Analysis of Sysco BI Software - Term Paper Example

Sysco BI Software 15 February Introduction The need for information is paramount in any highly-competitive business. Most firms today use all available means to enhance their overall competitiveness against other business organizations within the same industry. With the new computer technologies in the market, it is now used to mine important customer and market data that can provide critical information used in crucial decision-making processes like what business to invest in, consider mergers and acquisitions possibilities, serve the customer better, improve pricing methodologies, etc. A good use of business information systems is to predict certain patterns or trends that might otherwise escape the attention of management because of the difficulty of assessing such a big amount of raw data. This is where business information systems can provide their utility. The new term to designate this specific type of computer software is business analytics that is taking the world of business by storm. This new very potent tool has been called as the science of winning (Davenport & Harris, 3). Analytics has been used for a variety of ways to enhance a distinctive capability usually overlooked before due to the sheer mass of data and the difficulty of making sense out of it without the help of sophisticated quantitative analysis. In general, analytics (the newer term) goes a step further than old business information systems (BI) by producing quality data-driven insights that can be used by astute management in producing impressive performance not otherwise attainable before. The amazing power of analytics can be leveraged in a number of ways limited only by the imagination of the owner. Among these possibilities are identifying the most profitable customer segments and how to serve them best, introduce new products, improve the service or offer a better price. Discussion SYSCO was founded in Houston, Texas back in 1969 and today is the largest US food distributor. Its main customers are institutional clients such as hotels, restaurant chains, health care-related institutions, educational facilities and lodging establishments. As a measure of its size, company has 420,000 customers, 8,000 marketing associates and some 9,000 delivery associates. Overall, SYSCO has 45,000 employees as of December 2002. In a way, SYSCO is just sort of like any distributor that needs to manage its supplier relationships in a meaningful and tight way that ensures prompt deliveries at less cost. Due to its expertise and efficiency, it can unload a billion cases of product per year without major glitches that produced company- wide sales revenues of $23.4 billion as of end fiscal year 2002 (McAfee & Wagonfield, 2). SYSCO goes a step further than just making deliveries. One way to enhance customer relationships is to help potential clients design their menus, product usage reports essential to decision making by the clients, food-safety trainings and seminars, installation of dispensers and many other tasks no longer considered as part of the normal distribution jobs but which SYSCO gladly extends to its customers to promote loyalty and client retention rates. This is the companys idea of going the extra mile that somehow redounds to their own benefit. Relevant to subsequent discussions is the fact that SYSCO is not an integrated firm but rather a conglomeration of some 100 different operating businesses. Many of these firms are largely operating on their own with a large degree of autonomy exercised by their own set of management officers. There is logic in this decentralized approach which is to encourage an entrepreneurial spirit and provide enough room for flexibility whenever market growth or other exigencies demands it. However, to put some sense into a diverse array of companies, SYSCO is organized into some 83 regional operations (broadline companies) and 62 specialty companies with the former providing 75% of sales and the latter catering to niche markets. Background of the Case Study SYSCO is certainly not a bureaucratic organization as shown by the fact that only 3% of its employees are assigned at office headquarters. It is not top-heavy either with few layers of organizational departments that could impede quick reaction to developing situations. But it was admitted by top management that their organization is now becoming more unwieldy with the recent acquisitions of some specialty companies. Top management has started to look seriously at how computer technology can help them manage a diverse business empire but at the same time allow the same degree of autonomy necessary for growth-oriented initiatives. As a result of rapid growth in previous years, most of the operating companies were allowed to retain their unique operational systems. This rather lenient management attitude is thought more conducive for business growth and is quite reflected in its highly-decentralized organizational structure. What is more alarming to an information systems officer is that most companies also used their own hardware and software platforms as a carryover from the prior owners before these companies were acquired by SYSCO. Even the older companies which had adapted the same corporate IT applications had reconfigured them somewhat to suit their individual requirements and loaded or inputted these system applications with a different set of data. In short, SYSCOs IT infrastructure is a mesh-mash of different information systems. It is simply a logistical nightmare for any information systems officer to begin with. The task of making sense out of this patchwork of different information systems fell on the shoulders of Twila Day who had already gained provisional approval for the implementation of a corporate-wide deployment of business intelligence software following a successful and impressive prototype demonstration of what business analytics can do for the company. What is facing Day is the range of choices available to her as the chief information officer on what to do next and the possible issues that may arise out of its implementation, mainly strategic. The Biggest Obstacle to Implementation of the New BI System In my view, the biggest obstacles will be how to make employees and managers in the different operating companies adopt the new system into their operations and at the same time integrate all the different information system platforms that these companies are using now. It involves organizational change management that entails change management practices that will lessen resistance to this new system. Ms. Day has to consider how employees and users will adapt to a new system versus that of using their legacy ERP software platforms. Another major source of company resistance is all operating companies are mandated to use the new system and made to pay for IT costs in proportion to their sales contributions to the total company revenues generated annually. This simple but interesting fact is often obscured by all the focus on the technical side of the IT implementation such that the financial costs ignored the possible repercussions of these new investments on the operating companies bottom lines. Since SYSCO uses some sort of an internal transfer pricing mechanism, it must be considered along with the technical aspects of the new BI systems software. We need to remember that operating companies are evaluated based on their individual performance in terms of profits and loss statements and paying for these new IT investments can be a drag on their financial performance. The cost of the new IT system will be charged to them on top of what they are already paying in residual costs for using their legacy systems (ibid., 11). This is one corporate head office cost that operating (more so with specialty firms) companies cannot afford to turn down since participation is mandatory. There must be some justification of using this new software such as shorter time payback times so the new costs will not adversely affect their bottom lines for which individual managers are accountable for. The other major concern is that it will take sometime to integrate all applications, business processes and data processing across all its operating companies to get tangible benefits. Why Address only Two Questions Initially There are a lot of good reasons why this go-slow approach is best with regards to the use by SYSCO of the new business intelligence software offered by vendor Business Objects. The scope of the project dictates that a limited number of applications will be introduced first so as to acquaint the intended end-users on how to use it properly. Although admittedly Twila Day had experience with two other similar and even bigger-scale projects in the past, its sheer scope at SYSCO is much wider. Another probable good reason is that this can be considered more of a pilot-testing exercise after the prototype test done earlier. On a more strategic level, Ms. Twila Day has to put her best foot forward by focusing only on two areas first where she can show impressive results as expected and promised by BI consultants from Business Objects. From a more practical standpoint, it pays to cover her ass in case something goes wrong with entire implementation project and going slow is the best assurance that all things will go well. I can see some corporate politics involved in this minor decision here. After going through all the hassles of first seeking approval from the Directors Council, Ms. Day should not squander that goodwill by making a misstep of making overly grandiose plans of immediately implementing the new system in its entirety. On the practical level, concentrating on two areas first rather than going full throttle is that it will minimize possible disruptions on business operations. Any new system introduced will always have some bugs or unexpected anomalies (deviations from normal or predicted) no matter how well everything has been designed. There will always be something that was not planned or anticipated that will occur. Any new technologies being adopted will need a strong reassurance from management also that job security will not be affected. In most cases, introduction of new technologies require considerable time for new skills to be acquired and the modification of certain tasks by reconfiguration (Cyert & Mowery, 129). Ms. Twila Day is correct in focusing on these two very important areas where software is most effective. The ultimate objective of using business analytics is to know the customer on a more intimate and insightful basis. This is the very good opportunity to showcase benefit of using this new software to the managers of operating companies by potentially increasing their sales. A good business analysis will certainly yield new insights that will increase chance of cross-selling to existing customers. A step further in this direction of trying to increase sale revenues is by lead-sharing (Knoll, 161) by which some companies within the SYSCO group can give leads to other firms when they do not carry a certain product line a client wants. All in all, by increasing sales potentials, the new BI system as proposed by Ms. Twila Day will soon have many believers and adherents once they see their sales actually increase using it. It will become a good investment on the part of managers and will pay for itself in a few years. The second question expected to be answered by new BI system of Business Objects is actually the other side of the same coin. While increasing sales on the other hand, the new BI will also attempt to preempt some loyal customers from leaving due to a number of valid reasons such as lower prices by a competitor or a better service offered by a new firm. By the early detection of these seemingly subtle patterns of a probable dissatisfied customer, SYSCO can take immediate remedial actions before losing the client completely. It is more expensive to acquire new customers than retain existing clients as a general rule in marketing. How to Determine Effectiveness This trial show-and-tell can be easily measured by using the same BI system produced by Business Objects to compile sales reports and see if there is actual progress or not by using the new insights provided by these very detailed reports. By focusing on these two questions initially, Ms. Day is avoiding a shotgun approach that will produce the best results. New BI systems are now forward-looking and predictive rather than historical which is not useful. What are the Anticipated Difficulties Some of the common difficulties will be determining the number of people to be given access to potentially sensitive company data and then at what levels of authorization best for them. This will be largely a subjective decision based on job functions and job positions. It is almost a given that people who will not be given access might resent it and may even try to sabotage the implementation process in some way. Ms. Day should be alert for this behavior. How Much Software to Buy I would recommend that Ms. Twila Day buy only the “bare-bones” minimum at this time when the requirements of SYSCO are not yet so well defined. This will prevent tendency to spend on possibly frivolous purchases that are not needed after all and also avoid probable accusations of over-investing in some fancy software packages. Ms. Day can even try to drive a hard bargain with Business Objects by asking for the elimination of maintenance fees. It is a source of wonder for me why Business Objects charges so much for what in effect is the main selling point of the company which is after-sales service. This flies in the face of whats stated in Item No. 8 as shown on Exhibit 8 (McAfee and Wagonfield, 18). Business Objects charges an arm and a leg for what is supposed to be a maintenance-free computer software system. Will it become an Effective Competitive Differentiator I believe the new BI system at SYSCO will become a differentiator because it is very expensive hardware and only a few competitors can match the buying power of SYSCO when it comes to technology upgrades. It will however become a captive to Business Objects as the system being used is largely proprietary in nature. Ms. Day should bargain for a lower price. Conclusion Every company that wants to stay competitive should invest in new technologies. This is the new tool used by successful companies in the world to manage their databases better. It will result in better customer relationships, enhance overall business, give valuable insights into present and future customer behaviors, improve profitability and make a firm more agile. Business analytics will solve the twin problems of information overload while not getting at least enough useful information from piles and tons of data (Howson, 7). There will be no more room for a managers gut feel on how to decide because the very detailed precision of data available to him now gives an exact course of action. Ms. Twila Day can for ask for firm commitment from Business Objects that future software upgrades be made available free instead of being charged separately each time because SYSCO is a big client anyway. Works Cited Cyert, R. M., Mowery, D. C. & the Committee on Science, Engineering and Public Policy. US Panel on Technology and Employment. Washington, DC: National Academies Press, 1987. Print. Davenport, T. H. & Harris, J. G. Competing on Analytics: The New Science of Winning. Boston, MA: Harvard Business Press, 2007. Print. Howson, C. Successful Business Intelligence: Secrets to Making BI a Killer App. Dubuque, IA: McGraw-Hill Professional, 2007. Print. Knoll, S. Cross-Business Synergies: A Typology of Cross-Business Synergies and a Mid-range Theory of Continuous Growth Synergy Realization. New York, NY: Gabler-Verlag, 2008. Print. McAfee, A. & Wagonfield, A. B. “Business Intelligence Software at SYSCO.” Harvard Business Case No. 9-604-080 (Revised September 11, 2006). Boston, MA: Harvard Business School. Read More