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April 14, 2009

Using Heat Maps to Improve Sales--an Example of Business Intelligence in Action

BI: A problem looking for a solution or a solution looking for a problem?

Someone said that heat maps are the candy of business intelligence: taken with pointed moderation, heat maps are great for you, but abuse them and they'll produce unwanted fat in your budget and time. What do I mean? Let's see if you can answer this question: what is the main reason why business intelligence projects fail? If you've said "technical problems," you're stone-cold. If you've said "for lack of a meaningful business-intelligence strategy," you've hit the bull's-eye.

According to analyst firm Gartner, only five to ten percent of firms deploying business intelligence (BI) have a clear strategy for implementing their new resource. And guess what? These are the companies for which BI makes a tangible difference--yes, I'm talking ROI, as cliche' as that sounds. In other words, these companies begin with outlining the direction in which they want to go, then select the appropriate tool to take them there. And in most cases, they reach their destination. For the others, instead, BI is--at best--a tool looking for a problem to fix.

Let's use a practical example of how a common business situation can benefit from finding the right BI tool--in this case, heat maps.

Heat Maps and Sales--An Example
You are the VP of sales. Your goal: to aggressively increase your outside salesforce's effectiveness. Your resources: your existing salesforce, say, 100 strong, and a few tens of thousands of dollars in budget.
You break down your tactics into three major pieces.

First, seeing the effectiveness of your current salesforce: who's performing well and who isn't. Secondly, identifying the reasons behind well- and poor-performing salesmen. And thirdly, taking corrective action to maximize the effectiveness of your resources, and testing the results.

The first thing you need is hit your data, and find a way to ask it the right questions.

Your data is in an old-fashioned table. The rows represent the individual salesmen, or their territories. The columns show you different things--from orders taken year to date (YTD) in units and dollars, to numbers of visits, to percentage achieved of sales-goal, to percentage achieved in each product line. How do you make immediate tactical sense of all this? This is when business intelligence--and meaningful business intelligence tools like heat maps--will come in handy. See? Problem first, tool later.

I Know What a Heat Map Looks Like; What exactly Is It?
There are many different ways to define heat maps. I like mine. A heat map is a visualization tool that displays data from a table through cell-size and color in a way that a) makes immediate sense and b) helps you quickly answer your "why" questions. "Immediate" and "quickly" being the operative words.

Each cell of a heat map represents a row of data in the table; cell-size and color represent two columns--whichever you want them to be. A color slider under the heat map allows you to spot outliers on either end of the values of the column associated with color.

And unlike a traditional graph, heat maps are optimal to display multiple rows of data--up to hundreds of rows--which would result in a visual mess on a traditional table.

Using our scenario as an example, you now have 100 cells on your heat map--your 100 rows in the table, or your 100 salesmen. You choose to assign cell size to (say) YTD sales in dollars, and cell color to number of orders taken.

Also unlike a traditional graph, a heat map will automatically sort things for you--by cell size. So you'll immediately see that Johnson's big cell is at the top-left of the map, telling you that he's got the highest YTD sales in dollars, while poor old small Flaherty's on the bottom right has the fewest. Cell color, though, tells you that Johnson has taken fewer orders than Flaherty--all this without you doing nothing but staring at a colored gizmo for a few seconds. And now, if you move your slider left, you see that Joyce has taken the least amount of orders, while Hernandez has taken the highest.

So, you're now convinced that a heat map can give you a useful way to implement your sales strategy--time to spend the budget on BI and roll forward.

Using the Heat Map to Drive Your Sales
Let's think back to the three tactical pieces that the heat map will help you fulfill.

First: seeing the effectiveness of your current sales. As a sales manager, you know that YTD revenue is not necessarily directly proportional to effectiveness. A more useful yardstick would be to compare the individual salesman's YTD sales quota percentage achieved to the number of sales visits: if you can spot a positive relation between them, you can easily identify the outliers as the problem situations that need the most immediate fixing. And a heat map is the perfect tool to do this quickly.

Assign the "sales quota % achieved" column to cell size, and the "number of sales visits" column to cell color. Immediately, the map will tell you if there's a (generally) positive correlation between the two values. If the color tends to go to one hue as the cells get bigger and to the other as they get smaller, you have got your answer. Yes, the relation is positive: the more visits, the higher the percentage of the sales goal each salesman achieves. In this case, spotting areas of inefficiency is as easy as moving your color slider to the left: see which salesmen have paid the least amount of visits, and urge them to make more calls.

If the relation is not positive, spotting outliers will also tell you about potential problem areas. Move your slider to the right, and see which salesman, in spite of a high number of visits, has underachieved. Time to retrain? To realign the customer-base? To revisit the sales targets? Regardless, the heat map has alerted you of the situation.

Second: identifying the reasons behind your sales performance. Let's say that the relation between visits and YTD goal met is positive. You already know one potential reason for the performance of your salesmen--frequency of visits. To confirm this, quickly see if there's also a direct relation between visits and orders taken, which is as simple as assigning a new column (number of orders taken) to either color or cell size.
But how do you explain the outliers? Play around with your heat map. For instance, have you asked yourself if the product mix is right for all territories? To assess this, simply reassign your heat-map cell size to percentage achieved in each product line. This will tell you more pointedly if there are some product lines that are impervious to more visits, suggesting that there may be an opportunity to optimize the mix for that territory.

A handy feature along these lines would be drill-down (especially in a Web-based heat map). If you could drill down on each individual cell to see--for instance--what YTD goal each salesman has achieved in each individual line, you would be giving yourself a lot of flexibility and would be able to obtain even more answers quickly from your heat map.

Third: taking corrective action and testing the results. Depending on the answers you obtained in steps 1 and 2, you now have a strong grasp of your current situation as well as the possible reasons behind them. You can now start outlining some tactics for improving the situation--starting, for instance, with urging salesmen to pay more visits to their clients or to readjust the product mix for certain territories or regions.

The usefulness of a heat map--with its giving you an immediate (but accurate) snapshot of a situation--is even higher as you test your new solutions. After a week, for instance, you can already see if there's a positive correlation between the increased number of visits by your underperforming salesmen and a higher number of orders.
All this analysis and testing can be performed in minutes, while without the heat map, it would take days if not weeks.

Conclusion
As long as you ensure that you have a clear strategy, and that you break down this strategy into manageable tactical steps, modern interactive business intelligence tools like Web-based heat maps are invaluable. In the hands of an intelligent and creative manager, a heat map is nothing less than an oracle that will reveal--in an intuitive way--the situation, the possible causes behind it and likely ways to overcome your problems and propel your company towards more revenue.

Posted by Hound of the BI-skervilles at 1:45 PM | Comments (7)

April 7, 2009

Ten Questions to Ask Your BI Vendor Before You Buy

Choosing the right business intelligence (BI) and reporting solution for an entire organization is usually a challenging and difficult process. There are many variables to consider, especially in larger organizations; so, making this decision a successful one is particularly difficult.

Due to the dynamic landscape of the software industry, the BI vendor and the products you and your colleagues evaluate today might look considerably different when your BI project is actually completed. Unfortunately, this makes planning for and considering the costs associated with licensing, labor, hardware, training and execution very frustrating to managers like you.

As your organization narrows down its choice of BI and reporting tools, here ten questions that most BI vendors don't want you to ask. The answers to these questions should give you a clearer sense of the capacity of a company's product and the depth of the company's commitment to BI and reporting. They should also help you better gauge the company's ability to deliver the product and service you need to be successful. Depending on the answers, you should emerge from discussions with the BI vendor with increased confidence or some significant reservations.

1. Is Your BI and Reporting Platform Unified?
Many companies offer a portfolio of BI and reporting tools that can complement one another in your implementation. For example, you might start with a managed reporting solution where report developers build and deliver corporate reports for the organization, and then, later, add an ad hoc reporting solution for any end users in the organization to get self-service reports. However, how the portfolio of products was built, assembled or purchased--for example, due to a series of company mergers and acquisitions--can have serious and sometimes debilitating
impacts on your BI and reporting implementation.

If a company's BI and reporting platform is truly unified, all their BI products are designed and built to share key attributes like security, look-and-feel, installation approach, and report processing. This makes adding future features and products a relatively easy and seamless exercise. For example, if the same user interface, the same product terminology, and a similar logic to the report building process are used, the learning curve for each new product is reduced, the developer's expertise with the tools is increased, and new features and products you add can be live in no time.

A truly unified environment will also automatically connect and consolidate processing elements to support more efficient execution.

In contrast, a series of non-integrated products--even though they carry the same vendor label--can present integration problems for users, in effect transferring some of the cost of product acquisition onto the users. You may waste valuable time and IT resources tweaking these products and features so they can all work together.

Bottom line - A truly unified platform offers clear advantages in training, maintenance, integration and time-to-market for new BI application and report development implementations.

2. Do You Have User-based or Server-based Pricing?
Most BI and reporting companies structure their licensing agreements to include a price for the initial software purchase. They also usually include a limited set of user licenses in the initial package allowing five, twenty or even thirty users to take advantage of the software.

However, once your implementation exceeds that number, you will have to pay for each additional user seat separately. There also may be additional cost considerations like 'cost per transaction' or cost based on data size.
The catch is that the more successful your BI and reporting implementation is, the more it can cost you. This approach hinders the success of "BI for the masses" where managers at every level of an organization can access critical information to improve operational and financial performance.

The benefits of server-based pricing (for example, per processor) with unlimited users are themselves unlimited. With this pricing model, you save the organization significant dollars, increase BI availability across the organization as well as reduce IT complexity for maintaining and keeping track of user licenses.

If you are able to negotiate a zero-cost option for user seats, you can afford to extend the benefits of BI and reporting to users organization-wide and exponentially increase business performance.

Bottom line - Be sure to check all costs, especially the "cost per user" provision in your contract proposal. If you do not, you risk limiting your BI products to a small set of users in your organization or incurring unplanned costs for additional users.

For more on this topic, please read my blog post on BI licensing or this LogiXML white paper on licensing models in business intelligence.

3. Are Your BI Products Data-source Neutral?
Data-source neutrality has haunted the software industry for a very long time, specifically in the business application, programming tool and BI and reporting sectors. Data-source neutrality means a) ability to support different databases and b) ability to support other data sources such as flat files, Web services, the Cloud, RSS feeds, etc. Let's touch on them separately.

In some cases, tight integration with a pure processing database management system (DBMS), rather than the BI or reporting application, can have real benefits in speed and processing power. However, that extra speed or efficiency may not offer needed flexibility.

To the user, the differences in how data is accessed may seem to be of little consequence as long as it is delivered within the report, dashboard or query they want to use. However, limiting the ability to access data is, on a fundamental level, counter to sound BI and reporting principles.

All of the apparent advantages of tight integration with a particular DBMS can be eliminated by a single management decision to select a different DBMS, for example, due to an unanticipated technology change or an unforeseen
merger/acquisition that dictates the switch to a different underlying database. In addition, new processing capabilities that support integration of unstructured data could be compromised by tight integration with a particular DBMS server platform.

Also, a Web-based BI application should be able to support more than just different databases. It should also be able to connect to the more nontraditional data sources that are springing up practically every quarter--from RSS feeds to Salesforce.com, from the Cloud to Web services, etc. And let's not forget flat files (e.g. Excel, XML, Word, etc.), which are not going to disappear any time soon.

Is my new application going to support new data sources coming up next year? It is engineered to be flexible enough in this regard, or am I going to need complex and expensive data-integration tools in case I wanted to take advantage of a new data technology?

Bottom line - Insist on data-source neutrality as the best insurance for long-term viability of your BI applications and reports.

4. What Are the Hidden Costs?
A critical buyer should always evaluate the price of a software product versus the cost of a product implementation. The list price of a product is certainly a key consideration, and, in the case of BI and reporting projects, the cost of product maintenance, product upgrades and additional users must also be carefully
evaluated.

However, the cost of consulting services can be particularly onerous in BI and reporting implementations. This is because the impact of the project is very closely related to the business performance of the organization.

It also involves manipulating the precious data resources of the company. If the product isn't easy to integrate, set up and use, you will have to spend a fortune on professional services and training to get your product implemented. In addition, a small measure of "insurance" in the form of a professional services engagement to establish a "proof of concept" can lead to the vendor taking de facto control of the project.

The danger in this scenario is that you may end up spending much more time and money on consulting services than even on licensing costs.

A product that is easy to integrate, set up, upgrade and use will save you much more time and money in the long run.

Bottom line - Take the time before you buy to evaluate the real cost of professional services including what the company is charging to configure, customize and integrate your BI implementation so there are no surprises when it is time to sign the contract.

5. What Is the Vendor's Real Business Focus?
Your company has a clear objective for its internal performance, and chances are good that you are doing your best to find a BI and reporting solution that will help you advance toward that goal. Similarly, every BI software vendor has an internal objective. Do you know what that objective is?

While every business has a right to its own priorities, a potential user has a vested interest in knowing what those priorities are so they can evaluate the impact of their product and vendor choice for future project success. Full transparency of the vendor's actions, motives and plans will help guide your choice.

In some cases, a company's focus may be on constant BI product improvements, but, for others, BI products may simply be a "loss-leader" offering to generate revenue growth in related areas like professional services or database server licenses.

The catch is that your purchase of their software may help the vendor reach their short-term revenue objectives, but, because you are not in their strategic sweet spot, your company may not be a valued customer in the long term. In addition, if the vendor's overall emphasis is not on BI, you may not see significant BI product or feature set improvements over time.

Bottom line - Make sure you understand the business focus and know the longterm business objective of your vendor.

6. What Is Your Performance Trend?
Most likely your company is selecting software at a point in time where business objectives, budget allocation and staffing capacity all intersect to justify the investment. Just as these factors are leading your company in a manner that contributes to its ability to execute the BI program, it is in your best interest to review a vendor's performance trend to assess their ability to continue product innovation, offer long-term product support and to grow and demonstrate leadership as a company.

One means of evaluating a company's performance trend is to evaluate where they were 60 months ago, 36 months ago and 6 months ago so that you can project future trends. A company that shows significant revenue growth but limited software license growth may be repositioning themselves as a professional services provider rather than an innovative software product developer. In contrast, a company that
shows strong software license revenue and a high rate of new product introductions more than likely will continue down the same path. Also, verify the company's trend in product innovation and improvements such as determining how often new versions are released, what types of features are added, whether the product is getting better, and so on.

You need to decide which trend works for you and evaluate several factors that may affect your plan. For example, can you count on this company to continually innovate? Will this company support you long into the future? Has this company reached its peak, or is it on a strong growth path?

Bottom line - Every product choice is a company choice as well. As you invest in a partner organization, consider that the organization's past is a prelude to the future.

7. Can I Try Your Software With My Own Data?
To a great extent your BI and reporting product purchase is a "blind buy" in which you are taking a leap of faith. You can read independent reviews of a product, poll colleagues and friends in the industry or hire a third party consultant to make a recommendation. However, until you actually experience how the product works for you, in your IT environment, with your data and integrated with your company's particular way of doing business, you cannot know for certain that it is the right product for you.

All of us want to put our best foot forward when showing off our company or our products. Most BI software vendors are eager to do the same, developing elaborate demonstration databases to help showcase their BI products. These are valuable tools for gaining an appreciation of new features and product capabilities and can help you evaluate the company's vision and commitment to the product.

However, in the end, you are going to be developing reports for and analyzing your own data. Many features that are optimized in the demonstration database may be difficult or impossible to run in your own environment without significant modification. Your own familiar data--not just demo data--will show you the real value of the systems and clearly highlight any limitations.

Some companies will offer limited demo versions of products, which may help you evaluate some features. These demo versions do not provide enough of a developer or user experience to project how the completed BI or reporting application will work or look to the users.

You may insist on a paid demonstration consulting engagement in which the vendor's technical team will install the product and assist in developing a working project that indeed shows the strengths and weaknesses of the product. The catch is that by the time you have anything to show for your development efforts you have already expended too much time and money to reverse your decision.

Bottom line - Demand a free working product to "prove the business case" before writing the check for a business-critical project.

8. Can I Talk to References Listed on Your Web Site?
Software companies are always eager to tell prospects that large, established, dynamic or innovative companies are using their software products. A quick review of their Web sites will usually showcase a series of these clients. It is well worth your while to ask to actually speak with a sampling of these customers to make sure their experience meets your expectation of the product's capabilities and the organization's level of support.

Bottom line - Be wary if the vendor cannot or will not give you the requested contact information. In such a case, you have to ask "why?"

9. Do You Offer and Support User Communities?
In the Web era, the overall experience of a product can extend well beyond the direct relationship between customer and vendor. Today, BI and reporting tools are in many ways living entities, constantly being experimented with, extended, refined and tweaked by a community of users. In the past, the route for the improvements that this dynamic process yielded was very narrow, and the process was very slow.

Users told the company what they thought about improvements, and software companies made the improvement in their next release.

Today, the process of improvement, extension and collaboration of the product is dynamic, immediate and democratic. If your vendor supports their community of users via a site for contributing ideas, code, sample reports, and documentation you will be able to tap into a technical networking community that can offer your company a potentially unlimited source for BI and reporting creativity.

Bottom line - Find out how the company supports its users. A company that supports a user community adds considerable value to your investment.

10. Is Your Product Line Purely Web-based?
The impact of the Web has changed the world of BI and reporting. A Web-based approach is very fitting for BI and reporting products, offering an optimal medium to present, interact with and share data. The many benefits of BI and reporting products that take advantage of the Web are obvious, and some are more subtle. A pure Web-based BI product is not only free of the inherent limitations of client/server-based architecture, it is adaptable to the innovations that the Web continues to present in terms of output devices, information sharing technologies and deployment options.

How well a product takes advantage of the capabilities of the Web is completely dependent on how it is architected. Many products can make a case for being Web-enabled and, with some tinkering, can present a serviceable Web interface.

The catch is that Web-enabled platforms might give you a short-term fix that responds to immediate user demand to view reports via the Web at the expense of a long term cure that will allow unrestricted Web-based delivery of your reporting applications far into the future. And, this short-term fix may still approach a report as a static printable, paper-based page with limited interactivity or Web features.

Only a pure Web-based approach can take full advantage of the interactive and dynamic features now being implemented on the Web. This approach should just require a standard browser that works on any platform to view and interact with reports. A product that uses AJAX and other standard pure Web technologies can make reports as interactive as a Web page can be.

Bottom line - If your organization is committed to a Web-based future, make sure your vendor is offering a pure Web-based product.

Posted by Hound of the BI-skervilles at 11:45 AM | Comments (4)

April 3, 2009

The Magic of BI Wizards in Report Development

It's 4:00 on Friday afternoon. You are a report developer. Your project manager comes to you and asks for a last-minute "must-have" report to show in yet one more dimension what the sales status, revenue and costs are by sales territory.

Yes, you know you've already given this report to them in a thousand different ways--but let management be management. Darn. Happy hour is coming up--not just any happy hour, but one in which your best friend is bringing you an promising-sounding blind date. And here you are, now at 4:10 PM, tasked with preparing a report that shows columns so-and-so, has such-and-such pie charts and even an export button to PDF.

The Wizard to the Rescue
Last year, the same situation would have made you (actually, come think of it, did make you) hopping mad. With your antiquated BI solution, you had to hard-code the report, working through the week-end to deliver it to the bigwigs.

This year, however, you have a dynamic, Web-based BI solution that features a wizard-driven development environment. You make a quick note of the requirements from management, and you proceed to create your report.

The elements--such as data layers, report columns, group filters, export action and charts--are pre-built. So all you have to do is launch the wizard, and the rest happens practically at clicking speed. With hopeful visions of your new blind date in mind, you set out to create the report in 45 minutes so you can be out the door by 5.

1 - You create, name and save the new application--which is as simple as right-mouse-clicking on an existing report from your development files, and selecting "new application" and save it with a new name.

2 - You launch the report-creation wizard, which asks you which type of report you want (in this case an SQL-type data table) and which set of objects in your database you want to link to. Click, click. Done.

3 - Within the set of objects, you specify which columns you want visible. Here, you look at your hand-written notes with one eye and with the other follow the mouse as it clicks and drags the columns into the wizard. Double-check--done.

4 - Finish. The wizard has given you your basic report, which you preview in your browser. All A-OK.

6 - You add a PDF export button, with a pre-built PDF export action. All this takes you a whole of a minute, including testing.

7 - Ditto for the group filter and the pie charts. Test. Save. Done.

You now have spent 20 minutes to create and test the report, and you draw a breath. You have still a good 20-minutes before you are out the door. Hmmm... let's give them a little added value and look like a hero...

Your CSS-whiz colleague has created a swanky stylesheet that you can apply to all reports. The development environment lets you simply "apply" a pre-created style to any report, which is what you do in a few clicks.

One last save and preview--all works.

You have therefore created a full report complete with PDF export and visualization tools in less than an hour, with five minutes to spare. You email the URL to the report to the project manager, get your coat, give yourself a quick look in the office-hallway mirror and head to happy hour.

Posted by Hound of the BI-skervilles at 7:45 AM | Comments (0)