Business & Technology Nexus

Dave Stephens on technology and business trends

Custom reporting vs. Data warehousing vs. Packaged analytics

with 4 comments

Procurement intelligence has always been a somewhat controversial topic. There seem to be 3 main options:

1) custom reports

2) a data warehouse

3) packaged analytics

For many companies, a custom report, built quarterly from multiple data feeds and by a person deeply in love with Excel, seems the path of choice.

Larger firms with decentralized Payables or Purchasing systems often pursue a data warehouse that is “sliceable” and “diceable.”

And still others turn to “packaged analytics” for their procurement reporting needs. But none are without fault!

Beyond latency, the flaws in custom reports seem to center around the non-repeatability of data. There are typically a myriad of assumptions an analyst will make when manipulating the data. It’s tough to imagine the very same decisions being made quarter after quarter.

The data warehouse also has problems. One very, very large global manufacturer had a “savings database” the CPO kept. When buyers “saved” on a negotiation, they logged an entry. The CPO kept track and then used the savings database with the officers of the company to help them understand Procurement’s value. The only problem was the so-called savings weren’t tied into operating budgets. And typically they were recorded well before they were realized. Which leads me to the data warehouse’s biggest flaw – it need not reflect reality.

For quite awhile, Oracle pursued the ‘holy grail’ of ERP-based intelligence – packaged analytics. And let me congratulate the Marketing department for effectively labeling static reports provide in context with transactional flows as “packaged analytics.” It sounds so complicated and clever! But, to dumb it down, we are really just talking about reports built on top of the Procurement transactional system, nothing more.

Packaged analytics holds the promise of providing undisputable information on spend and savings history. But of course it has major flaws too. First, typically the analytics aren’t customizable as much as needed – and I am not talking about formatting here. Instead, l am speaking to the underlying algorithms used. I remember discussions with customers that started: “Well, how do you measure leakage? Oh, well our software measures it differently.” Never a good idea to tell the customer they are measuring things “wrong” while trying to sell them software!

So what’s the right answer for you? Well, I argue it depends on your company’s size & current state. If you have a single Procurement system, it’s quite possible “packaged analytics” is the right answer – only make sure you understand what business trade-offs come with the solution! Or build your own custom reporting system straight on top of your transactional data – it may be the simplest, lowest cost approach available. If you pursue a data warehouse, keep it close to reality -and- don’t overcomplicate the solution. And if you’re small and don’t care to study the numbers in too much detail, maybe sticking to quarterly Excel updates is the right option.

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Written by Dave Stephens

03/17/06 8:54 AM at 8:54 am

Posted in Opinion

4 Responses

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  1. We think we have a pretty good answer, Dave. Check us out. http://www.busiq.com

    Eric Strovink

    03/23/06 6:44 PM at 6:44 pm

  2. very cool stuff eric – thanks for sharing!

    Dave Stephens

    03/23/06 7:23 PM at 7:23 pm

  3. I have purchased packaged analytics. And, prior to purchasing packaged analytics, I purchased data cleansing and normalization services. All for the sake of understanding compliance (or lack thereof).

    Knowing what I know now, I’d make sure my business processes concerning classification taxonomy and schema were in place prior to implementing any warehousing, reporting or analytics acquisition. Without good processes, “noise” creeps into the data making the reporting/analytic tools less and less effective over time.

    Jeff Reekers

    03/29/06 3:46 PM at 3:46 pm

  4. Hi,

    Any one having any detailed info on the Busiq company. this looks like cools stuff. How many employees do thay have, what;s the revenue, the management team etc

    Bobby

    09/2/06 8:52 AM at 8:52 am


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