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Business Intelligence

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Daniel Moser

on 15 November 2013

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Transcript of Business Intelligence

Value and Impact
FUNCTIONALITY
TECHNOLOGY
BI represents the tools and systems that permit strategic planning

BI systems enable decision making through data analysis

BI tools promote better understanding of transactional and operational information

B.I.
1. What is the technology?

2. What is its major functionality?

3. What are the potential sources of business value for this technology?

4. What functional or business processes will this technology impact?

Business Intelligence
Potential Business Values
Competitive Advantage

Consumer Focus

Work more efficiently

Be Innovative

Competitive Advantage
More profitable than peers

Outperform the industry average

Identifies trends

Enables small companies to compete with larger companies

Allows management to make quicker and faster decisions

Customer Focus
Help identify new target markets

Enhance customer experience through increase in customer understanding

Create targeted marketing campaigns

Reduce costs on large, wide-spread marketing approaches


Efficiency
More centralized fashion

Analyze past data to help make future decisions

Produce products more quickly

Reduce costs

Understand the market/economy and forecast

Better manage labor costs and inventory

Innovation
Discover new openings in the market to offer new products or services

More open to new ideas



History
89 years in business
Headquarters: Oak Brook, Illinois
5,000 employees (cooperative)
4,600 retail stores
14 distribution centers
80,000 retailers and associates

Campaign of Reinvestment and Infrastructure Renewal
"Big Box" operators dominated sector
Ace's decentralization was challenge
Excel in wholesale
Blind at retail level
No customer data was captured at all
POS different at location
Use dial-up network
Lacked infrastructure to acquire sales visibility
Ace Hardware
Building a Bridge
Sales down
Customer visits down
Implement low cost, pay-as-you-go data warehouse
250 GB SQL database
nightly uploads of POS information
Create loyalty program
Beginnings of success
Need for Data Warehouse
Two experiments seem successful
Stores sending POS data climb
Loyalty program reaches 1 million
Deteriorating warehouse halt sign-ups
Queries go from hours to days
Ace has data needed but cannot use it
Larger warehouse platform needed
Enterprise Data Warehouse
Ace's IT ask management for true enterprise data warehouse
What is a data warehouse
Where to purchase data warehouse
IBM or Teradata Corporation
Installation 2001
Operational by June 2001
OR
Frank Murphy, Manager of Retail IT
"To store and analyze the high volume of POS transactional data and combine it with our masses of historical data, we needed a powerful data warehouse system and a strong partner. Teradata is the world leader in data warehousing solutions, with a proven track record in retail. That experience including customer relationship management, category management, and business intelligence, made Teradata the right choice for ACE Hardware."
Immediate Benefits
Constraints immediately relieved
2,500 stores transmitting POS daily
Helpful Hands Club up to 11 million
Query execution times fall while more users access warehouse
Better understanding of retail level
Average value of transactions increase
Same-customer store visits up
Profit margin increases
Hard dollar impacts
1 year after Teradata system enters service
A $1.03 increase in the average retail transaction
Value = 42 million
Increase in same customer visit of 1+ per year
Value = 24 million
Retail price margin increase for 3 Ace departments
Value = 19 million
Impact by 2005
Wholesale sales: $3.46 billion
Increase 5.4% from 2004
Largest gain since 1998
Add 131 new stores
Retail sales: $13+ billion
Net earnings 100.4 million
Compared to non-Ace hardware stores
85% higher annual sales
146% higher net profits before tax
42% higher ROI
Challenges
Creation of a new quality control process for POS data
Every line of data has to be validated before loaded
Sales information supplemented with interpretation
Teradata extended access to more users
Previous SQL solution supported less than 20 users
New ADW provides access to thousands
ADW New Users
350 field staff
400 corporate users
4,600 retailers
2,600 vendors
Current ADW Users
Teradata CRM
Used to automate/streamline marketing
Deployed in 2004
What is CRM?
How was Ace able to use Teradata CRM?
Plan and execute 50 national mail and email promotions
Catalog mailing
Homeplace magazine
Promotion creation
Data-driven Promotion
Trashbag product campaign
Combined email and mail promotion to loyalty members in 2005
The Offer
Coupon: $3 off a $10 purchase
of Ace brand trash bags
between March 1 and April 16
Origin
Transactional data used to identify distribution
Promotion offer based on average transaction
Target Segments
Based on history three segments identified
Previous Ace trash bag purchases
Previous non-Ace trash bag purchases
Top Ace consumers not purchasing trash bags
Performance Forecast
5% overall response rate
$12.00 average transaction total for Ace trash bags
Total value $195,000 for timeframe
Actual Results
Comparable to forecast
5.24% response rate
$13.98 average transaction for Ace trash bags
Total value $247,698 ($52,698 above forecast)
Average store profitable during promotion
Bottom Line
How are precision promotions beneficial?
Same customer sales up 26%
Loyalty member transactions on average $7.08 higher
Average transaction $22.62 to non-member $19.14
Loyalty transactions more profitable
Members average profit/transaction $8.62 to non-member $6.25
In Action
Awards
In 2004 Ace was recognized by CIO magazine for its accomplishments in using the ADW to drive significant improvements in marketing efficiency and profitability. They were named Retail segment winner in Enterprise Value Awards
Final look
"In the Teradata ADW, Ace has a scalable business intelligence platform through which to understand and manage its distributed, cooperative enterprise, no matter how large and complex it becomes."
What did ADW accomplish?
Ace Hardware created centralized data management infrastructure in an organized decentralized organization
History
1958
1970s
1980
1990s
Hans-Peter Luhn is
the pioneer of BI.
Software packages become available.
Spreadsheet software
like Excel and Lotus 1-2-3
become available.
Howard Dresner coins
the term Business Intelligence.
IBM Watson
Brittany Slater
Adrienne Newton
Amanda Meacham
Christopher Davis
Daniel Moser
Full transcript