and trade
promotion to help it
further improve decisions
and profitability.
summaries of business performance data, which
real time. The first move in this direction began in 2008,
hampered its ability to respond to fluctuations in supply
when Maple Leaf launched Project LeapFrog, in which it
and demand. In addition, business users were unable
consolidated its many ERP systems and implemented
to easily drill down into reports to truly understand the
common business processes across the organization.
supply and demand of individual products.
“A big part of the business is protein—poultry, hog and
These issues grew particularly acute between 2009
prepared meats—and each had their own way of doing
and 2011, when the Canadian dollar appreciated
work,” Hutchinson said. “And if you go over to the bakery
by 50 percent, resulting in Maple Leaf operating at
side, like Dempster’s or frozen foods, each of them ran
a cost gap of 15 percent to 25 percent versus its
almost every process internally their own way.”3
U.S. competitors. “If [Maple Leaf is] going to grow,
it can’t rely on the exchange of the U.S. dollar,”
An important data source that Maple Leaf needed to
said Dr. E. Jeffrey Hutchinson, global CIO of Maple
integrate with its internal systems was the fluctuating
Leaf Foods. “If it’s going to compete against the
market prices for “hogs and hams,” Correa said, which
U.S. and European players, it needs the right
can change throughout the day. Because the company
capabilities in house.”
trades such products on the mercantile exchange, he
2
said, “We’re looking at real-time, live information.”
Building the Analytics Foundation
Maple Leaf needs to combine supply and demand
As the competitive landscape toughened, the
information from its transactional systems with data
company realized it needed a better handle on its
generated by the marketplace to enable real-time
cross-organizational performance. For Maple Leaf,
pricing analysis.
FIGURE 2
Most CP Companies in Early Analytics Stages
(adoption rates of new technologies, %)
Completed
100
26%
90
Implementing
4%
44%
Piloting or budgeting
7%
45%
No plans
4%
33%
55%
48%
44%
60
15%
50
40
41%
37%
30
20
22%
19%
10
2. Schick, Shane. “Maple Leaf
Foods’ ERP system project: A CIO
strategy.” IT World Canada, April
18, 2011. http://goo.gl/8daaTX.
0
22%
22%
7%
4%
Software as a
service (SaaS)
Digital media
Mobile
platforms
Social network
collaboration
Base: 27 leading CP companies
Source: Grocery Manufacturers Association and The Boston Consulting Group, 2013. http://goo.gl/dFnylX
2
11%
67%
80
70
4%
19%
Advanced
analytics
Big data
Maple Leaf
Foods’ Business
Challenges
To enable real-time insights and provide employees
} Real-time information
and analytics were
required to optimize
product pricing and
enable other business
performance insights.
} Data needed to be
consolidated from 35
ERP systems.
} Processes needed to be
standardized across the
enterprise.
} Business users needed
the ability to drill down
into reports.
project focused on customer data that contributes
with a range of analytics tools, Maple Leaf
embraced in-memory computing. Its first in-memory
to profitability, such as profit and loss, price
elasticity, and sales and marketing data, all of which
amounted to about one terabyte of data. Although
59%
53%
Maple Leaf had used analytics for more than a
decade, in-memory computing enables the
company to ask entirely new questions; for example,
“How should products be priced tomorrow in line
47%
with supply and demand?”
revenue streams
47%
The In-Memory Edge
The ability to answer such questions through
Maple Leaf Foods’
Solutions
} Consolidated systems
and standardized
processes
} In-memory technology
to provide instantaneous
analysis of disparate data
} Analysis and visualization
tools for hundreds of
users
5. Yuhanna, Noel, Holger Kisker,
Ph.D. and David Murphy. “Case
Study: Maple Leaf Foods Relies
On SAP HANA To Enable Faster
Business Analytics.” Forrester
Research, Oct. 28, 2013.
http://goo.gl/QGBfXt.
6. Henschen, Doug. “Oracle
In-Memory Apps: Hunting Hana.”
InformationWeek, April 11, 2013.
http://goo.gl/nGvZns.
7. Yuhanna, Noel, Holger Kisker,
Ph.D. and David Murphy. “Case
Study: Maple Leaf Foods Relies
On SAP HANA To Enable Faster
Business Analytics.” Forrester
Research, Oct. 28, 2013.
http://goo.gl/QGBfXt.
analytics puts Maple Leaf ahead of the pack.
databases.5 For example, profit-and-loss analysis previously
According to a late 2013 study by the Grocery
required 15 to 18 minutes, but it now takes 15 to 18
Manufacturers Association and The Boston
seconds with in-memory computing, according to Correa.6
Consulting Group, only 23 percent of CP
The in-memory computing system has also enabled a
companies had implemented or completed an
self-service data platform on which users can run ad hoc
advanced analytics initiative (see Figure 2, “Most
queries and reports (see Figure 3, “Better Decisions
CP Companies in Early Analytics Stages”).
Through Data”).
And according to Lora Cecere, head of research
The use of in-memory computing has simplified Maple
firm Supply Chain Insights, only a small percentage
Leaf’s business rules, processes and data, removing
of companies are satisfied with their “what-if”
complexity and enabling collaboration. Business users
capabilities and few can easily determine the
can create more reports and queries, rather than
profitability of decisions. “They need more real-time
relying on the old system of canned reports. At the
monitoring, dashboards, early-warning systems and
same time, the company has achieved a standardized
other imperatives that can only be accomplished
view across the enterprise, enabling it to better
through smarter use of analytics,” she said.
manage its operations.
In Maple Leaf’s case, such insights could potentially
As Maple Leaf begins using predictive analytics supported
guide the company on product introductions, as
by in-memory computing, it plans to price products based
well. “We’ll start to see what the reality is and be
on the cost fluctuations of raw materials—such as wheat,
much faster at adjusting to market conditions as
pork and chicken—and combine this information with
they change,” Hutchinson said. “We’ll be able to
syndicated data from sources like Nielsen to obtain
make sure that our trade promotion monies, for
real-time pricing information. The company is also
example, are giving us what we want to get out of
evaluating many new use cases, such as recipe
them. Too often, unless you are very proactive there,
development, demand planning, production planning and
it just becomes a slush fund.”4
trade promotion to help it improve decisions and
profitability even further.7 •
In early 2012, Maple Leaf extended its real-time
analytics capabilities to 800 business users. In some
cases, business users experienced speeds that were
100 to 1,000 times faster than with traditional
3
Joe Mullich is a freelance business and technology writer
based in Sherman Oakes, Calif.
Mercedes-AMG at a glance
The performance unit of Mercedes-Benz, it tests the
limits of driving dynamics and performance with
hand-built engines
Industry: automotive
Parent company: Daimler AG
Headquarters: Affalterbach, Germany
Founded: 1967
Employees: approximately 900
www.mercedes-amg.com
Source: Mercedes-AMG
Page
71
CASE STUDY
Technology
Small/Midsize
Business
Marketing
& Sales
Mercedes-AMG: A Showcase for
Real-Time Business Decisions
The maker
M
of high-
Y28 K28 C78 M52 Y28 K6
C73 M19 Y40 K1
ercedes-AMG
C65 M29
Y79 K22 C61 M20 is
Y78the
K3
performance
unit of Mercedes-Benz, testing the
limits of driving dynamics and performance
performance
with its hand-built engines. But the division
automobiles is
is also a testing ground for revving up
building nextC0 M60 Y100 K17 C28 M88 Y70 K19 C48 M89real-time
business
performance.
Y84 K49 C61
M66 Y61 K52
generation
manufacturing
As manufacturers integrate complex machinery
with networked sensors to create next-generation
operations on
production processes, they are gathering more data
a real-time
than ever before that could eliminate waste and
business
improve efficiency, according to the U.S. National
Institute of Standards and Technology. In fact,
platform.
1
Figure 1
Analytics Offers Relief From
Operational Pressures
Need to reduce the cost of manufacturing operations
70%
Need to improve delivery of new products to market
38%
Management of global supply chains
36%
Management of demand volatility
32%
Customer mandates for improved order fulfillment
27%
Source: Aberdeen Group, “Big Data in Manufacturing Operations,”
2012. http://goo.gl/E43v5f
Cutting costs is a top reason for seeking more
insight from data.
pressure to cut costs while bringing new products
BY ST E P H A N I E
OV E R BY
to market is pushing manufacturers to make better
use of that data, the Aberdeen Group has found
cars, such as its million-dollar S-class line and the
(see Figure 1, “Analytics Offers Relief From
new GLA compact SUVs, but also invested in more
Operational Pressures”).
efficient manufacturing processes to cut the cost of
product delivery and improve vehicle quality.
In the automotive industry, manufacturers must
Daimler saw Mercedes-AMG as the perfect place to
manage a greater number of both models and
test out real-time systems that might benefit the
customization options as they adjust to fragmented
larger enterprise.
consumer demand, while also managing shorter
1. National Institute of Standards
and Technology. “Real-Time
Data Analytics for Smart
Manufacturing Systems Project.”
http://goo.gl/KZ9nzW.
product life cycles, according to McKinsey and
Employees working in the performance unit’s
Company (see Figure 2, “More Product Options,
engineering-focused manufacturing environment
Shorter Product Cycles”). To make the best use of
have yearned for real-time access to information for
their data riches as they tackle these challenges,
nearly 50 years, observes Dirk Zeller, Mercedes-AMG
companies are implementing technology capable of
head of IT Consulting. In addition, Mercedes-AMG
analyzing large volumes of data from disparate
operations are concentrated at the company’s
sources in real time.
Affalterbach, Germany, headquarters. “We have
everything close to us, from design and development
Mercedes-AMG and its parent company, Daimler
to marketing and sales, making us a good company
AG, are among the businesses that are expanding
to test out innovation, with regards to the products
their product portfolios. Daimler is currently one of
as well as in the IT area,” Zeller says.
the largest producers of premium cars and the
AUGUST 2014
© Copyright 2014.
Forbes Insights.
All rights reserved.
biggest global manufacturer of commercial
LESS WAITING, MORE WORKING
vehicles. To increase market share and profits, the
In late 2012, Mercedes-AMG began to deploy an
€118 billion company has not only introduced new
in-memory platform across business functions to
FORBES INSIGHTS
1
FORBES
INSIGHTS
CASE STUDY
analyze large volumes of data in real time. The
Figure 2
company started with back-office systems, such as
More Product Options, Shorter
Product Cycles
accounting and finance, and then moved on to its
of its one-of-a-kind vehicles.
Ultimately,
MercedesAMG is
considering
simplification
of the
hundreds of
systems it
uses to
engineer, sell
and service
cars to run on
a single,
in-memory
platform.
Avreage product life cycle (months)
Number of models
131
core operations—the development and manufacture
122
111
106
110
100
The first goals were to “be more efficient by
crunching numbers faster,” says Mercedes-AMG CIO
Reinhard Breyer. Company leaders saw an
opportunity to free financial analysts from waiting
for reports and enable them to focus on strategic
22
12
2002
BMW
analysis and decision-making.
But a faster, more efficient back office was just a start.
The key to becoming a real-time enterprise is not
2011
32
30
44
15
2002
Audi
2011
2002
2011
Mercedes-Benz
Source: McKinsey & Company, “Manufacturing the Future:
The Next Era of Global Growth and Innovation,” 2012. http://goo.gl/EcQ6tq
A greater number of models and options and shorter
product life cycles challenge automakers.
delivering more data quickly, it’s more quickly
delivering information that can improve the processes
equipment, and efficient use of the facilities was a
that lead to competitive advantage. For Mercedes-
priority. The ability to correlate historical test data in
AMG and Daimler, these are product development and
real time with sensor data from the engines being
manufacturing processes.
tested enables engineers to identify possible
problems more quickly.
Real-time efforts “are useless if they aren’t aligned,”
says Behnam Tabrizi, consulting professor at
“We are able to analyze test data from engines and
Stanford University’s department of management
test vehicles faster than before,” Zeller says. “And that
science and engineering. “If you throw new
leads to more insights faster, as we compare more
technology at a bad process, you won’t resolve
data and use complex analytics without losing time.”
anything. It’s not just about real-time systems, it’s
about real-time organizational transformation.”
Now an engine test that shows unusual behavior can
be stopped at any step of the test procedure;
A NEW WAY TO TEST ENGINES
engineers used to have to wait to analyze the majority
Even today, every Mercedes-AMG engine is hand
of data until after the hour-long test run has ended.
built from start to finish by a master engine builder:
That change, in turn, creates more engine-testing
it’s a hallmark of the brand. But company leaders
capacity each week. It also gives engineers more time
recognized an opportunity to use big data analytics
to focus on refining engine quality.
to also improve the engine production process.
to transform the company using real-time
A PLATFORM FOR REAL-TIME
TRANSFORMATION
applications, they zeroed in on quality assurance
What’s more, Mercedes-AMG now has a scalable
for its engines.
platform that it can apply to other areas of its
When they went looking for the next high-value area
business, and which Daimler can begin to apply
Earlier this year, Mercedes-AMG piloted a real-time
across the enterprise. Both Mercedes-AMG and
quality assurance platform that harnesses predictive
Daimler are expanding their vehicle lines, and thus
analytics to optimize engine-testing processes when
the number of projects they must manage.
manufacturing its vehicles. The dynamometers the
Mercedes-AMG has already introduced three new
company uses to determine the torque or power
compact models in pursuit of new market segments.
characteristics of engines being tested are high-cost
2
FORBES INSIGHTS
FORBES
INSIGHTS
CASE STUDY
The company is also enabling car buyers to
customize their vehicles more than ever before.
The strategy seems to be working: in 2013 Mercedes
AMG sold more than 32,000 automobiles, its most
successful year ever.
“We are able to
analyze test
data from
engines and test
vehicles
dramatically
faster than
before.”
–Dirk Zeller,
head of IT
Consulting,
Mercedes-AMG
The project expansion and growth could strain
existing project management processes, so
Mercedes-AMG leaders have begun exploring how
FIGURE 3
Delivering Real-Time Supplier Data
Customer information
46%
Employee data
Product data
42%
Supplier information
23%
the same data analysis and predictive functionality
can be applied to engine testing for project
management. The goal is to be able to visualize in
real time how the product creation and engineering
process is progressing and to predict potential
46%
Source: Accenture, “High Performance in IT: Defined By Digital,” 2013.
http://goo.gl/7cc4KM
Among top-performing companies, nearly half provide customer
and employee data to employees in the moment, but less than a
quarter can do the same with supplier information.
bottlenecks, such as supplier delays, before they
impact manufacturing ramp-up.
who will be consuming the data and what they need to
know. Business leaders and managers shouldn’t become
Both Mercedes-AMG and parent company Daimler
overwhelmed by the amount of data available to them,
anticipate benefits beyond managing an individual
Zeller advises. The concern is similar to that which
project more efficiently. They want to take
accompanied the introduction of email, Zeller recalls.
advantage of real-time analytics to give employees
“People felt disturbed by too many alerts, tending to
who work across several projects, such as those with
ignore them over time,” he says. “During our projects,
a focus on braking systems, visibility across all
we need to define if our target audience is prepared for
projects, so they can see if a new part is in time,
the solutions we’re offering.”
quality and budget during the engineering process,
if it is available for testing or inventories are low.
Daimler’s IT group recently awarded Mercedes-AMG
several innovation awards for the testing and
Even among top-performing companies, access to
implementation of its real-time systems. The parent
such supplier intelligence in real time is relatively
company will be using the performance unit’s
rare. Less than one-quarter of leading enterprises
experience and lessons learned as the basis for its
can provide up-to-the-minute supplier data to their
planned implementation of in-memory analytics.
employees (see Figure 3, “Delivering Real-Time
“They’re the trigger that started us on this path,” Zeller
Supplier Data”). Mercedes-AMG, however, plans to
says. “And we had a huge will to innovate.” •
be the exception.
The goal is to have new business intelligence
ABOUT FORBES INSIGHTS
software running on the in-memory databases by
functionality every two months. “We are working
Forbes Insights is the strategic research and thought leadership
practice of Forbes Media, publisher of Forbes magazine and Forbes.
com, whose combined media properties reach nearly 50 million
business decision-makers worldwide on a monthly basis.
very closely with our business partners to deliver
Bruce Rogers
exactly what is needed in an easy-to-use user
CHIEF INSIGHTS OFFICER
the end of the year, and then to release new
experience,” Zeller says.
One key to success when deploying real-time
Brian McLeod
DIRECTOR, NORTH AMERICA
Writer: Stephanie Overby is a freelance business and technology
writer based in Boston.
capabilities is gaining a deep understanding about
FORBES INSIGHTS
3
National Football League at a Glance
A professional U.S. football league that runs a
17-week regular season
Industry: sports & entertainment
Headquarters: New York, New York
Employees: 1,100
Founded: 1920
Number of Teams: 32
Viewership: 205 million people tuned
in to NFL games in 2013
www.nfl.com
Source: National Football League
Page
75
The NFL’s Advanced Analytics
Score with Football Fans
Looking to spur fan engagement, the National Football League is putting user-friendly data analytics
tools in the hands of fantasy football fanatics.
BY STEPHANIE OVERBY
P
rofessional football is America’s true national pastime. Viewership of NFL
games has grown steadily over the past decade. During the 2013
football season, NFL games attracted three times more eyeballs than other
The National
Football League
at a Glance
primetime TV offerings, and 34 of the 35 most-
FIGURE 1
watched TV shows in autumn 2013 were NFL games
NFL’s Gameday TV Viewership
Industry: Sports and
entertainment
NFL league office
employees: 1,100
Founded: 1920
Number of teams: 32
Viewership: 205 million
people tuned in to NFL
games in 2013
(see Figure 1, “NFL’s Gameday TV Viewership”).
Gameday outdraws the leading primetime
broadcast television shows. (average in millions of viewers)
But if regular viewers of NFL games on Sunday,
2009
www.NFL.com
very real for them. “When Tom Brady throws that
Source: National Football League
touchdown pass, it’s six points for the New England
NFL broadcast
Primetime broadcast
18.4
Monday or Thursday nights are considered fans,
8.5
those who participate in the NFL-inspired fantasy
football leagues might better be deemed fanatics. The
2010
20.0
fantasy teams that individuals put together might be
8.2
imaginary, but the process of managing a franchise is
2011
19.8
8.1
Patriots,” says Daniel Shlossman, the NFL’s director of
product for fantasy football and mobile games. “But if
2012
19.3
I’m playing Tom Brady, it’s also six points for my
7.6
fantasy team.”
This year, there will be 41 million fantasy players
2013
20.3
7.0
across all sports, nearly 70 percent of whom say that
football is their favorite, according to the Fantasy
Sources: NFL and The Nielsen Company. http://goo.gl/nGSRhN
Sports Trade Association (FSTA), with their ranks
increasing at least 10 percent every year. Around
So when the NFL was looking for new ways to use
three-quarters of fantasy football participants use four
data to maximize the engagement of football fans, the
or more Web sites for research. They spend nearly 18
fantasy market was a logical target. In addition to the
hours a week consuming sports content and more
direct revenues that fantasy league participation
than 8.5 hours a week specifically on their fantasy
generates, fantasy league members view about seven
teams, FSTA says (see Figure 2, “Fantasy Sports
times more content, including text, video and data, on
Users Are Active Fans”).
NFL.com than nonmembers. The NFL has its own
fantasy sportswriters online, and NFL.com is chock
full of key breaking news, expert analysis and
weekly rankings to help fantasy managers develop
their teams.
OCTOBER 2014 |
The NFL’s Player
Comparison Tool
Challenges
There has been no shortage of companies looking to
} Increase direct
engagement with
fantasy football users
by developing a player
comparison tool for
NFL.com
} Create a simple user
interface that enables
users to easily make
better decisions about
their fantasy teams
} Enable customization so
that the tool is equally
valuable to novices and
experts
} Ensure that the online
tool is scalable and
reliable, with 100 percent
uptime
NFL.com in 2010 and has sprinted into a position
be the preferred destination for fantasy footballers.
The NFL launched its own fantasy football league on
among the leaders.
In 2011, the league introduced in-game video,
delivering big-play highlights to viewers only seconds
after they happen on the field. In 2012, it added more
functionality, such as social tools and basic research
tools, along with simpler fantasy football games to lure
in the novice or casual user. The league also
incentivizes participation in its own fantasy leagues by
awarding prizes for league champions, such as trips
FIGURE 2
Fantasy Sports Users Are
Active Fans
• There are 36.6 million fantasy users across all
sports.
• 69% of fantasy users say football is their favorite
fantasy sport.
• The universe of fantasy users is growing at a rate
of 10% to 12% annually.
• 74% of fantasy users go to four or more Web
sites to conduct research.
• Fantasy users dedicate 17.89 hours a week to
watching sports.
• Fantasy users spent 8.67 hours a week
specifically on fantasy sports.
Sources: Fantasy Sports Trade Association
to the Super Bowl (see Figure 3, “The ROI of
Customer Engagement”).
“We are leveraging a custom cloud platform to answer
very fantasy football-centric questions,” Shlossman says.
Elements of the
NFL’s Player
Comparison Tool
Solution
Last year, as new, more advanced tools for data
“‘Which player should I start? Who’s going to perform
analysis and visualization became available, the NFL
better in a certain environment?’ Fans are wanting an
saw an opportunity to further fuel its captive fantasy
answer very quickly that they can understand.”
contingent. “In 2013, we wanted to focus on the
} Deploy the tool on an
in-memory analytics
platform in the cloud to
ensure real-time
processing, scalability
and reliability
} Utilize self-service data
visualization software to
deliver player analysis in
a user-friendly format
} Enable users of the tool
to customize player
analysis along five
dimensions:
performance, matchup,
consistency, upside and
intangibles
data,” Shlossman says. “We wanted to make it
The tool uses 10 years of historical information to make
simpler to understand the data, make it easier to play
predictions about player performance so that fantasy
fantasy football and grow that market.”
franchise owners can make data-driven decisions
about their teams. They can analyze and track more
Putting Big Data in Customers’ Hands
than 100 stats on each player, from team defense
As is the case with any statistics-generating sports
tendencies to home-and-away performance
organization, the NFL has for years been collecting
comparisons. The tool also incorporates variables
and analyzing what is now commonly known as big
ranging from the forecast weather at kick-off time to
data. But that activity has taken on a sharper focus
playing surface to injury reports. Historical and real-time
in recent years. “We are able to use our own
data from live games is fed into a statistical model that
exclusive content, data and statistics to increase
predicts player performance.
the fantasy market,” Shlossman says. The league
wants fantasy players to compete on NFL.com.
“There are lots of things we can do with the data to break
But, he adds, “at the end of the day, we want fans
it down at a very detailed level,” Shlossman says. “It’s all
playing fantasy football because it brings them
about the live data and understanding who the players
closer to the game.”
are and who the best players are for me to play in my
fantasy team.”
The question was, “how do you bring a tremendous
2
volume of data and statistics to fans in a very
A Tool for Rookies and Veterans
simplified, intuitive and highly visual way?” says Vishal
The behind-the-scenes number-crunching that delivers
Shah, the NFL’s vice president for digital media
player comparisons is very complex, but the user
business development. The NFL used the same
interface had to be simple, Shah says, and the tool had
in-memory analytics platform and data visualization
to work for the fantasy rookie and the fantasy pro. The
software that businesses deploy to gain a competitive
NFL wanted a tool that was just as valuable for someone
edge in their industries for its Player Comparison Tool.
who has been fielding fantasy teams for 15 years as it
“At the end
of the day,
we want
fans playing
fantasy
football
because it
brings them
closer to the
game.”
was to someone who has never done it before. “A
Houston Texans’ Andre Johnson or the Denver
Stability and Scale on Any Given Sunday
—DANIEL
Broncos’ Wes Welker at receiver. The two are very
For any fan-facing system, the NFL requires 100 percent
SHLOSSMAN,
different players. Welker is consistent, catching short
uptime. That’s quite a challenge for a pursuit that
passes over the middle of the field and delivering
involves millions of users hitting the system at the same
FA N TA S Y F O O T B A L L
steady fantasy points. Johnson is known for streaking
time—just before kick-off. “We’re a direct-to-consumer
AND MOBILE GAMES,
down the edge of the field and reeling in the long,
business,” Shlossman says. “[The tool must] scale to
NFL
rainbow passes that can end in a touchdown. The
millions of users who want to access this data at any
tool “kicks back a simple-to-read answer about who
given moment.”
FIGURE 3
tool that works for both markets was the goal,”
The ROI of Customer
Engagement
Shlossman says.
Throughout the week, a fantasy football user typically
makes three types of decisions: whom to start, whom
to add or drop, and whom to trade. The tool can
guide users through all three types of scenarios,
enabling them, say, to evaluate a rival user’s proposed
trade or whether to start a particular quarterback.
Novice users can keep it simple and do a basic
• A fully engaged customer represents an
average 23% premium in terms of share of
wallet, profitability, revenue and relationship growth
compared with the average customer.
• An actively disengaged customer represents
a 13% discount in terms of share of wallet,
profitability, revenue and relationship growth
compared with the average customer.
Source: Gallup. http://goo.gl/mdjf2A
head-to-head comparison, say, between starting the
DIRECTOR OF
PRODUCT FOR
is recommended in a head-to-head decision,”
Shlossman says.
The NFL chose to host the Player Comparison Tool in the
cloud for flexibility and stability. “Everything we build has
More experienced users can drill down for a more
to be best in class,” Shlossman says. “We get to very,
nuanced analysis of potential performance in the
very high load levels on Sundays and other peak
specific game—how each player performs in snow,
periods—thousands of requests per second on the
for example, or against a certain defensive back.
platform as people make last-minute changes to their
lineups. We had to build a tool that not only utilized all of
Rather than rely on one-size-fits-all rankings, users
this data but was also accessible and performed well at
can easily customize the tool by tweaking how much
the most crucial moment for fans, which is right before
weight to place on five different variables:
game time.”
performance, matchup, consistency, upside and
intangibles. If users decide they need a big week,
The NFL’s fantasy apps show how consumers as well as
they’ll turn up the volume on the upside and turn
businesses can reap the value of real-time analytics,
down the consistency dial.
opening up a whole new spectrum of consumer-grade
tools beyond fantasy sports. Just remember, Shah says,
“Users come in and add their own spice to it,”
to make the tools “immersive and fun. That’s what
Shlossman says. “They can adjust the sliders if they
attracts the fans and hopefully keeps them on our
want big points and get one result, or tweak it and get
platform for longer periods of time.”•
something else.” The league’s fantasy site also
features mixes of variables devised by each of the
Stephanie Overby is a freelance business and
NFL’s own fantasy experts, which managers can use
technology writer based in Boston.
at home.
3
Nomura Research Institute at a glance
Japan’s largest consulting and IT consulting firm
Industry: high tech
Business activities: Consulting, financial IT solutions,
industrial IT solutions, IT platform services
Established: April 1, 1965
Headquarters: Tokyo, Japan
Capital: 18.6 billion yen
2012 sales: 363.8 billion yen
Employees: 5,823 (NRI Group 7,738)
www.nri.co.jp/
Source: Nomura Research Institute
Page
79
Tokyo Drivers Avoid Traffic Jams with
NRI’s Big Data and Analytics
With in-memory computing and big data behind it, Japan’s popular Zenryoku Annai! application is
helping drivers get to their destinations faster and more efficiently—both day and night.
BY JOE MULLICH
T
okyo’s first taxicabs appeared a century ago. Now, about a quarter million of them service the
metropolitan area and beyond. For Nomura Research Institute (NRI), Japan’s largest consulting
and IT consulting firm, all these vehicles crisscrossing the nation represent a huge wealth of information
Nomura Research
Institute at a
Glance
and clues about how to break gridlock in one of the
} Business activities:
Consulting, financial IT
solutions, industrial IT
solutions, IT platform
services
NRI is analyzing traffic jams in Japan using multiple
} Established: April 1, 1965
the use of in-memory computing technology, which can
} Headquarters: Tokyo,
Japan
} Capital: 18.6 billion yen
process reams of different data types in real time for
world’s most densely populated countries.
sources, including traffic data from sensors around the
country and location data from 12,000 taxicabs. What
enables NRI to keep up with the massive data flow is
Traffic Data Jam in Japan
}C
hallenge: 360 million data records of Japanese
traffic information needed to be analyzed more
quickly than the several minutes required by
traditional relational database technology.
} Solution: In-memory computing, which can
analyze large amounts of data quickly, was able
to process the 360 million records in just over
one second.
instant analysis.1
Japan can plot out the shortest travel routes, avoid traffic
} Sales: 363.8 billion yen
(fiscal 2012, ending
March 31, 2013)
Not too long ago, NRI relied on more traditional
snarls and estimate what time they will arrive at their
technologies. But the database component, in particular,
destinations.4
} Employees: 5,823 (NRI
Group 7,738)
became a stumbling block for this application. According
www.nri.co.jp/
Source: Nomura Research Institute
to Hiroshi Terada, NRI’s general manager for ERP
Zenryoku Annai! combines information from satellite
solutions, “An ordinary relational database took several
navigation systems linked to sensors at fixed locations
minutes to analyze the 360 million traffic records and we
along roads with traffic data determined through
had problems with real-time data processing.”2
statistical analysis on position and speed information
from subscribers, moving vehicles and even pedestrians.5
1. SAP. “NRI: HANA.” Customer
Testimonial Video. http://goo.gl/gat2AC
2. SAP. “NongFu Spring: Accelerating
performance with SAP HANA.” Customer
Testimonial. http://goo.gl/MAQgp1
3. Ashford, Warwick. “SAP highlights
customer experiences of in-memory
computing at Sapphire Now.”
ComputerWeekly.com, May 19, 2011.
http://goo.gl/gsGp5e
4. Pai, Suraj. “Guest Blog: How to
run an intelligent business.” CIO Asia,
September 14, 2012. http://goo.gl/btFQrt
5., 6. Intel. “Not limited to ERP
applications alone, the Intel® Xeon®
processor E7 family also provides new
business opportunities via in-memory
technology.” Case study, 2011.
http://goo.gl/6nZC9m
After NRI implemented in-memory computing technology,
Meanwhile, data from thousands of taxicabs is added
it was able to analyze the millions of records in just over
to the mix. Using all this information, Zenryoku Annai!
one second. “The speed this enables is sudden and
analyzes road conditions and helps drivers plan routes
significant, and has the potential to transform entire
more accurately and over a wider range than is possible
business models,” says Akihiko Nakamura, corporate
with conventional GPS systems.
senior vice president, Services and Industrial Solution
Division, at NRI.3
“As the number of users of our Zenryoku Annai! service
continues to grow, so too does the amount of position
New Business from Big Data
and speed data collected. Accordingly, we must now
NRI is a leading example of how to find huge benefits
process this data faster than ever before,” says Aritaka
from “big data,” the term given to data that comes in
Masuda, general manager of NRI’s Ubiqlink Department,
large volumes, variety and velocity. Thanks to big data,
which is responsible for gathering the traffic information.6
NRI has leveraged its research and traffic analysis
expertise to develop a widely used service called
Masuda says in-memory computing tests have confirmed
“Zenryoku Annai!.” Using this service, subscribers all over
that 360 million data points can be processed in just over
one second. The technology has improved search speed by
a factor of more than 1,800 over the department’s previous
relational database management system.
}T
otal Cost: $121 billion
} Wasted Fuel: 2.9 billion gallons
}C
O2 Emissions: 56 billion pounds
Besides the big boost in speed, NRI found that inmemory computing helps simplify the programming
needed to solve a complex analytical challenge and—
Tokyo at a Glance
somewhat counterintuitively—has even reduced the
}P
opulation: 13.2
million (metropolitan
area)
} Number of taxicabs:
Approximately 250,000
(metropolitan area)
}N
umber of cars:
Approximately 3.33
million
}T
otal land area: 2,700
square miles
amount of processing power needed.
The Price of Traffic Congestion in the
United States in 2012
Source: Texas A&M Transportation Institute15
The NRI findings come at a time when many government
agencies and companies in Japan are exploring new
“In addition to making real-time processing possible, this
ways to leverage traffic data and other sources in an
approach simplifies traffic-data generation logic,” says
effort to improve quality of life issues. Toyota, which is the
Kenji Honda, an NRI senior systems analyst in the Ubiqlink
largest provider of taxis in Japan, recently announced it
Business Planning Group. He says the higher speed of
is using real-time traffic information from 700,000 Toyota
data extraction processing achievable with in-memory
vehicles on the country’s roads to offer what it calls a
computing means that historical data can be processed
“big data” service to local governments and businesses.
on a continuous basis. This, in turn, reduces the amount of
The service is aimed at helping drivers during disasters
computer resources required to perform calculations.
and emergencies. Drivers will be encouraged to share
7
their own observations on road conditions, including
A Better Quality of Life
blocked paths and strong winds, with other drivers
The ability to analyze traffic jams more quickly—and thus
around the country.12
to potentially alleviate issues faster—is crucial in nation’s
like Japan, which can be crippled by traffic congestion.
A recent report in The Japan Times notes the Japanese
During the country’s largest spring break, traffic jams can
Government also wants to use car navigation data to
stretch 37 miles or more.8
better monitor traffic after disasters.13 The Transport
Ministry found it was able to check conditions on only 79
7. Intel. “Not limited to ERP
8. Yamanaka, Megumi and Yuji Okada.
“Japan Braces for Record Traffic Jams
as Aso Cuts Highway Tolls.” Bloomberg,
April 27, 2009. http://goo.gl/9i93AX
9. Texas A&M Traffic Institute. “As Traffic
Jams Worsen, Commuters Allowing
Extra Time for Urgent Trips.” February 5,
2013. http://goo.gl/fyNEJL
10. Hotz, Robert Lee. “The Hidden
Toll of Traffic Jams.” The Wall Street
Journal,” November 6, 2011.
http://goo.gl/mOjIMK
11. Enterprise Innovation Editors. “Traffic
congestion top cause of employee
stress, declining productivity.” Enterprise
Innovation,” March 14, 2011.
http://goo.gl/mIDZYz
12. The Associated Press. “Toyota to try
out real-time traffic data service in Japan
next month.” CTV News, May 29, 2013.
http://goo.gl/TNbFe5
13. JIJI. “Government wants car
navigation data to monitor post-disaster
traffic.” The Japan Times, August 3,
2013. http://goo.gl/yRnbtU
14. Intel. “Not limited to ERP
15. Texas A&M Traffic Institute. “As
Traffic Jams Worsen, Commuters
Allowing Extra Time for Urgent Trips.”
February 5, 2013. http://goo.gl/fyNEJL
Traffic congestion also can and does have a significant
percent of the nation’s roadways on the night after the
impact on quality of life and the economy in many major
earthquake and tsunami ravaged the Tohoku region in
cities around the world. For example, a 2013 report from the
2011. Following the disaster, the ministry discovered that
Texas A&M Transportation Institute found that the financial
traffic data collected from car navigation systems clearly
cost of congestion in the United States in 2011 was $121
showed roads on which no vehicles were running. Being
billion, translating to $818 per U.S. commuter.
able to understand traffic conditions immediately, both
9
day and night, is a crucial aid in responding to a disaster.
The likely negative impact that traffic jams have on public
health is an even greater concern. As roadways choke on
All this demonstrates the growing need for—and benefits
traffic, researchers suspect that the tailpipe exhaust from
of—using big data in the public sector. “In the past, it
cars and trucks—already implicated in heart disease and
could easily have taken several hours to process large
cancer—may also injure brains cells and synapses key to
volumes of data, and for this reason, I suspect many of
memory.10 According to one analysis, drivers traveling the
our clients ultimately abandoned the process of data
10-worst U.S. traffic corridors annually spend an average
analysis” in the public sector, says NRI’s Masashi. “But in-
of 140 hours, or about the time spent in the office in a
memory computing may well provide a way to offer faster,
month. Meanwhile, a 2013 survey by workplace solutions
tailored solutions to them.”14 •
provider Regus suggests that traffic congestion and
crowded public transportation systems are the top
causes of stress and declining productivity among Hong
Kong employees.11
2
Norwegian Cruise Line at a glance
Cruise ship operator that gives guests the freedom and
flexibility to create their own dining and entertainment
activities
Industry: travel & transportation
Headquarters: Miami, Florida
Founded: 1966
Year-on-year growth: 12.9%
Initial public offering: January 2013
Number of cruise ships: 13, with four on order
Passengers carried in 2013: more than 1.6 million
Destinations visited in 2013: 114
www.ncl.com
Source: Norwegian Cruise Line
Page
82
Norwegian Cruise Line Sets Its
Course for Real-Time Insights
Innovative cruise company adopts predictive analytics and real-time business capabilities,
with the aim of improving the guest experience and ensuring operational efficiency.
B Y L A U R E N G I B B O N S PA U L
N
orwegian Cruise Line has a reputation to uphold. Founded in 1966, the
$2.6 billion, 13-ship cruise line has a track record of innovation and
differentiation. The company was the first in the business to offer round-trip
Norwegian Cruise
Line at a Glance
Industry: Hospitality/travel
Headquarters: Miami
Founded: 1966
Year-on-year growth: 12.9%
Initial public offering:
January 2013
Number of cruise ships:
13, with four on order
Passengers carried in 2013:
More than 1.6 million
Destinations visited in 2013:
114
www.ncl.com
cruises out of Florida’s Port of Miami. It also
insights that have led to major operational cost
revolutionized the industry with its signature Freestyle
reductions. Over time, Norwegian’s real-time capabilities
Cruising, which gives guests the freedom and flexibility
will aid in its ability to quickly ascertain and even predict
to create their own dining and entertainment activities.
guests’ needs and desires.
No wonder, then, that an engaging and increasingly
“The real power of the tool comes in predicting the
personalized customer experience is paramount to
future and giving visibility we never had before,” says
Norwegian’s quest to keep up with industry trends and
Ben Lightfoot, director of business intelligence delivery
continue attracting the growing number of people
systems at Norwegian.
around the world who want to book a cruise in
anticipation of enjoying a one-of-a-kind vacation (see
Many companies in the hospitality/travel industry are
Figure 1, “Top 4 Cruise Industry Trends”). According to
leveraging analytics to gain a better understanding of
Cruise Lines International Association, the industry will
their customers’ needs and preferences. “This is what
serve 21.7 million passengers worldwide, up from 21.3
the innovators are doing,” says Joshua Greenbaum,
million in 2013 and 13.5 million in 2009.
principal at EA Consulting. “It’s a very competitive
environment. They are taking every piece of data they
But to maintain its track record for innovation, and
have and using it to change the customer experience.”
develop offers that will resonate with different segments
of customers, Norwegian knew it needed to better
understand who its customers are, what they value and
FIGURE 1
Top 4 Cruise Industry Trends
what they most want to do when onboard the ship.
With an eye toward increasing guest satisfaction,
among other goals, Norwegian embarked in 2012 on
a fast-moving journey to implement a business
intelligence (BI) system aimed at delivering insights to
business users. Because it wanted to analyze large
volumes of data from multiple sources—and needed
rapid results—Norwegian chose an in-memory
platform, which aggregates and analyzes vast
amounts of data from multiple data sources in real
time. From its earliest days, the system has generated
Improved technology to lower the cost of onboard
communications and provide more efficient passenger
servicing.
First-time passenger growth coming from younger
generation travelers, especially Millennials.
Rebound in luxury cruising, stimulated by an improving
economy and increased consumer confidence.
More all-inclusive options and packaging in
accommodations, services and amenities.
Source: Cruise Lines International Association. www.cruising.org
AUGUST 2014 |
Voyage to Customer Insight
According to Lightfoot, the homegrown BI system
had long turnaround times and performance issues,
FIGURE 2
Swimming Through the Data
Norwegian leverages its BI solution, powered
by in-memory computing, for a host of data
types in real time.
lacked flexibility and was too complex for anyone but
Norwegian Cruise
Line Business
Challenges
power users and IT staff to use effectively. There was
no true enterprisewide BI strategy in place and no
real processes around master data management.
} Legacy BI platform
was slow, inflexible and
complex
} Individual departments
could not easily share
data, leading to multiple
versions of the truth
} The company needed
a quicker and more
effective way to validate
and scrutinize financial
data in real time
} Norwegian wanted
to better understand
customer needs and
preferences to improve
and personalize the
customer experience
“We knew we needed a state-of-the-art BI platform
and strategy to stay ahead of the competition,”
Lightfoot says. “The business couldn’t wait until the
next day for an answer.” Further, departments
maintained siloed data marts, with no way to tie the
data together, adds Chad Berkshire, vice president of
operations finance at Norwegian. “There was no ‘one
version of the truth.’”
In late 2012, Norwegian began its quest for a platform
that offered performance, self-service for business users
and streamlined decision-making. “We knew this couldn’t
Financial data. Norwegian’s BI system elucidates
and authenticates the financial data in its ERP system,
something it was not able to do previously, according
to vice president of operations finance Chad Berkshire.
Now, business users can swim in the detailed transaction data behind the financials.
Inventory data. Norwegian uses analytics to keep
a closer eye on food/drink inventory aboard its cruise
ships, spotting trends and heading off waste. In the
future, it will use the system for inventory planning and
forecasting.
Guest data. Currently, Norwegian uses analytics to
segment and better understand its guests. In the near
future, it will use the system to predict which guests
and prospects are most likely to go on a cruise in the
near future.
be a project that dragged itself out for the next three to
five years,” Lightfoot says. “The BI platform needed to
without any concerns around the data they were
produce results within a year. This platform would be a
consuming,” Lightfoot says.
Norwegian Cruise
Line Solutions
game-changer as to how users consumed and
performed data analytics. Changing our organizational
Financial Reality Check
} Adopting an analytics
system based on an
in-memory platform,
enabling real-time
analysis of a large variety
of data types
} Porting ERP data
to the in-memory
platform, followed by
property management,
reservations and
customer data
} Implementing data
cleansing, data
governance and master
data management
processes
} Establishing a business
department dedicated to
BI and analytics
culture around data needed to begin right away.”
The first use of the system was to provide a reality check
for financial data. “We needed to deliver the transactions
The team selected the system in June 2013, and
that made up the numbers in the ERP system,” Berkshire
implementation progressed quickly. The ERP system
says. The increased scrutiny was a natural part of
was the first data source to move onto the platform, with
Norwegian’s becoming a public entity in January 2013.
the property management and reservations systems
“We needed to talk to potential shareholders about
slated for future phases. Along with data cleansing, data
specific financial goals and performance,” he says.
governance and master data management, another
major change was the creation of a new corporate
With the system in place, Norwegian could begin to
department for BI delivery, headed by Lightfoot.
obtain the coveted “360-degree view” of its guests.
Under the legacy data warehouse, guest data was
2
“One of the other huge contributing factors to the
maintained in multiple data marts, and understanding
success of the implementation was the decision to
the correlation between pre- and post-spend was
create the BI department under the business
becoming increasingly difficult. Guest information was
umbrella,” he says. “This shift from the norm allowed
sourced from the reservations system, property
the BI department to align itself with the business,
management system, casino system and guest
immerse itself in the business culture and drive home
satisfaction. However, there was no way to bring all of
the necessary business requirements.” It also
this together without complexity. The new system is
ensured system usability at all levels of the enterprise.
changing that, giving everyone the same view of guests,
“I wanted users to have a true self-service platform
enabling them to provide a better customer experience
that would allow them to swim through their data
(see Figure 2, “Swimming Through the Data”).
Early Wins
Soon after the system went live Berkshire was able to
FIGURE 3
Better Decisions Through Data
Benefits of
In-Memory
Computing at
Norwegian Cruise
Line
see how much money was spent annually on individual
} Operational cost
reductions as high as 6
percent
in purchasing
} Expected revenue
improvements driven
by improved ship
configuration and new
food and entertainment
packages
} Improved scrutiny and
validation of financial
data
} Improved inventory
planning and forecasting
} Holistic customer views,
leading to improved
segmentation and
prediction of needs
representative to reduce the bill by 6 percent.
Purchasing was a fertile area for more hard returns as the
revenue streams
47%
vendors across purchasing systems. “It turned out
there were five different departments all using one
vendor,” he says. “We had been negotiating in siloes,”
says Berkshire, whose team worked with the vendor’s
purchasing department obtained visibility across multiple
systems. “We discovered that a significant number of
services we were buying were not running through a
59%
53%
47%
purchasing system. They were being negotiated without
purchasing being involved,” Berkshire says. Purchasing
For example, guests who meet a certain threshold of
has reestablished oversight of services purchases, driving
spending on the gaming systems will likely be passengers
additional cost reductions and greater efficiency.
who Norwegian would encourage to book another trip.
Lightfoot expects the system will help his team pinpoint
The system would also potentially highlight problematic
profitable customers and develop personalized offers (see
areas on the ships related to revenue. “We might
Figure 3, “Better Decisions Through Data”).
change the way the casino floor is laid out, or place
assets in different places as a result of looking at the
“They will be able to close the gap between someone
asset spend across the casino floor,” Lightfoot says.
who is interested in taking a cruise vs. someone who is
onboard enjoying themselves,” Greenbaum says. This is
The biggest impact for guests so far has been the
a major advantage in an industry where there are
creation of onboard food and entertainment packages
complex products, many customers and a lot of
based on common spending patterns. “We make it
competition. “There are 100 different cruises. Being able
convenient for them to buy it in one package while also
to take all these potential products and correlate them to
gaining savings,” Berkshire says.
customers based on data—that is the perfect scenario,”
he says. “You can move the needle very quickly.”
Another example of data-fueled innovation: Norwegian
recently introduced all-inclusive cruising, the first of the
Norwegian’s use of the system will increase over time, as will
major cruise lines to do so, according to USA Today.1
its associated benefits. “When we can begin to predict for
With this option, available for 2015 cruises, the guest
the future, the payoff will be huge,” Lightfoot says. “We are
pays one price for unlimited extras, including access to
now looking in the rearview mirror. The goal is to be able to
specialty restaurants and alcoholic beverages,
predict months in advance, so we can put together the right
shoreline excursions and bingo games.
offers, the right experiences for the right customers.”
Predicting the Future
So far, Norwegian’s journey has been smooth sailing, with
Currently, the crucial activity of customer segmentation
great things on the horizon. “A lot of hard work has gone
is handled by an external service provider. With the
into this,” Berkshire says, “but it has really paid off.” •
new solution in place, Norwegian will take that function
back in-house. “In this business, you have a fixed
number of customers based on the ships and number
1. Sloan, Gene. “Norwegian Cruise
Line tests all-inclusive packages.”
USA Today, July 31, 2014.
http://goo.gl/opYCzx.
of rooms,” Lightfoot says. “We really have to get the
best guests, so segmentation is really key for us.”
3
Lauren Gibbons Paul has written extensively on customer
relationship management and customer experience
management for more than 15 years.
Southern California Edison at a glance
Southern California Edison is a subsidiary of Edison
International, which was founded in 1886. A regulated
utility, SCE delivers electricity to 4.9 million customer
accounts in 430+ cities and communities
Industry: utilities
Headquarters: Rosemead, California
Service territory: 50,000 square miles
Transmission and sub-transmission line miles:
12,782
Electricity wood poles: 1.3 million
2012 annual operating revenues: $11.9 billion
(Edison International)
Employees as of 2012: 16,593
www.sce.com
Source: Southern California Edison
Page
86
How Southern California Edison
Harnesses Big Data’s Power
Real-time capabilities are transforming how the electric utility manages supply and demand to
lower costs and improve efficiency.
BY STEPHANIE OVERBY
T
o keep up with electricity demand from its 14 million customers, Southern
California Edison (SCE) plans to invest more than $20.4 billion during the next
four years to expand and strengthen its electric grid. But pouring money into physical
Southern
California Edison
At a Glance
Industry: Electric utility
Company description:
Southern California
Edison is a subsidiary
of Edison International,
which was founded in
1886. A regulated utility,
SCE delivers electricity
to 4.9 million customer
accounts in 430+ cities
and communities.
Headquarters:
Rosemead, Calif.
Service territory:
50,000 square miles
Transmission and subtransmission line miles:
12,782
Electricity wood poles:
1.3 million
2012 annual operating
revenues: $11.9 billion
Employees as of 2012:
16,593 (Edison
International)
www.sce.com
Source: Southern California Edison
MARCH 2014 |
infrastructure such as power plants and substations is not enough. Leaders at the
regulated utility need to manage energy supply and
FIGURE 1
demand more intelligently, using more data, better
analytics and faster reporting.
Many organizations, across all industries, have
similar ambitions. But for utilities, the transformation
to a real-time business—one that uses dynamic and
granular data to make decisions in the moment—is
in many ways an industry imperative. Theodore F.
Craver, Jr., chairman and CEO of SCE’s parent
company, Edison International, has stated that
preparing for transformative change in the industry
is critical to creating long-term value.
Not only is demand for electricity increasing, but
utilities are also under pressure from regulators and
consumers to reduce consumption and lower
costs. “The only way they can meet customer
expectations and shareholder demands is if they
Real-Time Data Bolsters
Performance
By integrating processes, information and technology,
companies deliver real-time benefits “to a very large extent.”
High performers
Other organizations
Improve the ability to analyze costs and benefits
7%
62%
Embed real-time decision-making tools
46%
2%
Develop and capitalize on insights about customer behavior
46%
3%
Provide access to information across devices
38%
6%
Source: Accenture, 2013
replace concrete with information,” says Narendra
Mulani, senior managing director at Accenture
Understanding Business Demands
Analytics (see Figure 1, “Real-Time Bolsters
SCE’s business data, like that of most large
Business Performance”).
companies, is scattered among various systems and
databases. Integrating it was time-consuming, which
SCE has responded to these demands by initiating
made analysis difficult. As a result, the utility was using
a business transformation. New technologies and
only a small portion of its data effectively. “If it takes a
analytics tools deliver instant information about
lot of time and effort to get information out of your
electricity generation and consumption to the
systems, it hampers your ability to make business
utility’s customers, regulators and employees.
decisions in a timely manner,” says Ron Grabyan,
Real-time data is helping SCE manage its
manager of business intelligence services at SCE.
multibillion dollar assets more effectively, while it
Oftentimes, by the time you get the data together, the
partners with customers to meet their needs.
opportunity is lost.”
FIGURE 2
these disparate data sources together more quickly,
The top five point to a critical alignment of
business strategy, people and tools. (% responding)
the business intelligence services group studied what
type of information, and how much of it, people
needed, as well as how they would use it, before
Southern California
Edison
Identifying where big data can have the greatest impact
81%
choosing a technology platform.
Having staff who can extract value from big data initiatives
72%
Business users wanted to do deeper analysis of
Finding the best tools or resources to meet goals
70%
customer data, as well as predictive modeling. SCE
has access to an increasing volume and variety of
} Integrated data:
Business users can
aggregate internal and
external data sources to
unearth fresh insights.
} New services: A new
tool built on the
in-memory platform
helps customers
manage their electricity
usage and their costs.
} Faster processes:
Real-time data means
finance professionals
can, in effect, partially
close the books daily.
} Future use cases:
In-memory analytics
holds the potential to
improve response times
when power outages
occur and to help
analysts create new
statistical models with
richer results.
Big Data Success Factors
Although it was obvious that SCE needed to pull
internal and external data—from customer and smart
meter data to weather and traffic feeds and electricity
market information—that can streamline operations
and improve decision-making. By aggregating and
analyzing such information in real time, the utility can
begin to transform processes across its business. So
SCE invested in an in-memory platform for its
Ensuring needed storage, compute and networking resources
are in place
68%
Getting IT and business agreement on where big data can
have the greatest impact
64%
business intelligence systems.
The smart meter data became the foundation of an
“You have all of these different databases, and you
online tool that uses the in-memory platform to show
need information from all of them,” Grabyan notes.
customers what their bills might look like under various
“You’re limited by the speed of the slowest one.” An
usage scenarios.
in-memory platform enables users to load extremely
large volumes of data from multiple sources into one
SCE had to deliver the results, which are based on the
database and answer questions almost instantly.
previous year’s consumption, almost instantly, or
customers would abandon the exercise. “The customer
Choosing High-Value Targets
expectation is not set by the interaction they have with
The platform for real-time analytics is designed to
any other utility, it’s set by the interaction they have with
benefit many business functions. But successful
retailers or with online companies,” Mulani says. “They
companies choose targeted projects to demonstrate
expect that same transparency and ability to interact in
its value, Mulani says. According to a recent survey
real time.”
by IDG Enterprise Research, 81 percent of
respondents say that identifying the business areas
Using legacy systems, the data analysis took 40
and processes where the real-time collection and
seconds. Employing the new in-memory platform and
analysis of big data can have the greatest impact is
analytics technologies, customers get the analysis in five
critical or very important to the success of such
seconds. “With increased insight, more options and
initiatives1 (see Figure 2, “Top 5 Success Factors for
greater control over their energy usage, consumers will
Big Data Initiatives”).
help us engineer a better energy future,” stated Doug
Kim, SCE’s director of advanced technology, in a recent
With the launch of its smart meter program in 2008,
press release. If customers use energy more efficiently,
SCE enabled consumers and businesses to reduce
SCE does not have to build as many power plants.
their use of electricity during peak periods in
Everyone’s bills go down.
exchange for preferred pricing. The utility’s business
1. IDG Enterprise. “Big Data:
Growing Trends and Emerging
Opportunities.” 2014.
http://goo.gl/BKeOYy.
2
leaders decided that if they could get detailed
Transforming Work
information about electricity usage to consumers
Real-time transformation, however, involves more
faster, they could better moderate their energy use.
than deploying new technology or delivering a cool
People Before Technology
new tool. “The business process has to be
FIGURE 3
changed,” Grabyan observes. “And you have to
Culture change is among the top barriers to
building the analytical capabilities needed to become a realtime enterprise. (% citing it as a barrier)
have the appetite to make that business process
change.” Although SCE’s executive team was
hungry for the transformation, others were less
eager to see their work change. Indeed, culture
Resources
Culture
55%
Southern
California Edison’s
Challenges
change is among the top barriers to building the
} Centralize data for better
and faster customer
service and predictive
analytics.
} Deliver instant analysis of
smart-meter data to help
customers manage their
consumption.
} Better manage capital
investments.
Before Technology”).
Talent/skills
The key is to make it clear to people how they will
Leadership
27%
Data
26%
Southern California
Edison’s Solutions
projects in half or close the books faster. Finance
professionals do not have to wait until the last
traffic patterns are and what it is going to take to get
} Deploy business
intelligence systems with
an in-memory database
to speed information
delivery to customers,
business users and
regulators.
} Develop flexible
customer data and
predictive analytics
models.
} Enable online access to
analytics to empower
consumers and business
users.
week of the month to perform all financial closing-
everyone where they need to go.
analytical capabilities needed to become a
real-time enterprise2 (see Figure 3, “People
personally benefit from new systems and
processes. The business intelligence services team
showed how real-time analytics and process
changes could enable employees to more easily
access information while on the phone with a
customer, cut the development time for new
Technology
49%
30%
21%
Source: American Management Association, 2013
related activities. They can spread that work
throughout the month—in effect, partially closing
There are, as well, opportunities to advance the
the books on a daily basis. Not every piece of
predictive analytics the utility has been doing for years,
business information needs to be delivered
not only to forecast outages, analyze usage patterns
instantly. But as hundreds of reports run faster, a
and costs, or model customer segmentation, but also
more efficient workforce emerges.
to create new statistical models. In the past, much of
the analysis, using legacy systems, was based on
Big Returns Take Time
samples from SCE’s millions of meters and customers.
Employee buy-in will be critical as SCE rolls out
That takes time, and it has not always delivered the
real-time capabilities to additional areas. With each
insight decision-makers wanted. With in-memory
potential use, there will inevitably be process change.
analytics, they will be able to use the full data sets and
That is where the real value is derived—and it takes
receive richer results.
time. Anyone who approaches real-time
transformation with a short-term outlook is destined
Ultimately, the real-time transformation will deliver new
to be disappointed, Grabyan advises. “You put the
ways of doing business that no one can imagine today.
systems in the first year, the process changes occur
“When you make changes like this, you speed up
over the following years.”
analytics, which speeds up processes, which speeds
up decision-making, which creates exponential
Take outage management. Like any utility provider,
change,” Grabyan says. “It will change the way we think
SCE has to deal with natural disasters, such as the
about operating the company.”•
2011 windstorm that left hundreds of thousands of
customers without power. The company is looking
2. American Management
Association. “Organization Culture,
Lack of Resources Impede ‘Big
Data.’” Oct. 3, 2013.
http://goo.gl/3NUXN8.
at putting its storm tracker program onto the
in-memory database to enable managers to see
where crews are, where equipment is, what the
3
Stephanie Overby is a freelance business and technology
writer based in Boston.
T-Mobile at a glance
Provides wireless PDAs, cellular telephones, tablets as
well as mobile communications, DSL
Industry: telecommunications
Headquarters: Bonn, Germany
Founded: 1990
Area served: Europe, United States, Puerto Rico, U.S.
Virgin Islands
Employees: 36,000 worldwide
www.telekom.com/home
Source: T-Mobile
Page
90
CASE STUDY
Technology
Small/Midsize
Business
Marketing
& Sales
Using Social Media to Improve
Customer Loyalty at T-Mobile
How a small
A
team within
Y28 K28 C78 M52 Y28 K6
C73 M19 Y40 K1
ccording to
a 2013 study1 by the
C61 M20 Y78 K3
FIGURE 1
University of Massachusetts Dartmouth
January 2013
C65 M29 Y79 K22
Center for Marketing Research, a stunning 77
T-Mobile uses
percent of the most successful U.S.
the simple act
companies use Twitter to communicate with
of listening to
while 70 percent use Facebook.
C0 M60 Y100 K17 C28 M88 Y70 K19 C48 M89customers,
Y84 K49 C61 M66 Y61 K52
turn unhappy
They use other social media tools in varying
customers
degrees. However, frequent usage doesn’t
into happy
necessarily lead to expected business results.
customers—
That’s because, according to experts, social
and happy
media success requires a new way of
customers
thinking about customers.
into recom“Companies are tuned toward delivering messages,
mendation
but that doesn’t work in social media channels,”
engines.
says social media consultant Paul Gillin. “Customers
BY H OWA R D
B A L DW I N
T-Mobile: Social Media Success
2.8 million
June 2013
3.7 million
December 2013
5.1 million
Source: T-Mobile
The company’s social media efforts have resonated with a
growing number of its customers.
T-Mobile today focuses on social media as a
competitive advantage, using it to listen and respond
to customers’ desires and concerns. It has to. With
mobile phone penetration at 78 percent of the U.S.
population in 2014 and leveling off,3 T-Mobile must
show how it is better to grow. Social media is one of
the key prongs in its strategy.
don’t go to social media sites to get advertising
A ROCKY START
messages.” The more a company tries to sell via
“When we first started doing social media in 2012, we
social media, the more likely the very people it’s
tripped all over ourselves,” recalls Michelle Mattson,
targeting will stop listening, he warns. “Get over the
senior manager, social customer support. “We didn’t
idea that you’re there to talk. You’re there to help.
have a business case for how to handle social properly.”
The more people you help, the more you get known
as someone who is a pleasure to do business with.”
The original team of 24 people—dubbed T-Force—
didn’t have a clear goal either, other than to try and
1. Barnes, Nora Ganim, Ava M.
Lescault and Stephanie Wright.
“2013 Fortune 500 Are Bullish
on Social Media.” University
of Massachusetts Dartmouth
Center for Marketing Research.
http://goo.gl/tzXPgg.
2. T-Mobile. “Awards and
Recognition.”
http://goo.gl/CWPfWp.
3. Statista. “Mobile phone
penetration in the U.S. from
2010 to 2016.”
http://goo.gl/ZurWud.
SEPTEMBER 2014
© Copyright 2014.
Forbes Insights.
All rights reserved.
That is, in essence, what wireless mobile carrier
reduce some negative comments on T-Mobile’s
T-Mobile is doing, with significant results. The
Facebook page and to explore the possible use of
number of its social media fans almost doubled
analytics. “We took big risks and learned our lessons
between the beginning of 2013 and the end (see
from them,” Mattson remembers. “That education
Figure 1, “T-Mobile: Social Media Success”).
got us to where we are today, but those first six
Socialbakers, the social media analytics site,
months were painful.”
consistently ranks T-Mobile as a “top 10 socially
devoted” company.2 The results are even more
Among those risks: When they first started tracking
impressive given that the program has been in
complaints, the system for customer sentiment
existence for only two years.
tracking was manual and time consuming.
Eventually T-Mobile started tracking customer
sentiment in a more automated way, using a
cloud-based system that integrated with its
FORBES INSIGHTS
1
FORBES
INSIGHTS
CASE STUDY
customer relationship management
system. But even that process was
difficult. As a result, Mattson’s team
tried several other products and
approaches before settling on the
cloud-based services it is using today
T-Mobile today
focuses on social
media as a
competitive
advantage, using
it to listen and
respond to
customers’
desires and
concerns.
to track everything from general
customer sentiment to reactions to
FIGURE 2
Upon Further Review
Step 1
Initial T-Mobile
action
Step 2
Social media
response
Step 3
T-Mobile
reaction
Step 4
Social media
response
T-Mobile
announces
elimination of
Advantage
discount program
7% positive
37% negative
T-Force quickly
communicates
negative feedback
to management;
CEO promises to
rethink decision
33% positive
5% negative
T-Mobile
announces
campaign to
promote switching
from Blackberry
5% positive
20% negative
After T-Force
notifies T-Mobile
executives, CEO
tweets that the
campaign will be
tweaked
20% positive
8% negative
new promotions and campaigns.
Mattson soon determined that her
group needed to articulate a clear
strategy. Out of those discussions
came a simple mantra: “We’re
listening, we’re engaging customers
where they want to engage, and we’re
Source: T-Mobile
Most announcements will trigger a negative reaction of 1 to 3 percent. These two
went far beyond that, but were saved by quick responses from T-Mobile.
resolving issues.” Tactically, Mattson
broke the goals down to four steps:
customer used the “comment” capability to say
• Identify trending issues and monitor customer
“Can’t make or receive calls!” Within 32 minutes,
one of Mattson’s team had posted a URL for the
sentiment.
•A
llow the tough conversations to take place.
customer to send T-Force a message directly. The
• Offer quick responses in real time.
formerly disgruntled customer was one of 38,000
•M
ake positive connections that deliver on the
users who “liked” the response.
brand promise.
GOING BEYOND THE BASICS
The sheer action of monitoring customer sentiment
Most telecommunications companies take
is an eye opener. “Typical negative reaction on every
advantage of social media to some degree. “They
campaign is 1 to 3 percent,” she says. But in two
use applications like Facebook and Twitter to
cases where T-Mobile launched a campaign or
communicate with consumers at a rudimentary
announced a service change to a popular offering,
level,” says Bas den Braber, principal consultant at
the negative response was off the chart (see Figure
Capgemini Consulting, who focuses on digital
2, “Upon Further Review”). In the first instance, it
customer experience in the telecom segment. “But
planned to discontinue what turned out to be a very
telcos that take social media seriously are the ones
popular discount program called Advantage. In the
who are making progress. They’re using social
second, T-Mobile tried promoting a program to get
media for marketing, to derive insights and as a
customers to switch from Blackberry phones. In both
real-time interaction channel to enhance brand
cases, the T-Force team was able to engage
engagement. They’re deploying predictive analytics
executive support to respond to social sentiment,
platforms to help make data-driven decisions
sometimes in as little as 24 hours.
across the organization. They’re integrating social
media with the customer service function.”
Dealing with negative sentiment is part of the job,
Mattson insists, noting that some of T-Mobile’s
T-Mobile’s efforts put the carrier into the category of
competitors simply delete negative postings. “We
leading practitioners of social media in its industry.
engage with those people, and in most cases, we
“We have sophisticated reporting that tells us what
can turn it around,” she says. In one instance,
our customers are saying about us and whether
T-Force posted a message on Facebook, and a
they’re happy or not,” Mattson says.
2
FORBES INSIGHTS
FORBES
INSIGHTS
CASE STUDY
For social media monitoring, the T-Force team is
using a listening tool that identifies when T-Mobile is
mentioned and highlights potentially negative
hashtags and keywords (for example, “hate” and
“never”). Sometimes the team’s efforts are made
“It gives us a
sense of pride to
work with
someone who is
super-negative,
and then have
that person
come back and
say how great
we are. That’s a
key element of
customer
service.”
—MICHELLE
MATTSON, SENIOR
MANAGER, SOCIAL
CUSTOMER SUPPORT,
T-MOBILE
more difficult when someone with a lot of followers
complains, and the complaints are retweeted. That
happened once with a DJ who was upset about
FIGURE 3
Chat Strategy Goes Social
Number of issues solved via chat Up 12%
Wait times Down 3 minutes
Overall handling time Down 1 minute
Source: T-Mobile
When the T-Force social media team applied its methodologies
to customer service chat, management was impressed with
the results.
being dunned for a bill he said he’d paid; it turned
out later that he had not actually paid it.
we wanted to be when we grew up, and without a clear
vision or aspiration, you’ll just flail.”
No matter what level of status the person has,
however, the T-Force team dives in. “It gives us a
Her T-Mobile colleague Jennifer Palmer, director of
sense of pride to work with someone who is
knowledge management and social media services
super-negative, and then have that person come
support, recommends looking at what other companies
back and say how great we are. That’s a key element
are doing to get a sense of how you can best engage
of customer service,” Mattson says.
with your customers. “Look at brands you admire and
analyze why you like that,” Palmer says. “For instance,
Mattson has been so successful with T-Force’s efforts
the social content of [toilet tissue manufacturer]
that she’s been assigned responsibility for improving
Charmin is funny. Is that the way you want to engage
T-Mobile’s chat process. Her strategy involves giving
with customers? There’s nothing worse than boring
the chat team the same tools the social media team
content. And you have to commit to delivering it at
uses—setting up anticipated responses to questions
regular intervals.”
and building dashboards to track results.
Perhaps the most important lesson is to understand the
But it also involved making some structural changes.
complexity of making social media work. Just because the
“Sometimes we had content to be used within chat
T-Force team responds quickly doesn’t mean it is
that wasn’t appropriate for offshore agents who may
spontaneous. The team has spent a lot of time developing
not understand the nuances of social media,” Mattson
relationships with marketing, customer service, public
says. The solution: creating a two-tiered chat model
relations, legal and senior executives. “Before, marketing
that shifted complicated support issues to an onshore
would just launch campaigns, and the social team would
team. The results were almost immediately positive
respond to them. Now, we come up with questions and
(see Figure 3, “Chat Strategy Goes Social”).
issues relating to how customers might respond,”
Mattson says. “We have to be methodical. The last thing
The number one metric for Mattson, however, is
resolution. “That’s the most important thing to
measure in the long term. We want to earn customer
loyalty in the way we resolve issues across all
platforms.”
LESSONS LEARNED
What has T-Mobile learned about social media that
other companies could emulate? The most important
lesson is setting a goal for your social media efforts.
“Set your goal,” Mattson says. “We didn’t know what
we want is to become our own news story.” •
ABOUT FORBES INSIGHTS
Forbes Insights is the strategic research and thought leadership practice of Forbes Media, publisher of Forbes magazine and Forbes.com,
whose combined media properties reach nearly 50 million business
decision-makers worldwide on a monthly basis.
Bruce Rogers
CHIEF INSIGHTS OFFICER
Brian McLeod
DIRECTOR, NORTH AMERICA
Writer: Silicon Valley-based freelancer Howard Baldwin has written
about business and technology since 1987.
FORBES INSIGHTS
3
For more information on SAP HANA,
visit: sap.com/hana and saphana.com

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