Future of management science, ERP and decision making

What does the future of analytics or BI look like? A chat with John Schwarz held some interesting perspectives.
Written by Brian Sommer, Contributor

John Schwarz and I had a great conversation a few days ago. John is the former top-guy at Business Objects (now part of SAP) and now heads up Visier.

Visier is a new, hot, purpose-built Workforce analytics vendor (for now) that could easily create additional applications for other business process areas (e.g., finance). Purpose-built analytic apps are quite different from analytic tools. Purpose-built tools are like a fully loaded Porsche sitting in your driveway ready to go while a toolset is the paint by numbers version of building software. Toolsets are products not applicatons. Creating your own application is a process that is often fraught with problems like:

  • The users are not sure what business problems or insights are contained within the company's data. So, the product development process is often a series of trial and error efforts until a solution of some value eventually emerges (or the project is abandoned outright).
  • Key users often lack time to give to the development effort. For example, ask a busy executive how they know when to intervene with a manager when they suspect a potential attrition problem is about to occur. Chances are, the busy executive might identify a few situations when they would get involved but they would also miss a number of equally valid trigger points, too.
  • Tools often require expertise in analytic capabilities that many executives and IT professionals lack or lack enough of. For example, how many people in your firm can really speak to game theory, multivariate or polynomial forecasting techniques, etc.? If the analytic tool is only being used to produce the same kind of straight line forecasts you currently produce with a spreadsheet, is it really delivering value?

Purpose-built analytics are great as the better software firms pool the insights of dozens of great business people, marry their insights with internal and external data and create tools that are laser focused on specific issues. These tools will:

  • Highlight potential problem areas AND tell you why the software is singling out these particular data points
  • Use both transaction data and "proxies" to detect potential trends or future business conditions. For example, if you want to identify potential retention problems, you might look at who is cashing out their stock options, who is putting in for a transfer, who is using up all of their accumulated time off, etc. Those data points are not the usual accounting-driven events found in many ERP solutions but they do provide clues to where potential future problems may exist.
  • Look at problems in different dimensions or directions. John and I discussed how many retention analytic tools only looked at the issue from the perspective of the employee who may be leaving soon. What if the tool looked at other factors like: Do the potential retention risks share a common boss? Is the work location a factor in driving up attrition rates?

John and I discussed that:

  • Visier is already successful. They've got multiple firms using their solution.
  • They deliver analytic applications in 1-2 weeks as compared to the 3-6 month time frame of many tool based products
  • Visier is using third party benchmark data to supplement the analysis it can perform on company provided transaction data
  • The target customer for Visier is a firm with 1000+ employees
  • The company is currently using a direct sales approach now but is looking for more HRIS and ERP software providers  to be channel partners

One of the more interesting conversation bits we covered was John's observation that some companies don't use analytics yet. He said that some firms simply don't have time to implement them or that they're afraid of what they'll find if they do. A cloud solution like this can certainly deal with the time dimension of that problem but, as for giving executives courage, that might take a trip to see the Wizard of Oz.

Visier is part of a new breed of analytic tools on the market today. But, more importantly, it is part of a group of technologies that can deliver ROI in a time when many ERP solutions are struggling to justify their very high TCO. This is why even old guard ERP vendors are pushing their analytics/Business Intelligence products so hard. It's the value one can get from these newer products.

Like all technologies though, this space is still sorting itself out. One dimension,  mentioned above, is the purpose-built vs. toolset dimension. It is one way to cut the products within this market. There are others.

This is a new-ish market and one that will likely reward vendors that:

  • Do a lot of research (remember what real R&D looked like) to understand what management science today can really be if only executives had solutions with the imagination to use more than internal accounting transaction data?
  • Look at all sides of a potential problem/opportunity to help executives really uncover insights
  • Make ACCURATE forecasting a core capability
  • Deliver solutions that be installed in days, reworked in minutes, discarded, re-purposed, etc. at the  speed of business
  • Use cloud, in-memory database technology, scaling technologies, external data, big data and more to create solutions that truly work in real-time, with really powerful datasets

But at the end of the day, what may be emerging is a world where ERP vendors will be the masters of all things accounting, transaction and regulatory based. Analytics vendors will be the ones providing insights to executives as these vendors have no problem embracing third party data, data that is less precise than that found in audited financial statements, etc. In a business world that moves at an increasingly faster clip, ERP solutions are just not as relevant or aren't the most relevant solutions around. Businesses need solutions designed for a new generation of business, workers, economic volatility and more. Businesses need software vendors that are re-writing the rules of management science and not just re-implementing the management techniques of the Industrial Age.

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