The importance of

Retail Business
Intelligence
in an economic downturn

An independent study into the use of

business intelligence reporting by
retailers in the United Kingdom

2008 Nov | www.manthansystems.com

Contents
Why did Manthan Systems commission this survey?............ 1

Overview.............................................................................. 1

Key findings......................................................................... 2

Manthan Systems perspective............................................... 6

How the research was conducted.......................................... 9

© Copyright 2008 by Manthan Systems.

No portion of this report may be reproduced in whole or in part without the prior written permission
of Manthan Systems. Any written materials are protected by copyright laws. Manthan Systems offers
no specific guarantee regarding the accuracy or completeness of the information presented, but the
professional staff of Manthan Systems makes every reasonable effort to present the most reliable
information available to it and to meet or exceed any applicable industry standards.
1. Why did Manthan Systems commission this survey?
Manthan Systems works closely with retailers helping them to capture and process data that can then
be leveraged to improve planning, analyse results, anticipate changes and mine opportunities across the
business.

In order to maintain a competitive edge, retailers today have to make faster, smarter decisions based on
knowledge rather than gut instinct. The key lies in getting the knowledge they need to make wise
decisions, and then disseminating that knowledge across the enterprise so that everyone is on the same
page. With the economy already in recession and many retailers already feeling the strain. Having
access to sound business intelligence is more important than ever.

This research seeks to establish what retailers see as key in terms of remaining competitive in an
economic downturn, and how enterprise wide business intelligence can help.

2. Overview
Nine out of ten (91%) retailers believe reacting quickly to industry trends is critical during a
downturn, and 87% think having comprehensive and up-to-date business information is vital
during economic uncertainty

Despite this, over a third (37%) of respondents do not have any kind of business reporting system
and those that do are still unable to access the appropriate business information when they need it

Strikingly, one in five (17.6%) of the respondents working for the largest retailers (more than
5,000 employees) do not have access to any form of business intelligence system

Interestingly, in light of the fact that reacting quickly is seen as paramount, when rating the quality
of their existing business intelligence reporting, only half (53%) of those surveyed can access
reports when required, and a significant 49% are unimpressed with the response time of their
business reports

It is the larger retailers (more than 5,000) that appear to have the most problems with the quality
of their business intelligence information and getting hold of reports when required

Furthermore, four out of ten (39%) retailers were unconvinced of their ability to identify problem
areas, and over half (55%) are subsequently unable to drill down into problem areas

Those respondents that have purchased a specialist reporting solution view these solutions as
having the most impact in terms of meeting customer needs and maximising profit

However, a significant number of respondents who have such a solution agree that there is a pent
up demand from their business for more reports

Retail Business Intelligence in UK | November 2008 © 2008 Manthan Systems | 1

3. Key findings
3.1 Which business intelligence system does your organisation use?
0.5%
Manthan
Systems
2.2% 1.1% Microstrategy
5.4% 3.3% Crystal
Business 0.5% Information Builders 37.0%
Cognos Reports
Objects 1.6% Others Do not use

48.4%
In-house systems

3.2 Which business intelligence system does your organisation use (by company size – employees)?

0.0%
1.5% Other
1.5%
1 to 50 0.0%
1.5% Information Builder
1.5%
0.0%
26.9% MicroStrategy
67.2%
Manthan Systems
0.0%
0.0%
5.3% Crystal Reports
0.0%
15.8%
0.0%
Cognos
51 to 500 5.3%
47.4% Business Objects
26.3%
In-house systems
4.3%
0.0%
0.0% We do not use a dedicated
0.0% business reporting/
0.0% intelligence system
8.7%
13.0%
65.2%
501 to 5,000 8.7%

0.0%
0.0%
0.0%
2.0%
0.0%
5.9%
7.8%
More than 66.7%
5,000 17.6%

0% 10% 20% 30% 40% 50% 60% 70% 80%

2 | © 2008 Manthan Systems Retail Business Intelligence in UK | November 2008

3.3 How strongly do you agree/disagree with the following statements regarding business reporting
issues?

Agree Strongly agree

Reating quickly to changing consumer needs is

critical for retailers during a downturn 29% 62%

conprehensive, up-to-date business information

is critical for retailers during a downturn 47% 40%

Information is useless unless it's easily accessible

across a retail business 46% 37%

It is particularly important for any retail

investment to demonstrate rapid return on
38% 23%
investment (ROI) during a downturn

0% 20% 40% 60% 80% 100%

3.4 How strongly do you agree/disagree with the statement: reacting quickly to changing
consumer needs is critical for retailers during a downturn (by company size)

Net agree/strongly agree

Whole sample 91%

1 to 50 88%

51 to 500 95%

501 to 5,000 91%

More than 5,000 91%

50% 60% 70% 80% 90% 100%

3.5 How strongly do you agree/disagree with the statement: comprehensive, up-to-date
business information is critical for retailers during a downturn (by company size)
Net agree/strongly agree

Whole sample 87%

1 to 50 82%

51 to 500 95%

501 to 5,000 87%

More than 5,000 91%

50% 60% 70% 80% 90% 100%

Retail Business Intelligence in UK | November 2008 © 2008 Manthan Systems | 3

 3.6 How strongly do you agree/disagree with the statement: information is useless unless it’s
easily accessible across a retail business (by company size)

Net agree/strongly agree

Whole sample 83%

1 to 50 82%

51 to 500 84%

501 to 5,000 91%

More than 5,000 78%

50% 60% 70% 80% 90% 100%

3.7 How strongly do you agree/disagree with the statement: it is particularly important for any
retail investment to demonstrate rapid return on investment (ROI) during a downturn (by
company size)
Net agree/strongly agree

Whole sample 61%

1 to 50 63%

51 to 500 58%

501 to 5,000 61%

More than 5,000 63%

50% 60% 70%

3.8 How important are the following factors, with regard to business reports

Identifying and highlighting problem areas 61%

Simple and easy to understand 58%

Quality of information 55%

Addressing key performance indicators (KPIs) 54%

Getting reports when required, e.g., Monday

morning trading packs 53%

Flexibility to cope with changing needs 53%

Speed of processing/response time 51%

Ability to drill down into problem areas 45%

0% 20% 40% 60%

4 | © 2008 Manthan Systems Retail Business Intelligence in UK | November 2008

3.9 How great are the benefits of business reporting to the following areas of your business?

Buying and merchandising 4.5

Supply chain management 4.5

Retail operations 4.4

Finance 4.3

Security/loss prevention 4.3

Store level management 4.1

e-Shopping 4.0

Marketing 3.7

3.0 3.2 3.4 3.6 3.8 4.0 4.2 4.4 4.6 4.8 5.0
Neither great Quite great Very great
nor small

3.10 How great or small have been the following benefits resulting from implementation of the
dedicated business intelligence system?

Meeting customer needs 4.0

Maximising profit 4.0

Better planning 3.8

Faster decision-making 3.8

Fast ROI 3.6

Reducing costs 3.3

3.0 3.2 3.4 3.6 3.8 4.0 4.2 4.4 4.6 4.8 5.0
Neither great Quite great Very great
nor small

Retail Business Intelligence in UK | November 2008 © 2008 Manthan Systems | 5

4. The Manthan Systems perspective
Steve Barker, Head of UK Operations and Vikas Gupta, Chief Technology Officer, give their views on the
research

Retail BI is not pervasive within Retail organisations

Steve Barker: “Knowing the market, we’ve seen most BI
deployments to be departmental and not enterprise in Survey Output:
nature. The investment case for a BI implementation is • 37% don’t use any BI tool
often tactical, driven by the need to meet the • 48% use in-house systems
reporting/BI requirements of a few user groups. As a
result the BI strategy is not geared to scale and meet the
requirements of the enterprise. This is exemplified by the responses to the ‘quality of information’ and
‘ability to drill into problem areas’ questions. However we are now beginning to see leading retailers
looking at BI at an enterprise level, therefore willing to create a sound EDW and BI strategy that is
scalable for growing needs of the organization.”

Vikas Gupta: “Pervasive BI has eluded many retailers because of short term goals taking priority over
a strategic approach to BI. Retailers have to realize that the true power of BI is achieved when it is
available to everyone. Democratization of data has to be a key priority in a BI strategy. Many of the
current tools and technologies out there lack in the critical areas of intuitive usability (especially for
retail), data quality and performance. A highly usable and intuitive front-end design makes it easy for
users to connect with, and adopt the platform. Currently we still see too many requests for additional
analysis being handled by a specialist team or ‘power users’, who are tool competent.”

Dependence on IT very high

Steve Barker: “Whilst we are aware that most of the
large retailers in the UK have purchased a BI tool set, the Survey Output:

survey bears out our view that there is still a large • As business grows, dependency on
dependence on IT and that in relative terms only a few in-house systems grow
users actually use the system. Why is this? Today, typical
• One in 5 respondents who work for
business intelligence solutions offer tools like
large retailers do not use a BI system
dashboards, drill-down analysis, business alerting, and
other exciting features. It is quite often the breadth of • 2/3rd of the reporting needs of mid
the toolset that convinces businesses to invest in such to large sizes retailers are delivered
tools. However, when it comes to implementation, the via in-house systems
fact that the toolset needs to be applied to both their
business data and business processes produces a much
larger implementation than what was initially anticipated. This leads to, in many cases a reduction in
initial scope and therefore groups of users having little or none of the planned usage.”

6 | © 2008 Manthan Systems Retail Business Intelligence in UK | November 2008

Vikas Gupta: “Retailers have to understand that a sound BI strategy covers the entire spectrum of the
BI environment including business processes, decision making people & roles, analytic applications, BI
front ends, data warehouse, and data integration. As Steve says, purchasing decisions today are largely
centred on BI front ends like dashboard, reporting and alerts. Retailers should look beyond toolsets to
consider a BI application. The right applications for retail organisations are solutions that are
pre-configured for retail. Where a significant amount of deployment and customization is pre-built for
the sector. These applications significantly improve speed of deployment, deliver self service
capabilities, whilst reducing maintenance costs.”

Performance is a major issue

Steve Barker: “We were not surprised that half of
respondents aren’t happy with the performance of their Survey Output:
systems. With the advent of cheaper and cheaper • 91% agree that quick reaction to
technology on the face of it you would expect that market opportunities is critical in a
performance should not be an issue with regard to any IT
downturn
system, business intelligence included. If the system is
running slowly, buy more technology. However, this does • More than 50% of respondents are
not solve the root cause of the problem, as is borne out in unhappy with performance
the survey. In our experience, many large deployments
using leading BI tools are constrained by long delays in
complex reporting, inability to distribute ‘Monday morning report packs’, crashes & missing data
during peak season, and delays/crashes in SKU-level reporting.”

Vikas Gupta: “Performance is not only a function of the data management infrastructure, but also of
the robustness of the data warehouse architecture. This includes many aspects like aggregation
algorithms, data caching, querying performance and data integration processes. HOLAP technology,
which is an optimal hybrid using both MOLAP and ROLAP processing technologies along with smart
aggregation algorithms optimize response times. Retail data model driven warehouse architectures are
performance tuned and highly optimized. Its pre-configured approach preserves architecture integrity
and robustness even as data volumes, number of users or additional data sources increase.

In addition, Performance Oriented Architecture (POA) is an emerging discipline that is becoming

widely recognised as the next evolution in performance management by forward thinking industry
leaders. Unlike tactical performance management, which operates from a bottom-up approach, a POA
approach views performance from a top-down approach. POA addresses questions such as:

• Who are your most critical users?

• How is the system being used?
• What data is being accessed most frequently?
• How is that data being used or consumed?
• How is my IT infrastructure being used by different lines of business?

Retail Business Intelligence in UK | November 2008 © 2008 Manthan Systems | 7

 • Is my IT infrastructure performance being maximized on an ongoing basis?
• Is my organisation able to make their most critical decisions in a timely fashion?
• When will I run out of capacity and what are the financial implications?
• What are my alternatives - both in terms of performance and investment?

Tactical products, specifically in house systems don't provide these answers because they focus on
discrete elements (CPU, disk, network, SQL, data, etc.). A good business intelligence system, using a
POA approach, should allow a retailer to understand performance as it relates to different lines of
business within retail. Knowing which users belong to various lines of business, how they are using the
system, what data they are accessing and how that data is being used are paramount considerations to
improving performance. This research demonstrates that there is still a long way to go in terms of
retailers having access to all the business intelligence they need, especially at times like these.”

In challenging times, focus more on BI

Steve Barker: “Whilst there is strong agreement in this
statement, the real question here is - how many can Survey Output:
actually do it? The Christmas season will test the abilities • 87% agree that comprehensive
of many retailers to quickly maximize sales and up-to-date information is critical
profitability in the short window of opportunity. They during downturn
will need on-time information, action oriented analysis, • 91% agree that quick reaction to
accurate data and all this tied into a culture of data consumer needs is critical during
decision making that can act on insights and downturn
opportunities. The ones with a sound BI environment
are likely to emerge winners in the end.”

Vikas Gupta: “Retailers need a BI environment that drives collaborative decision making capabilities.
Today the boundaries of BI are being redefined with an integration of new analytics capabilities like
business process workflow interventions, competitive analytics with external data integration,
specialised analytic applications like clustering (which are traditionally done out of the system or with
different solutions), supplier collaboration through vendor BI portals, predictive modelling and
demand forecasting, to name a few. It is our opinion that retailers should broaden their assumption on
the purpose of BI, re-define their strategy and roadmap for BI.”

8 | © 2008 Manthan Systems Retail Business Intelligence in UK | November 2008

5. How the research was conducted
The research was conducted online by Spectrum Consulting with retailers of all sizes from across the
UK. This included directors, senior managers, heads of departments and supervisors. In all, 192
respondents answered the survey.

Sample by size of organisation

13% Not sure 26% More than 5,000

13% 501 to 5,000

37% 1 to 50
11% 51 to 500

Retail Business Intelligence in UK | November 2008 © 2008 Manthan Systems | 9

Manthan Systems is a producer of analytic solutions for global retail and CPG organizations. Manthan's break-
through solutions help retailers become more profitable by improving their decision-making process, practices
and technologies. Manthan's portfolio of solutions covers the entire spectrum of decision-making technologies
from cutting edge products in retail business intelligence, to specialized analytics services.

Manthan's experience spans a range of retail segments and formats, having worked with many high profile
retail organizations like The Game Group, Woolworth, McDonald’s, Channel Islands Co-operative Society,
Haggen Supermarkets, Loblaw, Novartis and Gianfranco Ferre.

For more information about Manthan Systems, please visit www.manthansystems.com and www.arc-bi.com.