Whitepaper Operational Business Analytics by Joost Nijhof

Operational Business Analytics The gap in the IT landscape which holds the key to making self-service BI work

Whitepaper 20-08-2013

Colophon Every Angle Software Solutions Kampenringweg 45C 2803 PE Gouda The Netherlands www.everyangle.com Authors: Fred Hermans, Hans Veltman, Jacques Adriaansen Published: August 2013 ÂŠ Every Angle Solutions, Gouda, The Netherlands No part of this publication may be reproduced in any form without permission in writing from Every Angle Software Solutions

Contents 1

Overview

Different Processes, Different Requirements

2.1

Introduction: Business Processes and Requirements for IT-systems

2.2

Historical Background

2.3

Executive Focus and Execution Focus

2.4

The Executive Angle

2.5

The Execution Angle

2.6

Summary: Executive and Execution

2.7

The Everyday Practice

Different Reporting and Analytical Systems

3 3.1

Introduction: Business Processes, BI and Operational Business Analytics 11

3.2

BI Systems

3.3

OBA Systems

3.3.1

Why is it so difficult to realize OBA within ERP?

3.3.2

Why is it so difficult to realize OBA with traditional BI?

How does a Solution Architecture with ERP, BI and OBA look like?

4.1

The proposed solution architecture

4.2

Functionality OBA

4.2.1

Business User Self Service Tool

4.2.2

Feeder to BI-systems / dashboards

Conclusion - What Business Value does OBA bring?

1. Overview In today’s world, people expect the

that BI cannot solve all the information

the executive strategy into action on the

same level of ease when engaging IT

needs across all departments at all

work floor. Next to that, OBA systems are

systems in their working lives as they

organizational levels. There is a gap. A

a powerful tool to improve data reliability

have in their private lives where they

new type of technology is required which

and assist in meeting internal and exter-

are accustomed to intuitive apps on

provides the most granular level of detail

nal compliance requirements.

mobile devices and tablets.

possible and gives the user speed and flexibility. Such a technology, engineered

Five Characteristics of an Effective

The trend, called consumerization, com-

to deliver reporting and analytics on an

OBA System

bined with the maturing of IT systems,

operational level, is the next step in this

result in business users becoming ever

evolution over the years to come. In this

more demanding for information that

paper, it is referred to as an “Operational

helps them improve their business pro-

Business Analytics” (OBA) system.

Lowest level of transactional detail is accessible

Smooth and automatic refreshment of data from the originating transac-

cesses and bottom line performance. In

tion processing systems

this evolving IT landscape, Operational

At present, however, many companies

Reporting and Business Analytics are

are forced to deal with a gap in the IT

too often treated as a kind of neglected

landscape at the business user level

child in the IT architecture. As a result,

since they do not have an OBA system in

business users fill in this gap themselves,

place. In order for users to solve complex

using spreadsheets and a variety of local

business questions which often arise on

databases. Without question, this is an

an ad-hoc basis, they utilize locally creat-

enables business users to create

undesired and costly situation, both from

ed solutions and spreadsheets. Classical

and update their own reports, ag-

the IT and business perspectives.

BI systems and ERP systems simply do

gregations and root-cause analytics

not fulfill the granularity and flexibility re-

(Self-Service)

By looking back in time, the evolution

quirements necessary for business users

of this situation can be explained. When

to define and answer their own analytical

transaction systems like ERP entered

queries without the support from IT pro-

companies back in the 90’s, everybody

fessionals. When the attempt is made to

thought these systems would solve all in-

use them for this functionality, the result

formational needs. It slowly became clear

is a high level of IT projects failing to

that these “Systems of Record” were not

meet expectations.

able to do that and Business Intelligence (BI) systems arrived as the suggest-

OBA systems that are well implemented

ed solution. BI systems are dedicated

and utilized are the missing link in the IT

reporting systems which extract and

architecture. They empower business us-

transform data from multiple systems

ers and enlighten IT professionals. They

and provide publishing tools for analysis

are also an important piece in the reali-

and reporting. Although these systems

zation of a “closed loop system” enabling

are very powerful, companies now realize

the operations management to translate

Expose the data to the end-users in ‘’business language’’ and add ‘’pre-calculated fields’’ to make analytics easy

A user interface that invites and

Operates extremely fast, even when dealing with millions of records

“Companies now realize .

that BI cannot solve .

all the information .

needs across all .

departments at all .

organizational levels.” .

2. Different Processes, Different Requirements 2.1 Introduction: Business Processes and Requirements for IT-systems

Three process types can be distin-

nature (receiving goods and storing in

guished, on the business side:

warehouse, manufacturing, packaging

• executive and higher management

and distribution) or can be adminis-

processes: these processes define the

trative in nature (invoice processing,

Since the introduction of the com-

external strategy of an organization,

insurance policy processing, financial

puter for business support, much has

define the (operational) processes and

reporting, etc.).

changed technology-wise, but orga-

organizational structure, and are con-

nizationally the challenge remains

cerned with the overall performance

On the IT side, different types of IT sys-

and risk

tems exist:

the same. “Business users” impose requirements that IT must fulfill and IT delivers functionality to meet these requirements. Simplified and for the

• operational management processes: plan and control the operations • operational (execution) processes: this

• business Intelligence systems (“reporting systems”): this is a container term that refers to the IT-systems where the

purpose of this paper, it is depicted as

is where the actual work is done. An

functionality is provided for planning,

follows:

operational process can be physical in

analysis, reporting and control. In other words, these are systems to acquire insight for decision making and support

Executive and Higher Management

Information Analysis, Reporting & Control

Operational management Evaluate the Past

Requirements

Focus Actions

focused actions • transaction processing systems (“systems of record”): these are the IT-systems where the (master- and

Corporate Business Intelligence

transaction) data are stored, required to execute or resulting from the execution of operational processes.

Functionality Act

Execution

Business

Data

Transaction Processing Systems

Master Data & Transactions

IT Systems

2.2 Historical Background In the last decades of the 20th century, the marriage between systems for financial administration and logistic systems like MRP I (Material Requirement Planning) evolved to the genesis of standard ERP (Enterprise Resource Planning) packages. ERP systems deliver functionality to support many

business processes from purchasing to

this system could easily use this data to

sales and from financials to production

provide valuable information to all users.

planning.

This expectation, however, did not become reality. Many companies suffered

This was quite a spectacular evolution,

quite a disappointment after an ERP

since ERP systems replaced many de-

implementation when they discovered

partmental IT systems silos. Nowadays it

that the system could not fulfill their

can be difficult to imagine, but in the 70’s

reporting needs. There were too many

and 80’s, most companies used separate

performance constraints in the hardware,

systems for each business function. The

and the complexity of the information

financial department, the sales depart-

structure led to high costs as well as

ment, purchasing, warehousing and

long lead-times when developing reports.

production planning each had their own

Sometimes, the ERP systems did not cov-

local system. Generally these systems

er all data that was needed, or data from

were not interconnected. At the best

multiple ERP systems was required.

they were loosely connected, involving employees copying data from one system

As a result, new systems for BI (Business

to another with tapes or floppy disks.

Intelligence) were introduced. A dedicat-

Replacing all these local systems with

ed DW-system (Data Warehouse) that

one big ERP system was an important

stored all relevant data from multiple

and sometimes a dangerous step to take

sources formed the basis for these new

for a company. Not only were individual

systems and took the load off the ERP

processes automated, but processes

system. The BI systems appeared to suc-

became connected, or as it was called

cessfully cover the information needs of

“integrated”.

higher management, however, they did not prove beneficial for operational man-

Take, for example, the following scenario.

agement and overall operations.

As soon as the receipt of goods from a supplier would be posted in an ERP system, the stock quantities would be automatically updated, as well as the sta-

2.3 Excutive Focus and Execution Focus

tus of the purchase order, the financial value of the stocks, the work list of the

Operational processes as well as the

quality department and maybe even the

management of day-to-day processes

list of transfer orders for the warehouse

(“Execution Focus”) differ in nature

manager. The projected expectations for

from executive/higher management

improved efficiency were huge, once the

processes (“Executive focus”).

people had become accustomed to the system. ERP systems were sometimes regarded as the solution for all information requirements. Since all data was stored in one system, it seemed only logical that

This is in the picture on the right.

“Not only were . individual processes . automated, . but processes became . connected, or as it was . called ‘integrated’.” .

Executive/Higher Management processes have an Executive focus

Operational (Management) processes have an Executive focus

Plan and Execute

Observe and Respond

• focus on budget performance • LT Planning leads to hierachical budgets Execution generates financial postings • top-down/bottom-up Focused on Spending vers us Budget

• focus on Process performance • procurement to Pay, Make to Deliver, Order to Cash, S& OP, End-to-End SC • End-to-End detailed process analytics Focused on process goal fulfillment

2.4 The Executive Angle

solutions and “set in stone”, and this solu-

2.5 The Execution Angle

tion will be in use for as long as the fundaThe executive management function

mental strategy remains in place...

involves the higher managerial layers

Operational execution and operations management, corresponding to the

in organizations. It deals with the

Some typical examples of executive

right side of the diagram above, is

functions: plan, execute and control.

reporting (BI)

about achieving process performance.

Its focus is on overall business performance, governance and risk man-

The core questions are “how can the • What is the actual performance last month

product flow be optimized, and to what

agement.. Typically, the accountability

and how does it compare to the budget?

extent are we delivering the goods/

structure (hierarchical/departmental)

(Sales, costs, production, etc.)

services compared to the customers’

of an organization is followed, indicated by the vertical arrow.

• What was the customer service level of last month and how does it compare to the

expectations, within the given limitations of cost and capacity?”

target?

The information needed to inform top management is often highly formalized and can be realized with standardized

• How much product did we ship in tons/ hectoliters last month compared to plan?

There are multiple differences within the execution area which have important

• What are our year-to-date sales and how

impact on the information needs. First of

reporting. The information requirements

do they compare to the same period last

all, this a larger number of people in this

must be well defined and stable, leaving

year?

area and they have more diverse roles.

no freedom for interpretation or confu-

All these people have varying needs for

sion. The definition process of this control

information and they tend to change their

information can be lengthy and involve

requirements rapidly over time. Also, the

discussion. However, once defined, the

time horizon is much shorter than in the

specifications are translated into software

executive area, and the dynamics are

higher. In some functions, exceptional

Some typical examples of the ques-

situations arise daily that require special

tions answered via execution report-

procedures and unique information.

ing (OBA):

Many questions in the execution area

• Which customer orders will not be deliv-

have an “ad hoc” character. When an op-

ered on time next week, what is the reason

erational problem arises, the root cause

and what can we do about it?

analyses as well as specific answers

• Which purchase order lines are late and

are needed quickly. When that prob-

which of them will cause a customer de-

lem is solved, those specific questions

livery problem for us? How much (%) of

may never be needed again. This area

the order lines do we need immediately in

requires a lot of so-called “nitty-gritty” detailed information, because within the

order to control the damage? • Which local small suppliers will be over-

processes themselves, the devil is often

loaded in the near future as a result of our

in the details. The operational level does

actual production plan? How can we off-

not just call for standard reports built on

load these suppliers in time and capacity in

a limited number of standard questions

order to stabilize their delivery reliability?

that can properly be specified, thor-

“Within the processes themselves the devil is often in the details.”.

oughly checked and run periodically for several years. In operations, the need is for a vast amount of reports that change

Business intelligence (BI) systems: sys-

rapidly and, in addition, a continuous flow

tems that transform data into meaningful

of ad-hoc reports.

and useful information for business purposes.

To make matters more challenging, the

Traditional BI systems: BI systems provid-

operational level often requires highly

ing cube-based, aggregated and mostly

complex reports, involving flow-oriented

historical information to the users. It offers

analytics which often run across multiple

slice-and dice functionality over a limited

departmental steps the workflow. Once

number of dimensions and values, and is

again, the word “integration” pops up.

restricted by the design and technical lim-

What is the impact of a problem in one

itations of the system.

step of a process on the next step? What

Operational BA systems: Systems offering

caused a bottleneck in a certain process step? Purchasing processes can have a direct impact on production processes, which can have a direct impact on storage levels which can have a direct impact on customer delivery. Analytics that can detect root-causes rapidly become much more complex than those of traditional performance statistics over historic time frames.

a maximum level of granularity, flexibility and variety to business users. They are enriched with business flow-oriented information and predictive analytics, in a way that enables business users to define their own analytical reports without the support from IT professionals.

2.6 Summary: Executive and Execution The difference in focus implies that

The table illustrates that, given the dy-

Operational (Management) Processes

namics, variety and deep complexity of

have completely different requirements

chain-analytics, it is much more difficult

for “reporting’’ than Executive/higher

and costly to fulfill the information need

management processes, as the table

on the operational level than on the exec-

on below summarizes.

utive level. Executive and Higher Management

Operational Processes and Operational Man-

processes

agement

Goal

Accountability & Control

Process optimization

General nature

Condensed information related to time

Detailed information about current and near future

Characteristic of the requirements

buckets in the past Orientation

• Vertical (top-down)

• Horizontal (process)

• Holistic and complete

• Exception-based (root-cause)

Dominant how-to

Compare actual to budget

Integrate data from multiple process steps

Level of Detail

Low

High

Number of users

Low

High

Need for ad-hoc

Low

High

Time orientation

Past, long horizon

Current and future, short horizon

Need for flexibility

Low

High

Expected changes in information need

Low

High

Performance indicators

Orientation

Process Performance Indicators

Available time and budget (IT)

High

Low (but.. hidden cost)

2.7 The Everyday Practice Examining the architecture of IT sys-

This paper defines the important solu-

corporate IT landscapes neglect this area

tems, it is common to see ERP and oth-

tion gap that exists between transac-

as shown in the diagram on the right.

er transaction systems covering each

tion processing systems and business

of the needed transactional areas. It is

intelligence. It is precisely the area that

It is often assumed that operational

also common to find a data warehouse

Operational Reporting and Business Ana-

information requirements are properly

(DW) as the aggregation layer for data

lytics supports and we call this layer Op-

covered by either transaction process-

of all types.

erational Business Analytics (OBA). Most

ing systems or by their BI-systems; an

assumption heavily underestimating the

these “spreadsheet forests” is proof that

tem, that can sufficiently fulfill the users’

day-to-day needs of operations oriented

there is a gap in the IT landscape that IT

needs, will lead to better business perfor-

business users.

department does not control. Filling this

mance against lower cost.

gap with a professionally managed sys-

This difference in requirements is often not understood or not recognized. IT professionals sometimes attempt to solve this problem with ‘’One BI’’, under the argumentation: “once we have stored all data in one big central database, we can always answer the question from the end

Corporate Management (KPIs) • vertical, Control oriented • financial, strategic • stable KPIs – Dashboards • “cube-based”

users”. Unfortunately, this is not the case, because the level of detail and the broadness of the data required by people in

Operational Management (PPI) • horizontal, process oriented • high detail and diversity • multi-dimensional • high change level

operational processes cannot be matched with the requirements of BI. The complexity is too high, the system performance suffers and, at best, only one of the user groups is properly serviced, usually upper management. Hence, business users on the operational

Business Intelligence (KPIs) • BW/ Business Objects • Quickview • Tableau

level, fill this gap by using spreadsheets, local databases or any other form of “locally self-made business analytics.” That is, of course, not the preferred situation from the IT perspective in terms of security, stability, standardization, quality,

Business user self-service BI • reliability and security • maintainability? Availability? • single source of truth? • scalability? Hidden Cost?

validity and scalability. Once the data is stored in a spreadsheet, it is difficult to maintain the security standards. Multiple departments will define

Executive and Higher Management

their own standards, each having their own “version of the truth”. Since most of these local solutions are not set up pro-

Business Intelligence

Requirements

Operational management

fessionally, maintainability is low, leading to additional costs and risk. Besides that, companies can become very dependent

It is evident that the mere existence of

Solution Gap

Extract Transform & Load

Transaction Processing Systems

Master Data & Transactions

Functionality

Operational Proceses

on a few people who understand the structure and use of these local systems.

Information Analysis, Reporting & Control

Business

Data

IT Systems

3. Different Reporting and Analytical Systems 3.1 Introduction: Business Processes, BI and Operational Business Analytics

Executive and Higher Management

In this section the concepts of the “BI-system” (BI) and “Operational Business Analytics system” (OBA) are

Operational management Evaluate the Past

Information

Corporate Business Intelligence

Analysis, Reporting & Control

Requirements

Operational Business Analytics (OBA)

Focus Actions

explained in more detail.

Extract Transform & Load

Functionality

Both BI and OBA have to convert raw data into information that answers ques-

Act

Execution

tions from users. The characteristics of BI differ a quite a bit from the character-

Data

Transaction Processing Systems

Business

Master Data & Transactions

IT Systems

istics of OBA as a result of the difference in requirements.

3.2 BI Systems 2. Primarily focused on historic figures, Over the past decade, a significant amount of time and money has been

3.3 OBA Systems

preferably compared with budget 3. Limited level of end-user flexibility

Given the nature of OBA, the challenge

spent to build and maintain BI sys-

The end user can choose from a cer-

is to fulfill a large number of highly

tems. In most cases, BI supports high-

tain set of reports, each of which has

complex, analytical report requests

er and executive management with

a limited number of dimensions and

while utilizing limited resources in

business planning and performance

values. While a user can freely report

time and money. There are a variety of

measurement reports, with or without

over these existing dimensions, he is

users from different departments who

dashboards. The characteristics of

limited to them: if a dimension was

each have diverse needs. Users need

these BI-systems are:

not defined in the report, it cannot be

drill-down detail into multiple business

added by the user.

areas and push for it quickly. Often,

1. Limited number of dimensions and

they change their mind in a few weeks,

values

Since these BI-systems are often used

requesting modifications to the report

The number of dimensions (product,

for “accountability’’ as well as ‘’external

or something completely new. On top

region, customer, and vendor) and val-

reporting’’ purposes, the definitions must

of that, there will probably be a lot of

ues (revenue, gross margin, and cost)

be formalized, solidly understood and the

ad-hoc questions or answers that busi-

means a maximum of a few dozen,

systems must be robust and reliably built.

ness users need urgently and might

usually less

never ask again.

In such a dynamic environment, it is im-

3.3.1 Why is it so difficult to realize

system is that it is dynamic, meaning that

possible to follow the steps necessary to

OBA within ERP?

requirements often change.

have an IT professional create the report.

It is clear that the data required for an

There is limited time and budget and the

Operational BA-system often resides in

Constantly changing requirements are a

classic way of submitting an IT report

the ERP environment. However, ERP sys-

headache for an IT department and the

request and responding to it is no longer

tems were never designed for reporting.

only good way to handle this is to provide

effective. A faster and more flexible way

They were designed to cater for register-

the business end-user with the tools for

of working is needed, an environment is

ing business transactions in all kind of

ad-hoc reporting, which is the core of

needed that empowers end users with

different business events and scenarios.

business user self-service. Ad hoc re-

self-service capability.

This has led to a “data-structure’’ that

porting is a mismatch with the nature of

is capable of handling many business

transaction processing systems.

The requirements for an OBA system are:

scenarios, but is not understandable for

1. H igh level of granular transparency (all

business users.

OBA with traditional BI?

details are available for the end user) 2. Automatic and regular synchronization

3.3.2 Why is it so difficult to realize

When flow-oriented information covering

Modern BI-solutions offer great possibili-

multiple process steps (order, produc-

ties to represent, slice, dice, and browse

tion, stock management, delivery, in-

through structured business information.

ness language’’ to support business

voicing, complaint management and pay-

Data warehouses provide safe storage,

user self-service

ment) is involved, reporting and analytics

properly derived information and autho-

become especially complex. The ERP

rized viewing of data in an aggregated

system was simply not designed for this.

form (for example in the form of cubes).

with transaction systems 3. Expose the ‘’data’’ to users in ‘’busi-

4. High level of flexibility for user to change and create new analytics, as well as variety of available reports

As soon as the data is stored in aggre-

themselves, quickly and easily without

In addition, standard ERP-systems have a

gated form, it is no longer suitable for

incurring high costs

lot of customizing parameters to ensure

OBA. It will not meet the requirements

that one standard software can be used

for granulation, variety, flow-orientation

available for end-users and can be de-

by many different companies without

and flexibility. Left alone the lack of func-

rived rapidly.

changing the code. Some examples of

tionality to offer business users to create

5. Process flow-oriented information is

these parameters include fields in a data-

their own reports and use advanced ana-

Because of all this, it is impossible to

base which are sometimes a concatena-

lytics over multiple business processes.

expect an IT department to design all the

tion of different fields and illogical for the

necessary reports on request. The only

user. Relations between tables are some-

solution is to bring smart, specialized, fast

times in the application logic or found via

and flexible systems to business users that

complicated “in-between-tables’’ some-

enable these key users to create the nec-

where in the design of sub-modules,

essary reports themselves. Therefore, busi-

sometimes purely as a result of different

ness-user self-service becomes the fifth

development teams that have worked on

most important characteristic of an OBA

the software. All of this leads to complex-

system. Any organization needs BI as well

ity. There is complexity of the data-struc-

as OBA systems. All successful companies

ture, complexity of the process logic and,

have to organize their IT in such a way that

on top of that, complexity of the soft-

both the BI and the OBA-requirements are

ware-technology itself. As a result, end

fulfilled.The question now is: how to realize

users are not capable of finding their way

an OBA-system? In the transaction pro-

through this complex data-structure. One

cessing systems? As part of BI?

of the core-characteristics of an OBA

Are Your Analytics Projects Failing? During the panel session vendors were asked to estimate the failure rate of analytic projects. They generally agreed that more than 70% failed to meet expectations – but since most organizations don’t put in place explicit success criteria, it is hard to assess what this means. In addition, failure rates probably vary between different levels of maturity – with simple descriptive analytics being relatively successful.

4. How does a Solution Architecture with ERP, BI and OBA look? 4.1 The proposed solution architecture

Executive and Higher Management

In view of the different characteristics of the three types of IT systems, the following architecture could address the business requirements in an opti-

Operational management Evaluate the Past

Information

Corporate Business Intelligence

Analysis, Reporting & Control

Information Operational Business Analytics (OBA)

Focus Actions

Extract Transform & Load

mal way. Information Act

With the above architecture, both business and IT benefit. IT departments keep in control of their IT-landscape and lower

Data

Transaction Processing Systems

Execution

Master Data & Transactions

IT Systems

Business

cost, by providing a manageable OBA system. Operational business users benefit because they have a system that not only enables them to address the (changing) needs, it also provides them with the day-to-day information to make better decisions and improve performance.

User Interaction

(ERP-)

Operational

Transaction Pro-

Business Analytics

cessing systems

systems

Predefined trans-

Business User Self

Dashboards with slice and

action

Service with tools to

dice capability viewing

analyze follow-up ques-

only

A well implemented and well utilized Level of detail

the realization of a â&#x20AC;&#x153;closed loop systemâ&#x20AC;?,

All details and all

All details, but reduced

Aggregated in accordance

functionality

complexity and opti-

with predefined KPI,

mized for Analytics

dimensions and measure-

represented by the arrow circle in the

ments

above figure. In a closed loop environment there is a direct link between the KPI information on operational management level and the information that is used by (or presented to) the co-workers at execution level. This direct link is mandatory to turn strategy into action. The actions at the execution level change the current situation. This situation (the past) is then analyzed and evaluated at opera-

systems

tions viewing only

OBA system is the missing link in the IT architecture. It is an important piece in

Business Intelligence

Data store

Persistent, create

Not persistent, rebuild

and view

on basis of ERP-data

Persistent

tional management level, and predictive

An OBA system however has to provide

analytic information is used to focus

insight, to give the people in daily oper-

the next actions to be carried out by the

ations the tools to improve their daily

execution level. This Act-Evaluate-Focus

performance. Insight comes from a com-

cycle is carried out frequently to attain

bination of diagnostic analytics (figuring

the operational goals set by the higher

out why things happened) and predictive

management levels.

analytics (figuring out what is going to happen if no action is taken). Diagnostic

“A well implemented .

analytics, for example, can detect bottle-

4.2 Functionality OBA

necks and calculate payment reliabilities.

and well utilized .

Predictive analytics can calculate items 4.2.1 A Business User Self Service Tool

such as excess stocks and expected

The OBA system allows business end

delivery reliability. Both these categories

users to analyze the current situation

are smart analytics to optimize the pro-

and to create, publish and (regularly)

cesses for which they were designed.

OBA system . is the missing link .

execute their own reports, which is true

in the IT architecture.” .

self-service. They do not have to await

Two examples of areas in which OBA

the outcome of an often lengthy software

is very powerful are data reliability and

development cycle and, as a result, have

GRC (Governance Risk and Compliance).

the possibility to cope with the dynamics

These complex areas require a high level

and uncertainty of everyday life.

of granular transparency of the data and a professional way to manage a very high

On reporting level, Transaction Process-

number of changing “checks” that the

ing systems can give users hindsight, by

users want to perform on the data.

showing the results of what went wrong.

Operational management Evaluate the Past

Information Operational Business Analytics (OBA)

Focus Actions

Information Act

Execution

Business

Transaction Processing Systems

Data Master Data & Transactions

IT Systems

4.2.2 A Feeder to BI-systems / dash-

Therefore, the OBA system can be a

immediately verify that the question was

boards

content provider or “data feeder” to BI

formulated correctly. If not, the power

In order to make the OBA system suit-

system which can store the data in a

user can filter out the unneeded data and

able for business user self-service, the

time-series format and can compare

revise the question on the spot, showing

data must be prepared and presented in

actuals with targets. As an example, the

the results of the new out output again

“business language” with as many pre-

OBA system can perform a daily calcula-

for further refining.

defined calculations as possible. Exam-

tion that transforms stock/cash balanc-

ples of pre-defined calculations would be

es into euro amounts and then posts to a

As an additional benefit, the OBA-system

service-level, Otif, stock valuation, order

BI-system that keeps track of the trend.

is also an excellent feeder of historical

status, etc.

usage data and inventory data which is With an OBA system, it is possible to

often needed for sales and Operations

To accomplish this, the OBA system must

have a BI/Dashboard environment that

planning software.

have the built-in intelligence to trans-

truly supports “rapid prototyping”. Ef-

form fields in the transactional database

fective rapid prototyping of dashboards

in meaningfull business information by

allows a power user, who does not need

executing complex calculations. Once

to be an IT expert, deliver the answers

this is done, the OBA system has solved

to business questions in seconds. This

an important problem that all BI systems

power user, in an ideal setting, can sit

face: accessing fields from databases

with a business expert, enter whatever

and transforming them into information

question they may have question in min-

which is useful for end users.

utes and system will derive the answer in seconds. This allows a business expert to

Executive and Higher Management

Operational management Evaluate the Past

Information

Corporate Business Intelligence

Information

Focus Actions

Analysis, Reporting & Control

BI Rapid Prototyping Lane

Operational Business Analytics (OBA)

Information Act

Execution

Business

Ensures higher management oriented slicing and dicing within constraints of ‘Cube’

Transaction Processing Systems

Data Master Data & Transactions

IT Systems

Provides ‘out-of-the-box’ ERP system content for BI applications

5. Conclusion - What Business Value does OBA bring? An OBA system is a software system,

progress, so that the issue can be solved

problem, but the ERP material require-

which on its own, seldom improves

before it has a negative impact on pro-

ment planning (MRP) algorithm shows

business value. Yet software systems

duction.

something different.

can indeed produce transparency and

To answer this question one has to:

insights that people need to take the

a. analyze the master data of the pur-

appropriate actions and these actions generate business value.

chased item (e.g. standard lead time) b. perform a thorough multi-level bill of material analysis and

In order to explain what the business value of an OBA system can be, we make

c. connect the purchase order to the production orders.

a distinction between its direct value

It will recognize this partly open sales order as “still to be delivered” and reserves stock to deliver it, actually issuing purchase or production orders for new sales orders for the same material. Thus, to reduce working capital in supply chain management it is thus very useful

and its derived value. The direct value

The “direct value” is the list of missing

to know how much money is tied up in

(or benefit) is the “improved operational

parts that may jeopardize the production

“claimed stock”.

information’’ which people can use to do

progress.

their job better. The derived value is the

The “derived value” is the fact that the

To answer this question one has to:

result of better actions/controls/deci-

production process isn’t jeopardized

a. analyze the open sales orders to iden-

sions that are based on the OBA insights,

when the focused appropriate actions

tify “polluted orders” (too old open

materializing in improved business per-

are taken.

sales orders);

formance.

b. analyze the stock batches; Supply Chain Management:

c. figure out the financial value of the

As explained in the previous paragraph

In an ERP system, open sales orders

OBA has to answer questions from many

(sales orders still to be delivered) will

claimed stock.

different users, working in different de-

“claim stock” in the warehouse. The

The “direct value” is the list of old open

partments, asking questions for which

amount of stock needed for the delivery

sales orders;

one has to combine information from

of the sales order is administratively

The “derived value” is the reduction of

multiple business areas. This all takes

“set aside” to ensure the delivery. ERP

stock when the reservation of stock is

place in an environment requiring quick

systems also tend to have a lot of old

lifted by cleaning up (closing) the pollut-

answers to questions. Some examples of

open sales orders (for example sales or-

ed sales orders.

“OBA questions” touching various busi-

ders with an order due date that is more

ness areas at the same time:

than three months in the past). Partial

Expand these examples to all the opera-

deliveries are one of the reasons to get

tional issues that exist across the organi-

Purchase to Pay:

this. The customer orders 100 pieces,

zation and there are thousands of possi-

In purchase and production it is very

the company delivers 98 pieces and the

ble use cases in which the use of an OBA

useful to know, for example, which miss-

remaining 2 pieces stay open for eternity.

system can directly translate into finding

ing parts may jeopardize the production

That doesn’t seem to be too much of a

money hidden inside the ERP system.

Direct Value and Derived Value of Operational Business Analytics Operational Business Analytics direct value for Execution

Operational Business Analytics direct value for Operations Management

Support day-to-day Operational execution Bottleneck detection & prioritization, detailed (ad-hoc) information

Support SAP ERP data Quality

Support Operational Management & Control

Improved Business Performance

Measure PPIs such as Service level, process accuracy, excess stocks, dead stock reduction, output, data accuracy, etc.

Higher service level against lower cost, improved working capital, improved cash flow, etc.

Quality of Master data Quality of Transaction data

Direct value

Derived value

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