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Claudia Imhoff

Welcome to my blog.

This is another means for me to communicate, educate and participate within the Business Intelligence industry. It is a perfect forum for airing opinions, thoughts, vendor and client updates, problems and questions. To maximize the blog's value, it must be a participative venue. This means I will look forward to hearing from you often, since your input is vital to the blog's success. All I ask is that you treat me, the blog, and everyone who uses it with respect.

So...check it out every week to see what is new and exciting in our ever changing BI world.

About the author >

A thought leader, visionary, and practitioner, Claudia Imhoff, Ph.D., is an internationally recognized expert on analytics, business intelligence, and the architectures to support these initiatives. Dr. Imhoff has co-authored five books on these subjects and writes articles (totaling more than 150) for technical and business magazines.

She is also the Founder of the Boulder BI Brain Trust, a consortium of independent analysts and consultants (www.BBBT.us). You can follow them on Twitter at #BBBT

Editor's Note:
More articles and resources are available in Claudia's BeyeNETWORK Expert Channel. Be sure to visit today!

September 2005 Archives

According to an article written by John Hazzard, 45% of US IT Executives who responded to an August survey said their companies would not be ready by July 2006 to meet the message retention requirements mandated by Sarbanes-Oxley (SOX) governing corporate information!

Only 29% said they would be able to meet the deadline and an amazing 26% said they did not even know if they could or couldn't meet the requirement deadline...

The deadline was extended from the original one of November 15, 2005 to July 15, 2006. What's required? Public companies (and others who might not be publicly traded but still must comply because of their industry or the businesses they work with) must be able to store and retrieve emails and instant messages. And it's not just SOX that says this. HIPAA and the Patriot Act also require message storage and retrieval mechanisms.

What is needed is more than just storage and retrieval though. To really be of use, you must also be able to archive and index IMs and emails, making storage and retrieval a snap. Otherwise, you will find yourself wasting a lot of time doing the manual effort it will take to comply -- not a good position to be in. Yes, it means spending some bucks to get your technology up to snuff but what are the alternatives here?

Fortunately, you still have time to put a solid system in place. The system must be able to log, archive and make available for review all electronic communications -- emails and IMs being the bulk of these. Failing to meet this corporate accountability deadline can mean fines for the business and -- yes -- the orange jumpsuit for the executives and officers...

Time to get crackin' on this!

Yours in BI Success,

Claudia


Posted September 30, 2005 3:17 PM
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There are several sequential and predictable steps that occur as an employee moves in the direction of leaving his or her current employer. I underscored the predictable part because it seems that some managers are so busy or clueless that they would not notice if their employees walked around with signs hanging off them stating "Hate my job -- hate my boss" or "Looking for anything better than this!"

Here are a few of these steps and why they occur...

Research uncovered these findings about how and why people "disengage" from their current company:

1. The majority of voluntary turnovers -- a whopping 63% -- are precipitated by some kind of "shocking event". Turns out these are rarely pay-related events (like no raise, no bonus, etc). The common ones for employees are realizing that the job was not as promised, replacement of current boss with a new one that they don't like, being assigned a new territory, learning that the company is doing something unethical, an incident of sexual harassment or racial discrimination, being pressured to make unreasonable family or personal sacrifices, being asked to perform menial duties not part of the original job, a disagreement with the boss, conflict with a coworker, and an unexpectedly low performance rating...

2. About 20% of departing employees leave WITHOUT having another job in hand. That is amazing to me. I can put up with a lot to keep a paycheck coming in. They must be really unhappy to do such a desperate act.

3. Many talented employees keep an eye out for other jobs while working and decide to interview with other companies "just for practice", to create a "plan B", or to test their marketability. Guess practice makes perfect.

4. Exit interviews do not uncover the event that lead to the turnover and so rarely get to the root cause of the departure. Too bad -- that means that the problem is still occurring or will happen again and again.

So what are the signs that an employee is jumping ship? Increased absenteeism, tardiness, or other behavior that indicates withdrawal or negativity toward the company. I used to work with a guy who started parking in his boss's parking spot after he was turned down for a promotion. Looking back, I guess it was pretty obvious what he had on his mind... especially when he kept spitting in his boss' coffee when the boss wasn't looking!

Do you have any stories to share?

Yours in BI success,

Claudia


Posted September 23, 2005 7:59 AM
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Yesterday, a JetBlue airliner had to make an emergency landing in Los Angeles due to a malfunctioning nose wheel. Apparently the pilot could detect that the nose wheel was stuck sideways and would not face forward upon landing. The video of the landing is astounding but even more astounding was the fact that the pilot was able to keep the plane going straight down the runway -- never veering to one side or the other. Now that's a pilot! The passengers were scared but fortunately unhurt.

Click here to see the video (unfortunately you have to endure an ad first...)


Posted September 22, 2005 2:11 PM
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I just got back from the Teradata user conference - PARTNERS -- in not-so-sunny Orlando. The weather was not the greatest but the conference, in which 3200 attendees showed up, sure was. From an excruciatingly funny keynote address given by Scott Adams (creator of the Dilbert comic strip) to numerous informative sessions to interesting conversations in between sessions with customers and employees of Teradata, it was a most enjoyable time. Here is a highlight from just one session I attended. It was given by Mohan Sawhney, a professor at the Kellogg School of Management at Northwestern University.

Dr. Sawhney's presentation was entitled "Synchronizing to Transform Your Business". His premise was that forecasting your business trends out 3 to 5 years is a thing of the past. He believes that a company must be able to respond to any situation and be able to detect the direction of customers, markets, even the competition, much faster. The increased velocity of data moving through organizations has forever changed the business paradigm. It is now critical to build more flexibility and efficiency into business processes and models if a company is to survive.

He uses the Darwin theory of evolution as an analogy. Most of us probably think that Darwin said only the strongest will survive. That is actually incorrect. What he theorized was that the fittest or those that are best at adapting to their environments will survive. A big difference. You don't have to be the strongest -- just the fastest to adapt to a changing environment. Transfer that idea to businesses and you get the idea that if your company is not the biggest but is more flexible and agile, then it can react faster than its bigger competitors to a moving marketplace -- eventually eclipsing and surpassing its slower moving "big brothers".

To do this, your business paradigm must change from the "Make and Sell" model of the past (think Henry Ford) to the new "Sense and Respond" one. The company must be able to sense what markets and customers really want, that is -- to understand the patterns in buying behaviors, the trends in markets, the reactions of your competitors, etc. -- so you can respond more quickly and appropriately. This is where a well engineered business intelligence environment comes into play.

The agile enterprise must be able to sense and respond quickly to opportunities and threats in its environment. How? The way to do this is to change from:

1. Sequential to synchronous information flows
2. Batch to right-time updates (the right data at the right time to make the right decision)
3. Chains to "hubs" in the company's process architecture
4. Enterprise automation to value network optimization

This last step -- value network optimization -- means recognizing that most business processes span beyond your company to include suppliers, partners and customers. Business processes, including your BI environment, must be redesigned and optimized to include the full value chain. Each link -- supplier, partner, customer, and employee -- must have be able to operate and make good decisions at the right time which means having access to the right data.

If you want to get more information on this topic and how you can begin the process of creating a value network synchronized enterprise, please read a companion paper written by Dr. Sawhney's colleagues, Ranjay Gulati from Kellogg and David Kletter from Booz Allen entitled "Shrinking Core, Expanding Periphery: The Relational Architecture of High-Performing Organizations" published in California Management Review. I highly recommend it.

Yours in BI success,

Claudia


Posted September 21, 2005 9:02 AM
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Whether it is a new project just starting or one that has been years in the making or one that has yet to be decided, CIOs everywhere have some tough issues to grapple with. VAR Business found the following five were top on the minds of most CIOs.

The top five should not be news to anyone who follows the trends in our business but here they are:

1. Security - no surprise here. There have been major security breaches in almost every industry vertical over the past year. Now that we are in the era of global, self-replicating viruses, enterprises have invested big bucks in perimeter and internal security technologies yet this issue remains high on every CIOs nightmare list. Fortunately many companies like Cisco Systems, Check Point Software, MacAfee, Microsoft and Symantec all offer complementary products that provide pretty comprehensive coverage. Unfortunately none of these vendors offer one-stop shopping though.

What the CIOs surveyed want is simplified security or a unified threat management system (new acronym alert -- UTM). Unfortunately according to the article, these "holistic security systems" do not exist today. This lack of fully integrated security systems means that enterprises still must buy and integrate best-of-breed point solutions.

Vendors take note -- the global security market is projected to grow from $20 billion this year to more than $45 billion by 2008!

2. Service-oriented architectures (SOAs) - Gartner has predicted that by 2008, most application software revenue will come from products built using a SOA. If you aren't familiar with SOA, it basically pus all of an enterprise's applications on an equal footing to they can share middleware and data more effectively through standard protocols like Web services. Vendors such as IBM, BEA and Oracle are ramping up their SOA offerings big time. If predictions are correct (big if), it is thought that SOA will ultimately affect every business and IT department.

3. Outsourcing - again this should not be a surprise to anyone paying attention to what is happening in the IT world. Outsourcing has been the good news/bad news headline for a lot of companies this year. An interesting story from the VAR Business article is what's happening at General Motors. Many of us remember 10 years ago when GM announced that it was outsourcing its IT support to its (former) subsidiary -- EDS. Well, that contract expires next June. GM will have to choose between renewing its contract, giving the work to one or more outsourcer, or bringing IT back in-house (doubtful). No one at GM is talking... but there are indications that GM may be looking at option 2 -- one or more new outsourcers. With an IT budget of $3 billion, you can bet a lot of wooing is going on there.

4. Storage - BI is undergoing a paradigm shift in terms of the volumes of data stored and analyzed. With a growing need for more and more data, storage (and backup by the way) of that data is becoming a major concern of CIOs. Companies are looking for ways to consolidate the numbers of servers, files, tape drives, etc., they sue for storage and backup. Then there is the question of where to store all those backups. Hurricane Katrina taught us all a valuable lesson about off-site storage.

5. Regulatory compliance - You knew I had to mention this one. You cannot pick up a magazine, read a newsletter, or surf a vendor's web site without running into something about compliance. Storage of data is not just for BI; enterprises in all industries must store ever-increasing amounts of data and the various regulatory requirements force companies to store and maintain that data for years. Compliance is changing the very essence of many corporations. They are now far more motivated to bring in risk management, security and corporate governance functions and applications than ever before in IT history. Gartner again predicts that 60% of US firms with less that $5 billion in assets will have aligned their corporate risk management to regulatory requirements. AMR Research weighs in with a prediction that enterprises will spend an astounding $80 billion on compliance technologies and services in the next 3 years.

Fortunately these companies are also focusing on the other critical part of compliance -- instituting the proper processes for dealing with compliance. It ain't all technology, folks...

Well, there you have what keeps CIOs up at night. I hope the vendors, service providers and employees of these beleaguered folks can help them get a good night's sleep soon!

Yours in BI success,

Claudia


Posted September 16, 2005 10:25 AM
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The past few weeks have been filled with heart-breaking stories about the aftermath of hurricane Katrina. Here is one that should not have happened if there had been a bit of foresight by FEMA regarding a hurricane victim's ability to apply for aid online...

The Federal Emergency Management Agency (FEMA), already under sharp criticism in the wake of the hurricane disaster, came under fire again for restricting access to its online assistance site. The agency had set up a web site for victims so they could apply for aid or file a claim online. A major hitch was that you had to have Internet Explorer 6.0 or higher as your browser -- no other browsers would work. Linux, Firefox and Mac users could not access the site and were told they had to download IE 6.

Oh my...

Seems to me that this is a rather glaring error -- perhaps one of many -- but one that is so easily avoided. In this case, the error is just plain awful. The victims have suffered enough from the natural disaster. Now we are putting them through one of our own making.

FEMA and other government agencies must develop web sites that are accessible by any browser and based on standards. These standards-based sites will be far more accessible, not just to those with alternative browsers, but to those who rely on screen readers and other assistive technologies.

[It should be noted that a good 10% of our population depends on some sort of assistive technology.]

As it stands today, the FEMA site still states that you must have IE 6 or higher. There is a message on the web site that states "If you do not have Internet Explorer 6.0 or higher, you may still be able to check the status of your application and update your information online once you have registered by phone."

That, of course, is assuming that the victims have a phone at all...

Yours in BI success --

Claudia


Posted September 14, 2005 5:12 PM
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I have seen a horse fly and a house fly but now I have to say that I have seen a donkey FLY! Yes indeed -- today, Oracle announced that it would in fact buy Siebel Systems. I do hope the marriage is happier than the analysts had predicted... (see my May 5 blog)

I would love to be a "fly on the wall" during the meeting between the two companies' leaders to decide who does what...


Posted September 12, 2005 3:23 PM
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The rule of thumb is that 20% of your customers generate 80% of your company’s revenues. These are your “most profitable” customers but are they really? Unless you are studying your cost-to-serve analytics, you may have it all wrong…

Here is the scenario – your best customer asks for certain “perks” like expedited shipping of your product, specialized labeling or customized handling. Because they are your very best customer, the sales rep has been authorized to grant these special services. But is this customer really profitable or have you just eaten up whatever profits were available by these little “giveaways”?

An article in September’s Harvard Business Review suggests the latter is actually occurring.

Here is the problem as the authors see it. Conventional accounting methods and average-cost assumptions obscure what is really going on with these customers. Sales executives often see these perks as minor concessions necessary to close the deal. Unfortunately, it is the high volume customers who get most of these services making them far less profitable than first thought.

To prove their point, the Supply Chain Executive Board analyzed 750,000 order records from three companies (from consumer products, process and electronics industries) and found that these companies were sacrificing substantial profits – up to 20 % – for only a 3-4% boost to revenue growth. Ouch!

In another analysis of customer and product profitability, it was revealed that 40% of unprofitable orders were actually placed by these supposedly “profitable” customers. And 55% of these orders were for products that are, on average, considered profitable. Double ouch!

So what should companies really look at in terms of understanding the profitability of customers and products? The article suggests that companies must use cost-to-serve analytics rather than the traditional cost-of-goods-sold analytics (which uses average costs for each product sold). Basically, these analytics use the real dollar costs to deliver a specific product to a specific customer.

In the article's example, a client (Georgia-Pacific) used this data to discover the root causes of high costs associated with their good customers. They found that the high costs were caused by last-minute, uncoordinated promotional planning and purchasing across the customer’s business units and the customer’s own unwillingness to share inventory level and positioning information.

Basically, the customer was transferring its problem(s) to the supplier and asking the supplier to pay for the customer's poor planning. "Here, let me make my problem your problem..." And since this was one of Georgia-Pacific’s “best customers”, they got away with it until they were confronted with the facts about their true profitability status. Once this occurred, the customer became quite willing to work with Georgia-Pacific to improve service and return them to the “best customer” status.

The use of actual delivered cost analytics is a big improvement over the traditional cost of goods sold averages. Not only do you uncover which of your customers are actually profitable but you now have leverage to change their bad behaviors by threatening to withhold a “favored nation” status. It may truly not be deserved. If they refuse to change their ways, your company may ultimately choose to direct these customers to your competitors!

Yours in BI success,

Claudia


Posted September 8, 2005 6:20 PM
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Soon, you may be able to do all your emails and Instant Messages at 35,000 feet. Almost half of the world’s airlines plan to offer in-flight communications such as these by 2007 according to a report from the Airline IT Trends Survey published by SITA.

Now for the bad (IMHO) news – more than a third of the airlines also said they will allow passengers to use their mobile phones on planes as well. Oh nooooooo! I can’t imagine anything worse that being strapped in an uncomfortable airline seat with some loud mouth yakking into his or her cell phone for the entire trip! I get upset enough when this happens on the ground. But at least there, I can walk away from the situation. No can do in an airplane. So much for my peaceful sanctuary in the air...

Other new toys for the airlines? Many airports will offer general purpose kiosks from which you will be able to print your boarding pass regardless of the airline. Also more customers will be able to print their boarding passes before leaving for the airport. This feature will require the airlines to introduce bar codes on tickets (as opposed to the magnetic strips used today) which may also allow passengers to present their boarding passes at the gate on a mobile phone or PDA! Now that is pretty cool.

Unfortunately since many airlines are cash strapped just now, the distribution of the newer technologies will not be even. Those with the new capabilities will have an integration issue as well in that they will always have to interface with airlines that are still paper-based. We are lucky here in North America in that the local airlines already have a pretty good jump on the rest of the world’s airlines. Currently 63% of all tickets in North America are sold though online channels, with 24% in Europe, and only 10% in Asia.

These findings are based on responses from senior IT executives at the world’s top 200 airlines – which account for two-thirds of the world’s airline revenues. The reasons for these new communications services are to hook new customers and to create better loyalty in current customers, especially during this time when the airlines are struggling.

Nothing like always being in touch... NOT! I welcome your thoughts on these technological directions.

Your in BI success,

Claudia


Posted September 7, 2005 8:59 PM
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Another company bit the dust today as Pitney Bowes announced it was buying up the rest (90%) of Firstlogic in a deal valued at $50.3 million. One can't help but wonder why Firstlogic would agree to this...

First Pitney Bowes bought Group 1 -- another data quality vendor -- last year. Why do they need yet another one? Certainly Firstlogic fills in some holes that were missing in the Group 1 offering like data profiling but it seems they could have created that function for a lot less than $50 million.

And speaking of the $50 million, Firstlogic had annual revenues last year of $55 million. It has NO debt. So why such a low ball offer? The purchase price comes up to be a 1.0 multiplier -- that is, Pitney Bowes paid exactly what Firstlogic had as revenues for last year. This is remarkably low for a software company of Firstlogic's caliber. Generally the multiplier is anywhere from 3 to 10. And it is especially surprising since Firstlogic is having a better year this year than last. Sounds to me like there is more to this story than meets the press coverage.

What does this mean for the data quality industry on the whole? It may be very good news for the few remaining independent data quality vendors like DataLever and DataFlux. Competition will surely heat up for these companies. Secondly, to have such a large company (Pitney Bowes is a $50+ billion company) will certainly put a brighter spotlight on the overall data quality industry.

What will happen to Firstlogic remains to be seen. The press releases state that the company will start off as a wholly-owned subsidiary of Pitney Bowes. Whether this will continue into the future remains to be seen. My bet is that it will be subsumed completely by Pitney Bowes and the company as such will disappear.

I wish my friends at Firstlogic all the best in what must be an uncertain time for them.

Yours in BI Success,

Claudia


Posted September 1, 2005 1:50 PM
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