KNOWLEDGE DYNAMICS

SUBMITTED BY:-

MUGDHA JOSHI PANKHURI PRADHAN PRAKHAR DUTT PULKIT JINDAL RICHA MAHECHA

BUSINESS INTELLIGENCE

INTRODUCTION

The term Business intelligence (BI) represents the tools and systems that play a key role in the strategic planning process of the corporation. These systems allow a company to gather, store, access and analyze corporate data to aid in decision-making. Generally these systems will illustrate business intelligence in the areas of customer profiling, customer support, market research, market segmentation, product profitability, statistical analysis, and inventory and distribution analysis to name a few. Most companies collect a large amount of data from their business operations. To keep track of that information, a business and would need to use a wide range of software programs, such as Excel, Access and different database applications for various departments throughout their organization. Using multiple software programs makes it difficult to retrieve information in a timely manner and to perform analysis of the data.

OVERVIEW

In earlier times the back office software were to facilitate the innovative technology but now this segment has been implemented for accounting, payroll and database processes. Thus many companies have now adopted for an integrated solution called as (ERP) enterprise resource management. Eventually ERP solutions were enhanced with BI tool such as data warehousing and data mining, and front office applications such as customer relationship management (CRM). BI solution transformed corporate databases into competitive advantages.

Internet channels became great sources of customer information but they did not generate much customer loyalty. Banking & telecommunication operators and independent internet intermediatories had strong demand for BI solutions. Benefits of using a BI solution are:1. Used to optimize operations 2. Build good relationship with customer and traders 3. To gain bottom line profits 4. To reduce cost 5. To increase productivity Business intelligence is segmented as data warehousing tools, analytical applications and system integration consulting.

DATA WAREHOUSING TOOLS

A data warehouse is a subject-oriented, integrated, time-variant and non-volatile collection of data in support of management's decision making process. Subject-Oriented: A data warehouse can be used to analyze a particular subject area. For example, "sales" can be a particular subject. Integrated: A data warehouse integrates data from multiple data sources. For example, source A and source B may have different ways of identifying a product, but in a data warehouse, there will be only a single way of identifying a product. Time-Variant: Historical data is kept in a data warehouse. For example, one can retrieve data from 3 months, 6 months, 12 months, or even older data from a data warehouse. This contrasts with a transactions system, where often only the most recent data is kept. For example, a transaction system may hold the most recent address of a customer, where a data warehouse can hold all addresses associated with a customer.

Non-volatile: Once data is in the data warehouse, it will not change. So, historical data in a data warehouse should never be altered. Ralph Kimball provided a more concise definition of a data warehouse:A data warehouse is a copy of transaction data specifically structured for query and analysis. This is a functional view of a data warehouse. Kimball did not address how the data warehouse is built like Inmon did; rather he focused on the functionality of a data warehouse. A typical data warehouse design phase, and has several sections:

Task Description: This section describes what typically needs to be accomplished during this particular data warehouse design phase.

Time Requirement: A rough estimate of the amount of time this particular data warehouse task takes.

Deliverables: Typically at the end of each data warehouse task, one or more documents are produced that fully describe the steps and results of that particular task. This is especially important for consultants to communicate their results to the clients.

Possible Pitfalls: Things to watch out for. Some of them obvious, some of them not so obvious. All of them are real.

ANALYTICAL APPLICATIONS

Analytic applications are a type of business application software, used to measure and improve the performance of business operations. More specifically, analytic applications are a type of business intelligence solution. As such they use collections of historical data about business operations to provide business users with information and tools that allow them to make improvements in business functions.

A BI analytical application provides the following four key components:1. Pre-built ETL to extract data from the operational tables in the transaction system and load to the data warehouse. 2. Denormalized Star schema which is optimized for BI queries. 3. Best practice metric and calculation libraries that are created based on the data warehouse and operational sources. 4. Pre-built graphics, reports, dashboards, and alerts that designed for specific roles and business processes.

EXAMPLE

Analytical Functions within SAP Business Intelligence

SAP recently announced a new offering in the analytical applications market. The key message of this announcement is: Analytical applications within SAP Business Intelligence not only integrate business processes and depict predefined closed-loop business scenarios; they also offer predefined metrics to measure the effectiveness of business operations and allow companies to take immediate corrective action when necessary. Unique business area-based applications include the following:

Customer Relationship Analytics Measure and optimize customer relationships including campaign management, market exploration and customer retention analysis.

Enterprise Analytics Measure and optimize an organization's performance with respect to financial and human resources: in the area of Strategic Enterprise Management, Enterprise Analytics comprise planning and simulation tools for enterprise applications such as the balanced scorecard;

SAP will provide ready-to-use balanced scorecard templates and strategy maps that have been developed in cooperation with the Balanced Scorecard Collaborative Inc.

Supply Chain Analytics These include applications such as supplier evaluation, spend optimization, demand aggregation, strategic sourcing, inventory analysis and manufacturing analysis.

Marketplace Analytics Give the provider insight about usage of marketplace offerings through bidding, auctioning and traffic analysis; demand aggregation allows for the reduction of procurement costs for collaborating buyers.

SAP Business Intelligence also allows users to analyze which revenue streams per customer came through which channels - such as e-commerce, marketplaces or traditional sales - to significantly optimize the mixture of those channels in the business strategy.

SYSTEMS INTEGRATION CONSULTING

Systems integration (SI) consultant is an individual or business that builds computing systems for clients by combining hardware and software products from multiple vendors. Using a systems integrator, a company can align cheaper, pre-configured components and off-the-shelf software to meet key business goals, as opposed to more expensive, customized implementations that may require original programming or manufacture of unique components. Creation of these information systems may include designing or building a customized architecture or application, integrating it with new or Systems integration has traditionally been a crucial specialty in the defence contracting industry. Proprietary, closed systems needs to be upgraded or, as is often the case, legacy hardware or software must be preserved within modern computing networks, graphical user interfaces (GUIs) or hardware connection standards.

Example:Accenture Systems Integration Consulting Services Accenture is a global leader in systems integration consulting resulting from decades of experience helping some of the worlds leading organizations, our skilled people, a profound understanding of technology and our industrialized approach.

KNOWLEDGE DYNAMICS

COMPANY BACKGROUND

Knowledge Dynamics was founded in 1997 in Singapore with an objective of providing Data Warehouse based Business Intelligence (BI) solutions for large corporations. They emphasize on delivering business value, adopting leading edge technology, incorporating industry best practices and delivering quality. Knowledge Dynamics is in the business of helping consumer oriented organizations to efficiently and effectively utilize enterprise data to gain strategic and tactical advantage over its competitors. Knowledge Dynamics Pvt. Ltd. provides business intelligence and data warehousing solutions. It offers iDecisions, a solution that incorporates industry best practices into an analytical application suite for decision making applications in banking, credit card, and enterprise, insurance, and telecom businesses. The company also provides data warehouse services, which include business analysis, architecture, design, data extraction and transformation, online analytical processing (OLAP) and mining, and managed services; and analytical customer relationship marketing services, such as customer management consulting, customer segmentation, campaign management, one-to-one marketing portal, and personalization services.

OBJECTIVES

To provide Data Warehouse-based Business Intelligence solutions for large corporations. To help its client enterprises gain strategic & tactical advantages over their competitors by fully utilizing existing enterprise data. To implement solutions that allowed different systems within an organization to work together.

SYSTEM INTEGRATION PROCESS

Request for proposal (RFC)

Detailed documentation of the the functional requirements of the customer Design of the system at the architectural, database and business logic levels Detailing of the develoment timeline and resource requirements

Actual development

Knowledge Dynamics followed a typical system integration process for most of their projects. The process is a five phase model which helps them to develop the most efficient solution for their customers. The Five Phases are:-

1. Request for Proposal:It is issuing an invitation for suppliers, often through a bidding process, to submit a proposal on a specific commodity or service. The RFP process brings structure to the procurement decision and allows the risks and benefits to be identified clearly upfront The RFP may dictate to varying degrees the exact structure and format of the supplier's response. Effective RFPs typically reflect the strategy and short/long-term business objectives, providing detailed insight upon which suppliers will be able to offer a matching perspective. 2. Detailed Documentation of the functional requirement:It is a document which has comprehensive requirements of the customers needs and expectation from the solution. It is basically the understanding of the customers need by the supplier. 3. Design of the System:This is the proposal given by the supplier to the customer. This document details the design of the solution at the architectural, database and business logic levels. This is given to the customer for modification and approval. This forms the bases of the development of the solution. 4. Detailing of the development timeline and resource requirements:In this stage, the supplier makes a detailed timeline and requirement of resources which would be need to develop the solution. This will help the supplier develop a commercial proposal for the customer and an expected time to delivery of the product. 5. Actual Development:This is the final stage of development of the solution.

SERVICES & SOLUTIONS

Alliances

Established a quality partnership with the Institute of System Sciences (ISS). KD conducted BI courses at ISS. KD gained academic credibility as well as valuable insights into the industries of course participants.

The Banking Industry

Provided multi-basket analysis which showed a bank Correlation between clients credit card & home loan payment patterns Most profitable customers Regional variations in product profitability. Undertook projects such as:o Customer account review engine. o Compatible CRM system.

Trend of financial deregulation, coupled with the dramatic improvement of technology presented tremendous growth opportunities.

LOCAL BANK IN SINGAPORE

Objective To retain its most profitable customers To prevent defection to competitors

Issue with the Management Unknown about the profile of its profitable customers & hence was unable to focus on servicing them. Unable to allocate funds for marketing programs for more profitable product due to absence of profitability figures for products or business units.

Solution

To build a data warehouse-based decision support system to analyze the profitability of various business perspectives like customer, business unit & product.

Data Warehouse data was housed in an RDBMS in a UNIX server. A data mart based on a multidimensional database was created to allow OLAP analysis to be performed on the data.

COST ALLOCATION

OPERATIONAL DATA PROFITABILITY ENGINE DATA WAREHOUSE OLAP DATA MINING

PROCESS FLOW

MAIN ISSUE

Dilemma faced by the company Remain a small and profitable service provider in Asia OR To become a global player by productizing its business The former option was relatively less risky, and allowed for slow organic growth, profit margins could quickly come under pressure due to either technological changes or the entry of new entrants into KDs chosen market segments.

The production option, on the other hand could bring grater scalability and hinger margins, but it would impact the company on many levels. Culturally, the company would be requires to transform itself from a service-centric organization into a product-centric one.

DRAWBACKS OF KD BEING A SERVICE PROVIDER

Slow organic growth Profit margins could quickly come under pressure due to Technological changes Entry of new players into KDs chosen market segment

Growth was limited by The number of good consultants they could recruit. The number of projects they could effectively manage.

Example:KD developed domain-specific templates from existing projects for industries such as banking, but was unable to profit from them as the templates were not productized.

. PRODUCTISATION STRATEGY

The path of productisation presented its own problems and would require dramatic changes in areas such as corporate culture, mindset and organization structure. It would also require the involvement of external venture capital companies who could open doors in the US and other

parts of the world for a price. The firm would further require respectable customer advocates championing the use of the hitherto unknown product from a small start up. If the cash flow were not managed well KD could even face bankruptcy. If successful, KD could also be fortunate enough to be acquired but one of them in a lucrative buyout deal. Finally most of the staff in KD consisted of talented software engineers from India. The company would inevitably become more international as people from different nationalities and cultural backgrounds were recruited to grow the company into a significant international player.

BENEFITS TO KNOWLEDGE DYNAMICS

New business model will derive revenue from two distinct sources: Product licensing Services required to implement the product

Licensing to service revenue ratio to be 70:30 Profit margin expected to be more than double Overall revenue will grow substantially Greater scalability Turnkey products would require minimal customization

FINANCIAL ANALYSIS OF KD AS A PROJECT BASED COMPANY WITHOUT PRODUCTISATION

PRO-FORMA FINANCIAL PROJECTIONS WITHOUT PRODUCTISATION All figures in USD '000 1998 1999 2000 Projected Projected Projected Projected Projected 2001 2002 2003 2004 2005

Total Turnover

250

500

1000

2000

4000

8000

16000

32000

Expenses Salaries 150 300 50 600 100 1200 240 2400 480 4000 960 8000 1920 16000 3840

Cost of Goods Sold 25 General & Administrative Other expenses (R & D) 0 25

100

200

360

720

1440

2880

5760

FINANCIAL ANALYSIS OF KD AS A PRODUCT BASED COMPANY WITH PRODUCTISATION

PRO-FORMA FINANCIAL PROJECTIONS WITH PRODUCTISATION All figures in USD '000 1998 1999 2000 Projecte d 2001 Projecte Projected Projected Projected d 2002 2003 2004 2005

Total Turnover

250

500

1000

2000

4500

12375

37125

111375

Expenses Salaries Cost of Goods Sold General & Administrative Other expenses (R & D) 0 0 0 0 1800 2475 4455 8910 25 100 200 360 810 1856 4455 11138 25 50 100 240 540 2475 4455 13365 150 300 600 1200 2700 4950 11138 22275

DRAWBACKS

It involves several risks such as: KD would design a product up-front so it would require to know the exact needs of the customers KD would require a customer advocate to test its products and to state their benefits from the customers point of view. KDs competencies and corporate culture would need to accommodate future software engineers for product development Change in cost structure with a larger portion of costs allocated to R & D. Drastic change in mindset & organizational structure. It would require the involvement of external venture capital companies. If cash flow process remains unmanaged, KD could even face bankruptcy.