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Five BI trends that are changing manufacturing

The top 10 business intelligence trends that Knightsbridge has identified for 2006 indicate a greater awareness and appreciation of the importance of timely, quality information throughout organizations in all industries.

This article originally appeared on the BeyeNETWORK

In January, Knightsbridge Solutions released the latest version of its annual Top 10 Trends in Business Intelligence white paper, updated for 2006. My last article recapped the first five of these 10 trends at a high level and examined their impact on manufacturers. In this article, I will do the same for trends six through 10. Future articles will focus on those specific trends that appear to be impacting manufacturing companies the most.

Trend #6: Enterprise Data Transparency
Enterprise data transparency enables an organization to track any piece of data back to its source, and understand how the data has been transformed and manipulated along its path through the organization. The ability to trace the lineage of data from a historical perspective provides assurance that the data an organization is aggregating and reporting or basing decisions on is correct, and is comparable and can be rationalized across all business areas. An evolving technology that will support data transparency initiatives of the future is metadata management, particularly within ETL (extract, transform and load) applications. A future goal of metadata tools is for business users to be able to access these tools more easily to define and apply business rules and understand data lineage for themselves.

For manufacturers, regulatory requirements make enterprise data transparency particularly important. New environmental regulations such as the European Restriction of Hazardous Substances (RoHS), Title 49 CFR: Hazardous Materials Regulation, Title 40 CFR: Protection of Environment, and Waste from Electrical and Electronic Equipment (WEEE) make it particularly important for manufacturers to be able to certify that their products do not contain restricted hazardous substances, which will be difficult to do without achieving some level of enterprise data transparency. Of course, Sarbanes-Oxley is also very high on the list of regulatory requirements that call for heightened enterprise data transparency.

Trend #7: Actionable Business Intelligence
Improving capabilities around corporate performance management continues to gain importance as a strategic objective for many organizations. The challenge in achieving this goal is several-fold. First there is a paradigm shift necessary, as many organizations can’t seem to get past thinking that business intelligence (BI) is for historical reporting, trend analysis and strategic insight. These organizations need to widen their thinking about business intelligence to include serving the needs of near real-time operational or tactical metrics and key performance indicators (KPIs) that have clearly defined responsibilities and actions associated with the results. Second, many organizations struggle in coming up with a manageable and clearly defined set of KPIs, as well as with establishing a repeatable process for adding KPIs. A third challenge lies in determining how to align the operational metrics to the corporate performance management and measurement systems that are in place or are being implemented.

A major push for actionable business intelligence can be found in manufacturing companies’ supply chains. In order to optimize supply chain processes, manufacturers must define performance indicators, measure them, and then compare the results to predefined targets. Manufacturers must also define a clear process to follow or action to take when a KPI generated in a dashboard or report is either above or below the target by a variance outside of a tolerable range.

Trend #8: Service-Oriented Architecture – Drawing the Connections to BI
A service-oriented architecture (SOA) is a business-driven approach to systems architecture that simplifies the integration of applications and business processes as linked, repeatable business “services.” These services are self-contained, reusable software modules that are independent of applications and computing platforms. A significant benefit of an SOA is that rapidly changing business needs can be supported easily, quickly and economically due to the loosely coupled and interoperable nature of the services, which are based on well-defined and formal interface definitions.

According to the Aberdeen Group’s recent “Service-Oriented Architecture Benchmark Report,” the next five years will bring more rapid development and adoption of service-oriented architecture in supply chain operations. Of the 300 executives interviewed by Aberdeen, seventy-five percent said that their current supply chain software limits the services they can offer customers and does not support their strategies for profitable growth very well. The solution, according to Aberdeen, is in the SOA model which “allows corporations to start weaving together people, applications, and data to support individual and unique processes, helping you and your business partners meet the challenges and opportunities in a global, multichannel environment.”

In order to make a connection between SOA, which is not a data-centric discipline, and business intelligence, which is very data-centric, companies will need to model the relationship between business services and data models. As recognized by Forrester, an SOA offers significant potential benefits. Most companies are still focusing on how to leverage SOA for designing business processes, but there are tremendous benefits to reap by addressing information management in an SOA architecture, to leverage SOA formeasuring and optimizing business processes as well.

Trend #9: “Rightshoring”
“Rightshoring” is determining the right mix of onsite / offsite / offshore work that delivers high quality results at a lower price point while mitigating risk. Although offshore sourcing for BI development has gained fairly widespread acceptance over the past several years, enthusiasm has waned due to lower than expected benefits in terms of quality, as well as price per unit of output.

In order to determine the optimal mix of onsite, offsite and offshore development, it is imperative that a company be able to monitor and evaluate or measure performance of each of these development models. A best practice for monitoring and evaluating sourcing options is to implement analytics around IT and development, which will allow a company to understand the true costs and benefits of its sourcing choices. The first step is to establish a sound development methodology and IT performance measurement program internally, or “onsite,” before attempting to measure offsite or offshore performance. This way, the company will have benchmark information to use for meaningful comparisons with the offsite or offshore performance results.

As leading-edge adopters of offshore sourcing, manufacturers may have an early start in doing this type of performance measurement and benchmarking. However, they should pay particular attention to measurement of their offshore BI efforts given the strategic, complex and business-intensive nature of BI projects.

Trend #10: Semi-Structured and Unstructured Data
Many companies are beginning to think about the challenges that exist in integrating unstructured data with structured data so that it can be analyzed together. Structured data is typically generated from OLTP (online transaction processing) systems. Unstructured data is data that is not found in tables or records, and has no keys or attributes. Common examples of unstructured data include e-mail, memos, documents, telephone records, terms and conditions of a supplier or customer contract, or customer survey feedback, which does not adhere to a standard format. Gartner predicts that by year-end 2007, a framework and terminology will have emerged to help companies better align their structured and unstructured data.

The benefits of integrating semi-structured and unstructured data with structured data include the ability to provide richer contextual meaning in master file areas such as customer and product master file data, as well as the ability to better analyze customer affinity and preference information, and supply chain quality dynamics.

Leverage Business Intelligence
In summary, the top 10 business intelligence trends that Knightsbridge has identified for 2006 indicate a greater awareness and appreciation of the importance of timely, quality information throughout organizations in all industries. For manufacturers, some of the trends identified take a higher priority than others, as manufacturers realize ways to leverage BI to improve product quality, consumer demand analysis, supply chain optimization and customer satisfaction. For Knightbridge’s white paper on the Top 10 Trends in Business Intelligence, please visit http://www.knightsbridge.com/.

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