Reduce the cost of business intelligence
IT and business management are increasingly expressing alarm at rising costs associated with Business Intelligence (BI) implementations. A new report from Aberdeen Group reveals that top-performing companies are doing more with less.
IT and business management are increasingly expressing alarm at rising costs associated with Business Intelligence (BI) implementations. The fear of hidden costs has kept many companies from making an investment, and many adopters have found that ongoing support and maintenance costs for ever-changing analytical requirements inhibits user penetration and the ability to manage total cost of ownership.
A new report from Aberdeen Group entitled "Managing the Total Cost of Ownership of Business Intelligence" reveals that top-performing companies are doing more with less when it comes to managing the costs associated with implementing, deploying and supporting a BI solution. The report finds that Best-in-Class companies achieved significantly better year-over-year results on four key metrics:
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IT and business management are increasingly expressing alarm at rising costs associated with Business Intelligence (BI) implementations. The fear of hidden costs has kept many companies from making an investment, and many adopters have found that ongoing support and maintenance costs for ever-changing analytical requirements inhibits user penetration and the ability to manage total cost of ownership.
A new report from Aberdeen Group entitled "Managing the Total Cost of Ownership of Business Intelligence" reveals that top-performing companies are doing more with less when it comes to managing the costs associated with implementing, deploying and supporting a BI solution. The report finds that Best-in-Class companies achieved significantly better year-over-year results on four key metrics:
- 5.8% improvement in on-budget completion of BI projects, more than 5 times the average rate,
- 4.3% decrease in the cost-per-user of BI applications, more than four times the average rate,
- Average of 14 days to achieve completion of BI projects, almost three times shorter than Industry Average companies and over ten times shorter than Laggard companies,
- Average of .6 days (4.8 hours) to make a change or modification to an existing BI report or analytic view, versus 3.2 days among Industry Average companies and 7.9 days among Laggard companies.
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P&G's innovation culture
The heart of a company’s business model should be game-changing innovation. This is not just the invention of new products and services, but the ability to systematically convert ideas into new offerings that alter the very context of the business. Procter & Gamble’s success rate runs between 50 and 60 percent.
As they lead to repeat purchases, these offerings reshape the market, so that the company is playing an entirely new (and profitable) game to which others must adapt. A number of game-changing innovators are operating today, including such household-name enterprises as Procter & Gamble, Nokia, the Lego Group, Apple, Hewlett-Packard, Honeywell, DuPont, and General Electric.
Consider the case of Procter & Gamble Company. P&G has worked hard to make innovation part of the daily routine and to establish an innovation culture. They sought to create a system that would harness the skills and insights of people throughout the company and give them one common focus: the consumer. Without that kind of culture of innovation, a strategy of sustainable organic growth is far more difficult to achieve.
In 2000 P&G introduced new brands and products with a commercial success rate of 15 to 20 percent. In other words, for every six new product introductions, one would return our investment. This had been the prevailing ratio in our industry, consumer packaged goods, for a long time.
Today, P&G’s success rate runs between 50 and 60 percent. About half of its new products succeed.
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As they lead to repeat purchases, these offerings reshape the market, so that the company is playing an entirely new (and profitable) game to which others must adapt. A number of game-changing innovators are operating today, including such household-name enterprises as Procter & Gamble, Nokia, the Lego Group, Apple, Hewlett-Packard, Honeywell, DuPont, and General Electric.
Consider the case of Procter & Gamble Company. P&G has worked hard to make innovation part of the daily routine and to establish an innovation culture. They sought to create a system that would harness the skills and insights of people throughout the company and give them one common focus: the consumer. Without that kind of culture of innovation, a strategy of sustainable organic growth is far more difficult to achieve.
In 2000 P&G introduced new brands and products with a commercial success rate of 15 to 20 percent. In other words, for every six new product introductions, one would return our investment. This had been the prevailing ratio in our industry, consumer packaged goods, for a long time.
Today, P&G’s success rate runs between 50 and 60 percent. About half of its new products succeed.
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Design for frugal growth
With the right kind of organisation, you can expand while cutting costs.
The control of costs had been its greatest strength. But it was now the greatest weakness. The company had spent so many years trying to reduce expenses that this imperative was hardwired into its practices, processes, and organizational design. When executives tried to shift gears, to expand into new markets and introduce new products, the company was ill-equipped for the transition.
Business unit leaders spent much of their time looking inward, negotiating with the executives at headquarters who made the final decisions about personnel, product launch timelines, and many other operational issues. Meanwhile, consumers were growing increasingly sophisticated. They wanted more information about the company’s products. So did institutional customers, such as schools and restaurant chains.
As companies have struggled to create and execute growth strategies, investor expectations for the sector have remained high, and raiders continue to stalk the producers of popular brands. It’s no wonder that the industry has devoted its attention, for at least a generation, to reducing cost, streamlining operations and creating economies of scale by consolidating research, manufacturing, and distribution.
This approach has paid off in the past. But now, having turned themselves, in effect, into supercharged cost-cutting machines, how can these companies suddenly invest in the risky arenas of emerging markets and fundamental innovation? And if they can’t, how will they compete when frugality alone is no longer sufficient?
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The control of costs had been its greatest strength. But it was now the greatest weakness. The company had spent so many years trying to reduce expenses that this imperative was hardwired into its practices, processes, and organizational design. When executives tried to shift gears, to expand into new markets and introduce new products, the company was ill-equipped for the transition.
Business unit leaders spent much of their time looking inward, negotiating with the executives at headquarters who made the final decisions about personnel, product launch timelines, and many other operational issues. Meanwhile, consumers were growing increasingly sophisticated. They wanted more information about the company’s products. So did institutional customers, such as schools and restaurant chains.
As companies have struggled to create and execute growth strategies, investor expectations for the sector have remained high, and raiders continue to stalk the producers of popular brands. It’s no wonder that the industry has devoted its attention, for at least a generation, to reducing cost, streamlining operations and creating economies of scale by consolidating research, manufacturing, and distribution.
This approach has paid off in the past. But now, having turned themselves, in effect, into supercharged cost-cutting machines, how can these companies suddenly invest in the risky arenas of emerging markets and fundamental innovation? And if they can’t, how will they compete when frugality alone is no longer sufficient?
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Smart companies innovate
Smart companies will do different things and do things differently. As revenues slow and margins get squeezed, companies naturally switches its focus to cutting costs and outsourcing. The winners take a different approach.
As revenues slow and margins get squeezed, companies naturally switches its focus to cutting costs and outsourcing. The company protects its balance sheet—an approach leading to the deferral of growth and of low-priority investments, the shelving of innovation and acquisitions and its competitive advantages eroded. The insistence on short term results can have potentially devastating effects on a company’s innovation culture.
The winners take a different approach. They see a downturn as a time to increase their leads and make acquisitions. They pounce on the opportunities it creates with an alacrity that is the stuff of legends: think of GE’s speedy dispatch plane load of strategist and dealmaker to Asia right after the Asian financial crisis in 1998. While there's no question that a bad economy makes it tougher to raise capital and launch new products, the reality is that good ideas executed well always have room to succeed.
Here are three secret weapons of innovation...
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As revenues slow and margins get squeezed, companies naturally switches its focus to cutting costs and outsourcing. The company protects its balance sheet—an approach leading to the deferral of growth and of low-priority investments, the shelving of innovation and acquisitions and its competitive advantages eroded. The insistence on short term results can have potentially devastating effects on a company’s innovation culture.
The winners take a different approach. They see a downturn as a time to increase their leads and make acquisitions. They pounce on the opportunities it creates with an alacrity that is the stuff of legends: think of GE’s speedy dispatch plane load of strategist and dealmaker to Asia right after the Asian financial crisis in 1998. While there's no question that a bad economy makes it tougher to raise capital and launch new products, the reality is that good ideas executed well always have room to succeed.
Here are three secret weapons of innovation...
read more >>
