I finally had a revelation about the REAL difference between business intelligence and business analytics software this week. It comes down to this: Business intelligence technology is all about collecting and storing data relevant to your business. Analytics technology is about making thoughtful decisions using that data. It's about taking action. You can be smart without taking action. Although that's not very smart, is it?
That difference is readily apparent in a new agribusiness case study that was brought to my attention by the IBM mid-market group. It involves Sun World International, a midsize operation in Bakersfield, Calif., that produces various fruits and vegetables on approximately 12,000 acres of farmland across the state of California.
Sun World has been collecting information about its business for years. An example: The company has been acting on its water consumption to change irrigation techniques, a practice that has now helped it reduce water usage by 8.5 percent per unit since 2006.
But the operation only seriously began realizing the full value of its historical data until earlier this year, when the relatively new vice president of sales and marketing, Gordon Robertson, started asking the right questions. "I saw a tremendous amount of data and insight that simply wasn't being used at the right level," he says. "Now, we've installed a longer-term planning process that puts us way ahead of the game for the different seasons in which products are sold."
And, it involves getting data into hands of people who can act on it.
Sun World, which specializes in table grapes, peppers, stone fruits and citrus varieties, can now look at everything from unit costs and revenue for individual crop types to how many boxes per hour crews are harvesting. And how that differs depending on the type of fruit. This information has helped it balance labor resources on the farm, focusing first on the crops that yield the best return. This insight has helped cut labor and distribution costs by 10 percent to 15 percent in the past year, according to IBM and Sun World. Fuel usage has also been cut by 20 percent.
The sales team can also use Sun World's data in conjunction with industry buying trends to figure out the best timing for campaigns. This has helped with balancing product mix. It also resulted in $3 million in new business in 2009 and a 20 percent increase in the company's customer base. (Sun World is tracking $175 million in total annual revenue, according to Robertson.) "The plan is only as good as Day One. After Day One, plans being to move and information availability is key from a sales perspective," he says.
Steve Greenwood, Sun World's director of budgets and reporting, says the technology behind these changes was Cognos, which helps provide information on crop yields, farm labor costs, water usage trends and growing patterns. When I spoke with him earlier this week, he said it took about eight weeks to get some very basic dashboards up and running, which the sales team can use in their prospecting and the financial types can use for things like hiring decisions. Sun World worked with an IBM Business Partner, Applied Analytix, to craft the solution.
Here's his perspective from the IBM press release about the solution:
"We've aimed to transform the company culture from a farming business where you 'grow and hope for the best' to one that uses information analytics to provide an accurate measurement of the business. Before, we didn't know until 30 days after the month how our harvest crops were trending. By that time, it was too late to start financial planning because the crops had already been harvested. We've turned raw data into business insight, improved our order fill rates and have gone from being a reactive company to a proactive company."
Tony Levy, director of business analytics for IBM, says there are typically three things that hold entrepreneurs back from a technology investment like this that could yield results similar to the Sun World example.
- Outdated business processes, such as the practice of developing an annual budget that is relatively rigid in time. There need to be levers for the unforeseen.
- Reliance on outdated applications such as spreadsheets, which were never really intended for forecasting.
- An aversion to change.
If you want to be generate results like Sun World, you'll need to get over all three things.
This post was originally published on Smartplanet.com