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'Press enter for business intelligence'
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Dec 12, 2002
It’s the latest jargon being thrown around the
market place by software solution vendors but jargon aside business
intelligence (BI) tools are increasingly being leveraged by companies across a
vast spectrum of industries to respond to customers more effectively. Take
your pick beginning with paints companies, the line up stretches to cellular
operations pharma companies, banks and designer retail stores.
First the definition : BI
refers to an umbrella term for a set of software tools and applications that
allow enterprises to gather, organize, distribute and act on critical business
information. It attempts to eliminate guessing and ignorance in enterprise by
leveraging existing mountains of data that companies collect in a variety of day
to day corporate applications. For instance, an FMCG company would use BI to
find out what its top selling products are, who its most loyal customers are,
the efficiency of promotion campaigns and how this is reflected in sales.
In India the BI application
market is projected to generate $ 10.7 m in revenues by the end of 02 and $30.4m
in 05, according to a Frost & Sullivan study on the segment. However the market
here is still at a nascent stage ,despite the growth projections. India is still
in the adoption phase of enterprise application such as enterprise resource
planning (ERP) and supply chain management (SCM).
BI which is a much more mature application is likely to be deployed once the
primary applications are in place says Alok Shende, manager technology practice,
Frost & Sullivan India . most companies in India are still unfamiliar with the
product and its utility. As a result even where BI applications have been used
it has taken place in modules. there is hardly any full scale implementation in
place. Companies either implement the data warehousing module or the knowledge
management module or the business performance module but never three together
explain Shande.
Industry
sectors which have taken the module approach include chemicals, automotive
banking and financial telecom and FMCG – all with a very strong customer
orientation.
The domestic
cellular market offers one of the best instances of how BI applications have
helped companies respond faster to customers. Early this year, Delhi based GSM
operator Airtel decided to launch a regional roaming service for pre-paid
subscribers, when statistics thrown up by its data warehousing tool showed that
a number of pre-paid subscribers in Delhi were not locals but visitors who
subscribed to Airtel back in their hometowns. Unlike a lot of other companies,
Airtel latched on to BI quite early - it implemented a churn management tool
developed by SAS Institute as early back as '99.
The churn management solution enabled Airtel to identify dropped calls and wrong
tariff plans as one of the key reasons for churn in Delhi. The company brought
down the churn rate from 3% to little over 2% subsequently, Says Mohit Deora,
chief marketing officer, Airtel (Delhi), " An example of how the solution helps
is with respect to tariff plans best suited to specific customers and
rationalise their billing cycles."
For a cellular company,
customer retention costs are at least five times cheaper than new acquisitions.
A fact that is making more operators move towards BI - BPL Mobile and Hutchison,
faced with competition from recent entrant Airtel in the Mumbai market, was able
to go to market faster with new products using BI tools like data warehousing.
Moving to the other end of the spectrum, on the eve of the re-launch of All
Scapes, a premium acrylic emulsion, paints major Goodlass Nerolac found that it
could manage inventories on its 11,000 strong dealer network better if it
introduced only 38 ready-to-use shades. An analysis of customer buying patterns
showed that sales would improve significantly if the company made only the base
(white) and allowed customers to match shades at dealer counters.
For standard Chartered Bank, BI has proved to be a critical application for its
retail business. Says Sedjwick Joseph, business intelligence unit, SCB India, "
India and Hong Kong have done extremely well in terms of BI implementation
within the SCB group. In terms of specific examples, the Sapnay and Diva credit
card we launched here were direct outcomes of BI. " on analysing customer
centric data, the bank found that the market had a large middle class base in
the non-managerial cadre, which could become credit card users. "It's just that
this segment of the market shops at different places and therefore the features
of the Sapnay card are also different from the regular card we offer," says
Joseph.
Sapnay card users now generate 10% of the bank's credit card revenues, while
Diva, which is targeted at working women and housewives, accounts for 2%. 'Diva
is a new launch. We knew that this segment existed, but did not the have the
factual data in place to go to market with a product. Going ahead, we expect to
net in 15-20% of the credit card population with Diva," he says.
Similarly, Delhi-based design and lifestyle retail chain Ravisant, has
implemented a customer relationship management solution, which essentially
enables it to identify key, highly profitable customers, fast moving products at
each of its outlets in Delhi, Mumbai and London, inventory levels at these
outlets and come out with informed marketing campaigns which translate into
higher returns on investment. The Chief vendors of BI solutions in India include
SAS Institute and Computer Associates. Of the two, SAS has made faster inroads
into the market and is currently the market leader, says Frost & Sullivan.
According to Philip Beniac, vice president, SAS Asia Pacific, "The banking and
financial, including insurance, telecom, pharma and retail sectors have
contributed significantly to the overall SAS revenues in the APAC market and we
see this trend continuing in India and China."
However, despite the advantages BI has to offer, return on investment from IT
initiatives has always been a contentious issue with Indian enterprises, Says
Frost & Sullivan's Shende, " BI solutions offer companies with medium to long
term solutions. A few applications such as churn management yield short term,
tangible results. " The firm predicts that most of investment in BI applications
will take place in the '02-'04 period and will be fuelled largely by large and
medium sized enterprise, including multinationals.
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