Analytic Applications for Quick Decision Support and Actionable Intelligence
When you want to know how to send a customer a coupon she’ll actually use, Actionable Intelligence will tell you that she just bought dog food for the first time and suggest you send a deal on a dog bed to her iPad at 8 p.m. Business Intelligence in Retail will never be the same again.
With new technologies in usability, everyone wants to use their software in as simple ways as Google search. With advances in mobility and multi-channels, customers have new touch-points you can’t afford to ignore anymore. With the new fast-paced economy, nothing remains constant. And speed to action can make or break your opportunities to win in a tougher, more dynamic market. Business Intelligence is moving from Viewpoints to ActionPoints.
- A Store Manager responds to a Business Intelligence (BI) alert and re-routes stocks in transit to his store within 24 hours – averting a potential stock out right in the midst of a promotion.
- A Marketing Executive at an online electronics store sends an offer on DVDs to a prospect’s mobile phone an hour after he tweeted about an intended DVD purchase.
- A category manager looking to improve margins draws on a margin maker ActionPoint to find the right products and their tactical opportunities in assortment optimization, price simulations, and promotions to hit on a definitive plan of action he can deploy for the next 3 weeks.
These are just some of the ways in which Actionable Intelligence is helping retailers to take timely action in a wide range of business situations. The difference of actionable analytics lies in the emphasis on making an action, which is normally a result of iterative analytics process of inquiry or discovery, in a guided manner. In other words, one starts by asking “what action can I perform and how can I do it?” as opposed to “let’s look at my weekly sales reports”.
Actionable Intelligence: The Cross-over from Traditional BI
Until recently, Business Intelligence was used mostly by senior levels in an organization, and largely handled by IT departments. The complexity of these BI tools, their high licensing costs and long deployment cycle were some of the reasons that restricted their usage and access across the enterprise. And most Business Intelligence provided historical information useful at a longer term planning level rather than support for operational and tactical functions closer to moments of truth. Often leading to the fact that analytics was missing in some of the key areas where the day-to-day retail decisions get made in stores, stock outlets, docks and warehouses and among frontline employees across the organization.
In a post recessionary economy, a lot of this is changing giving way to a new approach to Business Intelligence. Pitted against tough market conditions and increased competition, you have to optimize costs and inventory and improve all round productivity. You need to get more done with less – fewer people, lesser stocks and tighter budgets.
A new range of actionable analytics applications are offering a more action focused approach, tailor-made to meet the performance requirements of an industry that is under pressure to increase efficiencies and profits.
These analytic applications go beyond report-centric business views that help in strategic planning and instead provide specific ActionPoint’ and operational BI at a tactical level. They deploy actionable analytics capabilities across users and departments in the enterprise, enabling quick, on-the-spot decisions on a wide variety of business functions. Thus, helping decision makers like store managers, buyers and merchandisers to quickly accelerate shipments based on top-selling products, announce markdowns by evaluating seasonal sell-through and cancel orders for bottom-selling products before goods get shipped to stores with the help of ActionPoints.
ActionPoints: Analytics Applications Focused on Action
ActionPoints are designed for various decision making approaches. It can help start the analytical process with an aim to realize a goal (for example, “I want to improve margins in my beverages category” is a goal-centric ActionPoint), or can help inquire into an anomaly (for example, “let’s find a way to bring back the sales to targeted levels by looking into the root cause of the drop”, is an investigation ActionPoint), and in other instances can help find unexpected patterns in your performance (for example, “The sales of these 2 products in the same basket is consistently high during back to school”, is a pattern-based discovery ActionPoint).
Take a look at how ActionPoint works in some of the typical situations in your retail environment:
Markdown slow selling inventory: ActionPoint for Managing Markdown
Slow sellers are the biggest problem at your stores, holding up shelf space and pulling down your profits. Meanwhile you are heading into holiday season which means fresh stocks and new promotions. As the Merchandising Manager, you need to quickly find bottom sellers across all stores and clear them off the shelves.
You can log into an ActionPoint for Markdown Simulation on your computer and view sales data and stock positions for all products in stores across your district. The exception reporting and guided analytics capabilities in the actionable analytics application can show you the bottom-sellers on a month-by-month basis. You then put the selection through the ActionPoint Markdown Simulator to determine the right candidates that should be moved into a markdown sale. The application uses in-built algorithms and modeling capabilities to provide you various alternatives, complete with recommendations on prices and budget requirements. Following the guided workflows in the application, you send the necessary notifications and mails to execute the markdown.
The analytic application ensures that you have picked the best markdown prices, aligned with overall sales and margin goals, based on guided analytics and advanced modeling capabilities. It effectively compresses your decision-making cycle by days, saves effort and time for your district-wide store staff and gets your store shelves ready for holiday season stocks.
Rationalize growing assortments: ActionPoint for SKU Rationalization
You are manager at a store that has ended up with too wide an assortment of packaged snacks. While many of these have not been selling well, customers have been asking for some of the new brands in the market that you have not yet stocked.
Your assortment is in critical need of rationalization but you need your Merchandising Manager to help you plan and execute it.
With an ActionPoint, you can manage the entire SKU rationalization process with no dependency on your senior manager. Using the actionable intelligence capabilities of a Product Rationalization application you can track product-wise sales and margin data and fix set rules for Key Performance Indicators (KPIs) for products. You can go on to fix individual and combination deletion criteria which lets you explore various assortment mix alternatives. Based on the findings of the analytic application, you can set alerts for products that fall short of KPIs, send for approvals and then notify store staff to eliminate them from the assortment.
With the ActionPoint, a decision-making process which would have required supervision from your Merchandise Manager and weeks of manual effort can now be done within a couple of days with far greater accuracy and speed.
Regulate Prices Effectively: ActionPoint for Price Management
As Merchandising Head at a grocery retail chain, you have been concerned about the poor performance of one of your stores. Having checked sales and stock figures and made store-wise comparisons, you have identified that fresh produce in the problem store is the culprit – priced higher than competitor outlets in the locality, sales of fresh produce has been poor leading to high shrinkage and losses. You need to quickly regulate the prices of these products to encourage higher sale and pull up store performance.
An ActionPoint for Price Management is just what you need to take you through the complex process of fixing the best prices that can balance between sales and margins. The Price Management application lets you drill into sales performance and margin percentage data for the products and set rules-based pricing and rebate parameters. It lets you drill into vendor deals and explore combination pricing strategies and alternate outcomes, walking you through the decision making process until you arrive at the right prices for each product.
ActionPoints: The Drivers for Change
As actionable analytics establish greater value across the retail industry, it is interesting to see the triggers that have led to this evolution in Business Intelligence models. Cross-channel customers, e-commerce, mobile retail and social media influences have all had a role in this transition.
|Focus on Retail Performance: In a post recessionary economy, performance management and profits have become critical for retail chains to sustain operations and stay ahead of competition. This calls for BI that evolves from being an information delivery system to a decision platform that enables action in key areas of business.
The Consumerization of BI: The 2011 BI Market Study by Dresner Advisory Services points to the growing consumerization’ of BI as it is increasingly consumed by non-technical business users and frontline roles in organizations. Retail organizations are developing a more mainstream understanding of the value of BI characterized by its broader user within the enterprise.
Changing Shopper Profiles: The popularity of multichannel and mobile retail and the rising influence of social media in retail have led to a generation of informed, interconnected and hard-to-please shoppers. Retailers have to be really quick in tracking and analyzing their behavior, identifying opportunities and responding to them – if they are to attract, engage and convert these next generation shoppers. Action oriented Business Intelligence applications have the agility and versatility to enable this.
Higher Comfort with Technology: Besides consumers, the profile of the retail worker has changed as well. As the retail industry grew, it has attracted an intelligent, tech-savvy and performance focused workforce. These retail employees are driving the need for more user-friendly and widely accessible BI tools that can help them perform their roles better and faster.
Data Explosion: There is an explosion of data volumes in the retail industry from transactions covering multiple touch-points. Out-of-the-box BI technologies are evolving to deal with big data and unstructured data analysis.
Evolution in Technology: BI technologies such as in-memory processing, interactive Q&A, and predictive analytics are giving rise to BI solutions that encourage non-linear decision processes, that guide users along multiple, iterative decision paths, simulate alternative scenarios and recommend definitive action.
The Mobile Brigade: Smartphones, tablets and new form factors have opened the market to new users who can access BI on the go. This calls for lightweight, quick and mobile enabled applications that can provide answers to business critical questions – anytime, anywhere.
Faster and Smarter Decision Making with ActionPoints
The convergence of internet and mobile platforms, powerful search engines and customized and personalized web experiences have led to user expectations of BI applications that have the same level of simplicity as the basic technology tools of everyday use.
With location context information, mobility and powerful capabilities for predictive analytics and iterative decision making, ActionPoints can help retailers build competitive advantage through faster and smarter decisions.
In a world where decision makers can lose themselves in data, we think it’s about time for ActionPoints. What do you think?