Business Intelligence for Process Industries: Actionable Insights for Business Decision Makers

Business Intelligence
for Process Industries:
Actionable Insights for Business Decision Makers

by Don Tapscott

Brought to you by Business Objects (an SAP company), SAP and Intel.

Business Intelligence for Process Industries: 1

Executive Summary axes: (1) simplicity and relevance, (2) agility and (3)
integration.
FIRMS IN PROCESS INDUSTRIES have made significant
investments in information technology to increase the First, new user-friendly interfaces and approaches to
efficiency of their operations and supply chains. One side business intelligence provide easier access to relevant data
effect of these investments has been the creation of vast and empower more decision makers. Second, new
stores of valuable data. But most firms are overlooking or technology advances such as in-memory BI are providing
underutilizing this potential goldmine: they’re missing new levels of performance and helping users gain real-
opportunities to analyze and redeploy their data to drive time insights into their data. Finally, in a world where the
the next stage of innovation and competitive advantage. logistics of a distributed, global supply chain have created
To take full advantage of this data, firms need a new new opportunities to tighten up alignment between supply
generation of business intelligence (BI) tools and and demand, BI needs to be integrated into business
applications to integrate cross-enterprise, inter-enterprise processes and be more widely distributed. All of these
and externally available information with processes to systems must rest on a solid data foundation with aligned
achieve insight, transparency and competitive advantage. master data: only then is that data trustworthy, and only
Enterprises that effectively harness the vast quantities of then can decision makers be confident that they have a
information that IT systems generate⎯both within the single version of the truth.
corporation and outside its walls⎯are poised to gain
competitive advantage. 2.0 Simplicity and Relevance

1.0 Value Proposition Effective business intelligence is simple and relevant:
simple so that a large number of users have access to the
information through an interactive, user-friendly interface
Firms in process industries such as oil and gas, chemicals,
(regardless of the type or source of information), and
pulp and paper, or mining today face multiplying business
relevant so that users can deploy the information to
challenges driven by phenomena such as globalization,
address immediate issues and support business decisions.
unpredictable input costs, fluctuating exchange rates and
geopolitical instability. In this rapidly changing
environment, companies can’t afford to be satisfied with
2.1 Simplicity
traditional business intelligence systems that merely report In the past, BI implementations were often driven by
on “what happened.” BI systems need to answer more sophisticated “power users” in the IT department who
timely questions: “what is happening now?” and “what created reports on behalf of business decision makers.
will happen in the future?” Accurate answers to these These power users were technologically sophisticated and
questions for all stakeholders, both inside and outside the were accustomed to working with complex data systems.
organization, will drive superior performance and Their efforts, in conjunction with first generation business
competitive advantage in the future. intelligence tools, brought real advantage to their firms.
In addition, today’s business imperatives mean that BI But this approach also introduced new challenges.
has to go beyond its traditional role of helping to control First, the few power users were rapidly overwhelmed by
and cut costs. BI data is now the basis for new growth demand for their services. As organizations became more
strategies. This is true even in the process sector⎯think, data-driven and users began to see the value of their
for example, of global industrial leader Rohm and Haas. business intelligence systems, they began to clamor for
Mike Masciandaro, business intelligence director, agreed various new reports they required. This increased demand
that “our main imperative is growing profitably. Of for reporting combined with complex tools created
course, controlling costs is not off the table, but it’s too untenably long wait times for BI-driven information.
much of a short-term proposition. Eventually, you’ll run
Secondly, the power users creating the reports often
out of ways of cutting, unless you also grow the top line.”1
misunderstood or didn’t know the context of the requests
In this paper we discuss how technological advances are they received and often made inaccurate assumptions
enabling improved decision making across three broad about the needs of the business decision makers. As a

© 2008 New Paradigm Learning Corporation


result, internal clients were unhappy with BI’s
inappropriate solutions and producers of reports felt Breakout Case Study: Rohm and Haas
overworked and underappreciated. Rohm and Haas is a leading global specialty materials
company that operates in industries as diverse as
The solution to the problem is to democratize BI: create construction, electronics, food, industrial process and
easy-to-use visual and interactive tools that the average personal care. The company does business in North
business decision maker can use themselves without IT America, Latin America, Europe and Asia-Pacific, and has
support. We live in a world where literally billions of more than a hundred manufacturing, technical research and
users interact on a regular basis with the simplified customer service sites in 27 countries, over 16,500 highly
interfaces of Google and other search systems. These qualified employees, and annual sales of $8.2 billion in 2006.
systems work because they present information in a visual Rohm and Haas competes through outstanding innovation in
way and make the interface as simple and accessible as science, business and services, and their business
possible, so that any user can ask questions and get the intelligence systems are a key component of the data-driven
desired, context-sensitive answers. Business intelligence decision making that backstops their innovation efforts.2
systems are building similar easy-to-use visual and Good business intelligence is essential for Rohm and
interactive tools so that all users can create their own Haas. The company buys more than two million tons of raw
materials and 23 million BTUs of natural gas each year in an
reports.
environment of rapidly changing prices and exchange rates.
One simple to use, next generation tool is Polestar, Many decisions are made on the spot with no time to
available from Business Objects, an SAP company. schedule a meeting or engage in “duelling spreadsheets.”3
Whereas new reporting solutions once were only suitable Despite this difficult economic environment, the company
for technically-savvy software developers, Polestar has maintained and even grown profit by utilizing their BI
program to drive decision making. One senior executive
enables business users to explore data without prior
stated that the BI program gave the company “confidence”—
knowledge of data structures or content. Polestar brings
not just in the data’s accuracy, reliability and timeliness, but
together the simplicity and speed of search capabilities also in the data’s usefulness for making important decisions
with the trust and analytical power of BI tools, giving and getting consensus that wasn’t possible before.
immediate answers to business questions. Users employ In addition to its day-to-day success, Rohm and Haas’ BI
familiar keyword searches to find information hidden in program offers them another important advantage. In the
data sources, and then navigate and explore directly on industries where the company competes, mergers and
data—no existing reports and metrics are necessary. By acquisitions are a fact of life and Rohm and Haas is a player.
increasing self-service BI and maintaining IT control, this For many firms, one of the downsides of growth through
technology empowers business users to create their acquisition has been integrating business and IT. Rohm and
content thereby reducing IT report creation backlog. It Haas exercises a “1 company, 1 measure” discipline that
applies to existing units and newly integrated acquisitions.
reuses existing security, metadata, and other services from
No matter the business, the company makes investment
Business Objects Enterprise, meaning it’s easy to
decisions based upon the same criteria, with the additional
administer and quick to deploy, often in a matter of days, benefit that employees can move from unit to unit and still
thereby abbreviating time to market and expediting have a common “language.”
decision making. Despite the success of their traditional BI deployment, the
company is not resting on its laurels. Masciandaro is a BI
2.2 Relevance visionary, and grasps the need to consider “both our
structured reporting and analytics, as well as our Enterprise
In addition to the improved insight and effectiveness that Content Management, which embodies the unstructured
better tools deliver, many software vendors are using data, including documents and emails all the way through
industry-savvy BI experts to create templates specifically informal pieces of competitive intelligence. We need to
focused on solving an industry’s business challenges. merge it all together for true business advantage.”4
These templates include pre-defined data models, queries
and metrics that incorporate industry best practices. outcomes. Although the relative importance of these
In process industries, for instance, virtually all firms are inputs may vary by firm, there is no doubt that all firms
interested in how variations in energy prices, input costs, will be affected and pre-defined templates can shorten the
exchange rates and shipping rates will affect business decision making cycle. The amount of data available in BI



systems both inside and outside the firm today is unpredictable, and yet so little of that price volatility can
staggering and it is easy to be overwhelmed by the be passed along to their customers? One answer is to use
challenge of synthesizing the data to drive advantage. data to make rapid decisions and stay one step ahead of
What matters most is not the quantity of data, but its the competition. Unfortunately, the large and growing
relevance. quantity of electronic data can slow traditional BI systems
to a crawl.
One way to increase the relevance of data is by utilizing
“best practice” templates to help bridge the gap between Traditional reporting solutions rely on a painstaking
IT professionals and the business units they serve. These two-step process: first, model the end-user requirements;
templates include pre-defined data models, queries and second, optimize the system to meet those requirements.
metrics while incorporating industry best practices into the This method was once dependable but it can also be
implementation process, which not only saves time, but inflexible and result in deteriorating performance when
also helps the BI initiative deliver on business needs. business needs divert from the original assumptions. New
technologies such as “in-memory” BI help solve this
Business Objects customers that exploit the power of
problem; with more (and more affordable) memory now
user focused tools can also access “business blueprint”
available, today’s BI solutions can process reports on the
templates. These data models and templates solutions
fly by loading data sets into memory, and eliminate some
include a bundle of technology and industry knowledge
of the old bottlenecks.
that leverages SAP’s and Business Object’s substantial
business knowledge, which was developed over many SAPPI’s recent implementation of in-memory
years while delivering software solutions to the world’s technology was a huge success. SAPPI is a global pulp
largest companies. By leveraging these “packaged” and paper company with 16,000 employees that does
industry best practices, customers increase the likelihood business in more than a hundred countries around the
of a successful BI deployment. At the same time, they world. The company is a leading producer of coated fine
shorten development cycles and lower costs. The business paper and chemical cellulose and follows an innovation
blueprint templates can act as a foundational solution that strategy. Understanding their customers’ business models
individual organizations can extend to meet their specific and challenges are key to innovative responses and
requirements. Specific components of business blueprint success in the marketplace.
templates include: pre-defined “extractors,” large
Didier Magnien is a BI director with SAPPI:
quantities of pre-defined data models, master data objects,
authorization roles, query views and reports⎯all of which “We implemented in-memory BI because we did have
are delivered in the software. some issues with the response time of our previous
system. It was a huge success. We had significant
The simplicity of business user oriented tools like improvements on all of our queries, ranging from two
Polestar and the enhanced relevance enabled by bundles times faster in the smallest improvement to seven to ten
such as business blueprint templates are enabling solutions times faster on average, and in some extreme cases
for competitive advantage. The ease of use and enhanced over three hundred times faster. We were somewhat
relevance of these solutions build on the capabilities of skeptical but the implementation was smooth and the
existing BI systems, thus increasing their value to the system is stable. People now have access to multiple
organization. scenarios and can dive through daily, weekly, monthly
data, by region, etc. Senior managers even use it at live
3.0 Agility meetings instead of paper reports to review different
situations. It makes a big difference not just to the way
The recent global economic environment makes it clear we access data, but how we run the company.”5
why process industries must be agile. In the Rohm and Another major global firm that implemented in-memory
Haas example we saw how one firm uses over two million technology had an unusual problem. The performance
tons of raw materials and 23 million BTUs of natural gas improvements were so significant that they were worried
each year in an environment of rapidly changing prices that users would not believe the results. “We actually had
and exchange rates. How do companies grow revenue and to warn users about the upgrade, so they wouldn’t think
profits in a world where so many input prices are there was an error, as queries that used to take 10 to 15


minutes were now delivered under a minute. For the first tons of packaging steel yearly, serving over 400 customers
time in my career, we actually had a honeymoon phase in 80 countries. Says Denker:
with the business unit.”6
“We use BI extensively for planning purposes, and our
planning process is very tightly integrated with our
4.0 Integration sales team and financial profit analysis. Our division
decided to run one plant instead of two, so we have
Business intelligence is moving beyond the “end-of-line” been at near-capacity for over five years, but we
analysis and reporting function to an integrated system manage what products we produce when and for what
embedded within business processes. In the past, the profit margin extremely closely. We have an
reporting mechanisms that reached the end user came at optimization process that integrates the sales process
the final stage of a tedious “in series” approach to business and forecasts (tons), exchange rates, cost data (direct
intelligence. Data was processed, stored in the production and overhead), input from material groups and based
system, and then extracted into a data warehouse in a on all of these variables we build scenarios to
linear sequence. Only then was the information the end determine which orders are most profitable. So BI
users require ready for analysis and reporting. The new touches every aspect of the business and this tight
approach injects business intelligence “in parallel” with integration enables us to be successful.”
the business processes, providing business clients with As business intelligence is integrated with business
more timely access to better information about critical processes, companies can also revisit and refine existing
business processes. processes. After all, accurately documenting and
The ultimate benefit comes from a complete integration measuring an ineffective process does nothing to improve
of the information across systems and across departments. the business. Most effective business intelligence
Planning for day-to-day activities and significant events solutions will provide industry-specific resources, in the
such as new product launches can now be integrated form of expertise (e.g. consultants) or specific technical
across marketing, sales and other departments. The resources (e.g. templates, queries).
benefits of tighter integration include⎯to start⎯
consistent and accurate information and customer
messaging. Ultimately, it delivers substantial 5.0 The Payoff
improvements in revenue and profitability. The challenges that process industries face are
Business intelligence is not limited to senior managers; compounded in today’s volatile business environment.
smart companies are distributing business intelligence Trends such as globalization, changing input costs,
more broadly across their organizations. Every business complex supply chains and fluctuating exchange rates are
process requires a certain amount of insight and analytics, here to stay.
which should be delivered to the right individual at the To maintain competitive advantage, organizations must
right time. leverage internal and external information into an
ThyssenKrupp is one of the world’s largest accessible, usable medium and provide business
manufacturing and technology groups. The group’s intelligence to a wider array of employees. Business
190,000 employees worldwide are distributed around core intelligence solutions will continue to evolve as exciting
focus areas of steel, capital goods and services. The group new capabilities such as in-memory arrive and are adopted
reached sales of more than €51 billion in fiscal 2006/2007. broadly in the market.
Alongside product manufacturing, the company also Organizations that enable business intelligence solutions
provides system solutions and services in five segments: that are simple, relevant, agile and integrated have the
steel, stainless, technologies, elevator and services.7 potential to sustain competitive advantage in an ever-
Martin Denker is in charge of business intelligence for changing world. Simple and relevant BI tools can
Rasselstein, part of the ThyssenKrupp steel group. empower employees to make effective decisions faster. By
Rasselstein’s 2,400 employees turn out about 1.4 million integrating real-time decision making with mission-critical
business processes, smart businesses can set a path for
industry leadership.


Moving from legacy BI solutions to these next
generation solutions represents a giant step forward and
corporations will continue to face a choice: execute these
best practices or fall by the wayside. The leaders will see
empowered employees, rapid execution and adjustments
to plan, resulting in bottom-line growth.

I am grateful to Pierre-Luc Bisaillon and Paul Barter of the New Paradigm team for their help in researching this paper and I also
thank SAP and Intel for their financial support of this White Paper series. However, the views expressed are my own and my
company New Paradigm takes responsibility for the opinions expressed herein.
Don Tapscott, chairman and founder, New Paradigm

Don Tapscott, one of the world’s leading authorities on business strategy, is the founder and chairman of international think tank
New Paradigm. Established in 1993, New Paradigm produces ground-breaking research on the role of technology in innovation,
competitiveness and society. The company was acquired by BSG Alliance in November of 2007, and is expanding its syndicated
research programs globally. Currently four multi million dollar efforts—The Enterprise 2.0, Talent 2.0, Marketing 2.0 and
Government 2.0—investigate strategies for winning through next generation enterprises.
Tapscott is the author of 11 widely read books about information technology in business and society, including Paradigm Shift, The
Digital Economy, Growing Up Digital and The Naked Corporation. His most recent book, Wikinomics: How Mass Collaboration
Changes Everything is an international best seller in 20 languages. It was a finalist for the prestigious Financial Times/Goldman
Sachs Best Business Book award and has been chosen by many publications including The Economist as one of the best books of
the year. He is also adjunct professor of management at the Joseph L. Rotman School of Management, University of Toronto. His
clients include top executives of many of the world’s largest corporations, and government leaders from many countries. He holds a
master’s degree in Research Methodology and two Doctor of Laws (Hon).
www.newparadigm.com



Endnotes
1
Interview with Michael Masciandaro of Rohm and Haas, conducted
by Paul Barter and Pierre-Luc Bisaillon, New Paradigm, October 25,
2007.
2
Rohm and Haas corporate Web site, November 2007.
3
Rohm and Haas application to the Gartner BI Excellence Awards
2007.
4
Interview with Michael Masciandaro of Rohm and Haas, conducted
by Paul Barter and Pierre-Luc Bisaillon, New Paradigm, October 25,
2007.
5
Interview with Didier Magnien of SAPPI, conducted by Pierre-Luc
Bisaillon, New Paradigm, September 2007.
6
Interview with Phil Nikolai of Kimberly-Clark, conducted by Paul
Barter and Pierre-Luc Bisaillon, June 15, 2007.
7
ThyssenKrupp corporate Web site, November 2007.


A message from the sponsors…

Enabling Better Business Intelligence
More strategic IT through the intelligent use of information

Today’s competitive environment is fast and fierce, marked by complex supply networks and increased consumer power. In order to
succeed, companies in the process industry need to fully leverage the power of information to their advantage. No longer is it enough
to leave information access to a select few; every business person needs to be empowered to access, analyze and act on trusted
information, wherever and whenever needed, and in the context of the relevant business activities.
That is why leading companies worldwide rely on solutions from Business Objects and SAP to provide end-to-end solutions for better
business intelligence (BI). The business user is in the focal point, with an intuitive and system-agnostic solution set that delivers on
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With solutions from Business Objects and SAP, companies in the process industry get:
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for real-time BI embedded into business operations.
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capabilities, dramatically reduces the need to deal with multiple vendors. Due to inter-operability with any systems, applications
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• Faster realization of value from IT investments. Out-of-the box content and templates, across both SAP and non-SAP data
sources fosters accelerated deployments of BI solutions while significantly increasing the chance to “get it right” from the
beginning, as compared to pure custom-built approaches. And alternative delivery models (e.g. on-demand, appliances) provide
drastically reduced setup time and lower maintenance.
The result is that IT is better able to meet the information needs of business users thus becoming a strategic partner to the business.
To learn more about how solutions from SAP and Business Objects can help you empower your employees to make the best-informed
business decisions, visit www.sap.com/businessobjects.

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Business Intelligence for Process Industries: Actionable Insights for Business Decision Makers

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Business Intelligence for Process Industries: Actionable Insights for Business Decision Makers