Written by Glynn David
In a tightening economy, anything that can give retailers a competitive advantage is worth looking at. Business intelligence (BI) software is one tool that can help retailers gain an edge over their rivals. Yet many companies are unhappy with the solutions on offer, as Glynn Davis finds.
The situation of people scurrying around clocking up overtime in order to collate detailed information packs for their respective bosses ahead of their company\\'s imminent board meeting will be played out in many retail organisations.
While this positively shows that there are many dedicated employees in the industry it unfortunately also highlights the deficient reporting capabilities in
many retail businesses. Rather than having a number of people individually sourcing data from various IT systems, an efficient BI software tool should
enable one person to quickly and painlessly access all the data required for the company\\'s board.
But the reality is that few retailers are in this advantageous position and many are dissatisfied with the quality of their reporting. Research from Manthan Systems found that only 51 per cent of merchants surveyed were satisfied with the speed of reporting or response times of their current reporting solutions. Particularly worrying was that 45 per cent are also unhappy with the quality of the information they receive. This is a widespread problem and can usually be
put down to the fact data is now held in an ever-larger number of depositories as retailers have continued to grow their business activities.
Nigel Illingworth, product director at Retail Assist, says: "Ten years ago it was much simpler, with most retailers having just UK stores, but now they are operating in different countries and across different channels. They\\'ve simply bolted on franchising, the web, franchised stores, concessions, and some have gone into wholesaling with multiple currencies and prices. This is causing all sorts of problems as they do not have the necessary systems to cope with it."
The key to successful BI is to start with a flexible centralised data warehouse. Marcus Jones, BI lead at Avanade UK, says: "All data should be collected, managed and processed by a central system, rather than individual entities using their own sources of data, such as using potentially out-of-date information held in spreadsheets. With everything held in one place, the reports drawn from the system are accurate and reliable as they represent the whole business, rather than just one element."
The Manthan research also found that larger retailers were particularly dissatisfied with their BI solutions, with only 46 per cent regarding them as good for speed of processing and report time, and an underwhelming 57 per cent stating that they actually receive reports when required or gain quality information from them.
Illingworth suggests this is down to the greater likelihood that larger merchants have gone down the route of using best-of-breed solutions that are then interfaced together and this inevitably leads to a "struggle with the consistency of their data."
"Tier 2 retailers may be better placed from having a truly integrated IT infrastructure with only one database - with one file for products and one file for stock. With large retailers they merge products together and this involves multiple databases," he explains.
The solution to the problem is to either work on better defining and cleansing the data within the company, which should then dramatically improve the value of the BI within the business, or invest in a new BI software solution.
Tony Bryant, business development manager at K3, believes that when retailers examine their existing solutions they will be surprised to find that they are probably only using 50 per cent of the reporting capabilities. "Retailers should exploit the systems they have before spending hundreds of thousands on a complete overhaul," he suggests.
He recommends retailers look at the individual parts of their businesses and examine how effective their reporting is and what will likely be the business\\' needs in the future in order that it can remain competitive.
These needs are likely to require a BI software tool with a powerful \\'what if?\\' capability that allows forecast modeling to be undertaken. Jones agrees: "Retailers should move away from fixed reporting, to a system of \\'ad-hoc querying.\\' This allows businesses to request data as, and when, they need it, and in response to specific market conditions - such as economic fluctuations, heat waves, cold snaps, or sporting events."
This capability should also cut across the whole of the business in order that
the results of queries will show how the outcome is reflected in all parts of
the company. For many retailers different BI tools have historically been used within individual parts of their business such as buying and merchandising, and the finance division.
This was the case at Harvey Nichols until 18 months ago when it implemented a solution from Merret, which is powered by Board. This replaced three separate BI systems - for finance, general reporting, and buying and planning. Martin Schofield, retail operations director at Harvey Nichols, says: "Our existing reporting wasn\\'t cohesive or reliable and was produced by a myriad of different tools. Users weren\\'t confident in the accuracy or reliability of the data."
Illingworth says there have been many benefits of the new solution, including the cost of ownership being dramatically reduced since only a single tool now is
now in use. The new solution is also much easier to use, which has reduced learning times and enabled BI to come within the reach of a much wider group of people within the company.
"Systems must be very easy to use and require no deep programming so whereas the reporting (at Harvey Nichols) was only previously done by \\'super-users\\' they\\'ve now pushed it out to a wider community. Over the first 12 months of its use more than 2,000 different reports were used by non super-users. It has been a major success for the company," he says.
Schofield agrees: "We have new insights and improved reporting across key areas including daily sales, seasonal sales and stock, and budgeting. Today more than ever, we need to have the ability to make the right decisions quickly. Merret BI gives us this fantastic degree of visibility that has revolutionised how we work."
Illingworth suggests there is an increasing need for retailers to trade intelligently in this way while also spending less money, which is why he believes investment in BI should be high up the agenda for the many retailers that remain dissatisfied with their current reporting.
The combined potential of a significantly reduced cost of ownership and the massive improvements that better intelligence can bring to a company should be sufficiently strong justification for any retailer to at least lift the bonnet on their existing BI activities.