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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

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
Permalink | 1 Comment |

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
Permalink | 4 Comments |

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
Permalink | No Comments |

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
Permalink | 5 Comments |

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