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Bernard LiautaudFrom the Author:
The Internet not only enables e-business intelligence—it demands it, and demands it now. In the rapidly maturing realm of e-business intelligence, speed wins.
But, as ...
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But, as internationally acclaimed e-business intelligence guru Bernard Liautaud shows in this important new book, when it comes to corporate intelligence, most companies are still plodding along at the speed of the steam-driven locomotive. Anyone who doubts that assertion need only consider the recent findings by researchers at IBM that most business actively use only 7% of their data in making strategic business decisions.
In E-Business Intelligence, Bernard Liautaud shows you how to get your company up to speed for the Internet economy. With the help of fascinating and instructive case studies from Lucent, Dow Chemical, Disney, T. Rowe Price, Telecom Italia, Penske, Peugeot, Go Network and other major players at the forefront of the e-business revolution, he explains how, using a handful of key Web technologies, you can transform the vast reservoir of raw, untapped data languishing in your company databases into a corporate intelligence gold mine.
You'll learn how to excavate and integrate information spread throughout your company into a total corporate intelligence network embodying all organizational levels. And you'll learn how to strategically deploy e-business intelligence to significantly reduce costs, substantially improve operational efficiencies, achieve bold new levels of customer loyalty, forge solid, mutually beneficial alliances with suppliers and distributers, radically expand the scope and effectiveness of your marketing initiatives, and much more.
Writing from a strictly business, non-technical, perspective, Liautaud explains the what, why, and how of e-business intelligence in the new information economy. Then, focusing on the three main areas of e-business intelligence—intranets, extranets, and business-to-business e-commerce—he describes cutting edge strategies for accessing, analyzing, and sharing corporate data internally throughout an organization, as well as externally with customers, partners, and suppliers.
What it will take to prepare your company to compete and win in the rapidly emerging world, e-business economy? Read E-Business Intelligence and find out from the mind behind the intelligence strategies at many of today's leading e-business giants.
In his latest book, Living on the Fault Line, Geoffrey More-the Silicon Valley strategy guru and author of Crossing the Chasm and Inside the Tornadostarts with the notion that information about an asset is now more valuable than the asset itself: "In this new world, information is king. The more information you have, and the better (and faster) your analysis, the greater the probability that you will make winning investments."
Geoffrey Moore is correct: Businesses thrive on information. Even businesses that do not think of themselves as information businesses are, in fact, information businesses. When one thinks of Fiat, for example, one thinks of a company that manufactures and sells cars, such as the eponymous Fiat, as well as the Alfa Romeo, Lancia, and Ferrari. Cars are Fiat's most visible commodity. The element that makes it possible for Fiat to produce those vehicles is, of course, information. Fiat needs information in order to make literally thousands of decisions each day on supplier costs, purchase prices, and distribution channels.
Take the lowly lug nut. Seems like a simple, inexpensive part, right? Well, think again. It is a relatively simple and inexpensive part, yes, but the information associated with the lug nut bears directly on Fiat's bottom line.
Let us say that Fiat has been buying lug nuts for a pair of vehicles from different suppliers. Fiat has "data" in separate data stores on the number of lug nuts purchased and the price paid from the two suppliers. The data becomes "information" when Fiat combines the two data stores, thus enabling its managers to examine andanalyze that information to make more informed decisions. This information is likely to show that Fiat is paying, say, $0.10 more per lug nut for one vehicle than it is for the other. Understanding that information and forwarding it to the right people in the purchasing department creates a collective "intelligence," which ultimately can be transformed into positive financial value. Indeed, at 1 million vehicles per year, $0.10 per lug nut translates into $100,000. Repeat that exercise with 100 other parts, and you are saving $10 million per year. By transforming its data into information and then into intelligence, Fiat adds a few bits to its bottom line.
Data and information form the bloodline that enables Fiat to be a successful company. However, like blood in the human body, they tend to be taken for granted. The enormous quantity of data that businesses collect has tended to lie fallow, untilled for the intelligence that analysis might yield. Researchers at IBM have arrived at the alarming conclusion that businesses actively use only 7 percent of their data to make strategic business decisions!
Corporations usually do not lack data. On the contrary, they tend to have plenty of it. Through their basic operational business processes, they collect terabytes of information about everything they do: the products they sell, the customers they have, the employees they manage, and the assets they own. This information is generally properly stored in vast corporate databases. However, in most cases, the data stays there, unused and unexploited, collecting dust like old crates in a storage room. Although the information potentially is extremely valuable, it often is hard to find: The businesspeople, the line managers who really need that information, do not know how to get to it, or even that it exists. As a result, simple questions remain unanswered.
Let us take a test: Are you, in your company, able to get a full picture of a given customer? That is, not only the basic information on that company, but the full sales history-how many products they bought over time and at what price, the kind of contract you currently have with them, whether they are satisfied, and what orders are pending? Probably not. Most companies are not able to provide that 360° view of their customers. The information usually exists somewhere in the company records, but it is spread throughout many systems and thus is inaccessible to the people who need it.
Moving to Intelligence Everywhere
This situation is slowly changing as organizations are beginning to realize that information is the currency of the new economy. Increasingly, businesses are tapping into the intelligence latent in their data. We are starting to see pioneering e-businesses turn raw data into intelligence. Vast data stores are now being energized, integrated, and analyzed for insights into key business metrics. Like never before, data is being probed, sliced, skewered, and diced to assess trends and anomalies.
We are seeing companies empowering people at virtually all layers of their corporate hierarchies-from the CEO to the rank and file-allowing them to access, analyze, and share information over the Web. We are seeing companies dramatically improve operations by leveraging the insights, the intelligence wrung from purely transactional data. We are seeing them take advantage of newly powerful and user-friendly Web-based analytic tools, using disciplined analytic practices that have matured in only the last several years. This is what we mean by developing enterprisewide business intelligence: turning raw data into usable information and distributing and sharing that information with all of the employees, managers, and executives throughout a company, hence creating a collective intelligence about one's business. In virtually every industry-from retail, to health care, to insurance, to transportation, to financial services-we are seeing companies at the vanguard of e-business exploiting this intelligence to build and fortify relationships with their customers and partners, to drive one-to-one marketing campaigns, and to reduce costs and improve operational efficiencies.
Consider the example of a traditional retailer in the early twenty-first century. A retailer needs to know more than which products are selling and which products are lagging, or it will soon find its sales diminishing. Why? Because a half-dozen dot coms are selling a similar product-tax-free!-on the Internet, and because those dot coms and traditional competitors very likely have e-business intelligence systems and strategies in place or on the drawing board.
The competitive pressures of e-business make it mandatory that retailers go beyond the basics of product sales into the who, what, where, when, why, and how. Who is buying our products? What is their income? Where do they live? What other products do these consumers buy? How can we cross-sell to these customers? How is our e-business channel affecting other channels? What channel is showing the greatest growth? How should we redirect resources? Where are our products selling? What is our profit margin? How do these sales compare to the same time last year? What percentage of these sales is attributable to advertising? How much is driven by direct marketing? What is our sales forecast for the next 12 months? By region? By demographic segment? By product color?
Answering these questions, the retailer will be armed with intelligence and thus able to know quickly and precisely the customer purchasing history, and how it has been evolving over time. On the basis of previous preferences, the intelligent retailer will then launch targeted and personalized marketing campaigns corresponding to the customer state of mind "at the moment." Without this intelligence, the retailer would only be able to send fairly generic marketing campaigns to its customer base, not taking into account personal preferences or most recent purchasing history. Which retailer do you think has the most chance of retaining its customers?
The new imperative for e-business intelligence is not confined to any particular industry, any particular geographic region, or any particular business operation. It applies equally to companies doing business only on the Internet-the so-called pure-play dot coms-as well as to traditional companies bringing their business online-the click and mortars. Similarly, the imperative is not confined to any particular business operation-it applies to customer relationships, financial analysis, human resources, supply chains, marketing campaigns, manufacturing controls, and the clickstream data that records the activity of shoppers and surfers on Web sites. For instance:
|Pt. 1||The Quest for Intelligence|
|1||The New e-Business Intelligentsia||3|
|3||The Value of Information||35|
|5||e-Business Intelligence at Work||67|
|Pt. 2||Information Democracies|
|6||Enterprise Business Intelligence||93|
|Pt. 3||Information Embassies|
|9||e-Business Intelligence Extranets||195|
|10||Customer Care Extranets||213|
|11||Empty, as no business book should have a Chapter 11!|
|13||Supply Chain Extranets||237|
|Pt. 4||Vision for Tomorrow|
|14||The e-Business Intelligence Future||259|
|A||Popular Misconceptions about an e-Business Intelligence Implementation||277|
|B||The Search for Return: Justifying the Investment||283|
There is no greater truth than what your customer is telling you.
With fancy words and acronyms like one-to-one marketing, personalization, customer churn, lifetime potential value, customer relationship management (CRM), market-basket analysis, cross-selling, and target marketing buzzing about in companies that are endeavoring to become "customer-centric," one wonders what the customer-you know, that person who is always right-would make of all the noise. In this chapter, we discuss the concept of customer intelligence and offer detailed recommendations on how to leverage your data in order to better understand and serve your customers.
A fair bet is that most businesses do not know much about their customers. Even companies furthest advanced on the journey to achieving profitable customer intimacy are still struggling with what to make of the tidal wave of information they are collecting on their customers. They are struggling to understand who the customer is, what the customer wants, when, how, and why the customer wants it-the fundamental questions that all companies should be seeking to answer. Most businesses are now on a mission to become more customer-centric. The emphasis is shifting from transactions, processes, products, and channels to the ultimate source of immediate and long-term profitability-the customer. This change is driven by intensified competition, deregulation, globalization, and saturation of market segments. Last, though not least, this change is driven by the Internet, which offers a bonanza of choices online, thereby raising customer expectations. Product differentiation is eroding. The competition is just a click away, and the switching costs for customers are becoming ordinarily negligible. Companies find it harder and harder to differentiate on factors that prevailed in the 1980s-product quality, operations, logistics, and business processes. The quality of many products has improved, many businesses have streamlined their supply and distribution chains, and companies have benefited from the widespread business process re-engineering exercises of the 1980s and 1990s. In this new ruthless environment, it has become essential for companies to find new ways to attract new customers, to maximize the value of each existing customer, and to retain the most profitable ones. Numerous studies show that it is easier and as much as six times less expensive to sell to an existing customer than to acquire a new one.
This will allow you to understand the customer's profitability, as well as his or her expectations and preferences. With this knowledge you can then determine the customer's lifetime value to your organization. Note that to understand the value of the customer, you must look not only back in time, but also forward in an attempt to predict his or her future potential.
Once you understand the lifetime value of the customer, you can then define and take the actions required to materialize that value. It is this collection and analysis of information, and the resulting actions based on our intimate understanding of the customer, that we call customer intelligence. Customer intelligence will ultimately allow you to deliver the best service and interaction with the customer.
A study by the Meta Group analyst firm in March 2000 revealed statistics showing that business has a long way to go to solve this multifaceted customer riddle. (See Figure 7-1.) In Meta Group's survey of 800 business and IT executives, 83 percent of respondents answered "no" to the fundamental question, Does your company know who its customers are?1 And the survey found that 67 percent did not feel that their companies were effectively using client data to understand their customers. But efforts are intensifying to get to know these customers-56 percent of Meta Group's respondents counted improving customer intimacy as among the top three priorities of their companies.
Achieving customer intelligence ultimately involves two very important objectives: n The 360° view of the customer, i.e., the ability to aggregate in a single view all the data you have about a customer n The segment of one, i.e., the ability to segment the customer base in such a fine-grained way that you can implement pure one-to-one marketing. First we will review these two concepts and the challenges of putting them to work, and then we will discuss the basics of customer relationship management and how customer intelligence enables a more intelligent CRM. Finally, we will discuss the concept of Customer Value Management.
The 360° Relationship
Understanding your customer base means knowing much more than their demographic distribution. It means having a full view not only of their purchase history, but also of all their interactions with your company. Interactions can happen through multiple sales channels (direct sales, online purchases, resellers, etc.) and through multiple points of contact or "touch points" (customer support center, marketing programs, sales force interaction, and so on). By tracking, observing, and analyzing these interactions, you can gain great insight into the customer's needs and desires at any given moment.
Traditionally, the various departments in contact with customers have a good understanding of their own communication with the customers, but rarely know much about the other interactions. A salesperson knows how many calls she made to a customer for a potential new sale. A customer support representative knows how many times that customer has called to complain about product problems. A marketing manager knows how many times he called that customer to serve as a reference. Typically, none of that information is shared across these different functions, leaving all employees involved with only partial information. To address their expectations effectively and efficiently, each of the company's representatives who interacts with a customer needs to have a clear and complete picture of that customer's activity.
This holistic picture of the customer is what we call the "360° view." The business intelligence software implementation of this 360° view can take several forms, including a dashboard of business indicators on a screen, a set of business reports accessible via a Web portal, or an environment that delivers direct ad hoc access to the customer data. The key is to integrate in a single environment the related data that comes from all points of interaction with the customer.
Achieving this is critical to
Posted April 5, 2001
This book is rare in my experience. It is helpful to both the executive who wants to develop important customer and competitive advantages and to the CIO who has to plan the company's electronic capabilities. The book succeeds in doing this in a way that will improve the dialogue and effectiveness of technical and nontechnical executives in working together to improve their organization's knowledge and ability to make good use of it. Beyond that, the book is well-founded in a vision of individuals (at work and at home) being able to interrogate data bases to find better ways to do things, and then cooperating with other people to save time and money. Business intelligence software basically does two things: First, it pulls off data from other databases so that relevant information is all together in a usable form. Two, it contains simple query tools that allow anyone to ask a wide variety of ad hoc questions and get quick answers back. Think of this as being like turning a large business into the simplicity of a one-person operation being run by the owner. The strength of the book comes in the many detailed examples from around the world of companies in different industries using business intelligence software to improve themselves, their customers, and suppliers. The examples come from companies of many different sizes, dealing with different kinds of problems, and having varying degrees of technical sophistication. These are presented in some detail in sidebars that are highlighted in gray backgrounds so that they are easy to find. I intend to recommend this book to all of my clients, which is something I seldom do. The writing in this book deserves special praise. Mr. Liautaud and Hammond have done a very careful and thorough job of taking complex ideas and breaking them down into simple words, concepts, lists, and examples. They have done this without 'talking down' to the reader, and the material is consistently interesting. Mr. Hammond deserves special credit for understanding the advanced thinking of Mr. Liautaud that has led to the development of an entire industry around helping companies expand their e-business intelligence. I am often annoyed by books written by CEOs of companies that have services to sell. The books often come across as one big piece of advertising or brochureware. Although the examples here come from Business Objects clients, I did not have that negative reaction to this book at all. After you finish this book, you will realize that the key thing to getting benefit from e-business intelligence is to ask better questions once you have the databases and query tools in place to do your own interrogations. I suggest that you start asking those questions now. You may find that some can be answered simply and quickly without bogging down the IT department, and you will obtain the benefits sooner. What's even better is that you will find ways to start thinking in improved ways about your business sooner. Enjoy the benefits that follow naturally from having all of us know more and be able to ask more . . . to extend our knowledge into improved forms of profitable intelligence! Donald Mitchell, co-author of The Irresistible Growth Enterprise and The 2,000 Percent SolutionWas this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.
Posted May 3, 2001
Posted January 1, 2001
Much has been written about e-business. In fact, the topic has become mundane. It's time for new information on the subject, and e-Business Intelligence delivered. It covers the very important, but relatively under-known, topic of leveraging information in a company for maximum competitive advantage. There are dozens of useful case studies in the book, not just from corporations in the US (Mastercard, Eli Lilly, eBay) but companies in Europe as well (Fiat, British Airways). It is well-written, and easy to refer back to later. Highly recommend it.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.