“In the struggle for survival, the fittest win out at the expense of their rivals because they succeed in adapting themselves best to their environment.” With this quote, Charles Darwin clearly defined today’s business analytics imperative. In this posting we illustrate a best-in-class Analytics Innovation Case Study at P&G. The case study illustrates the way Business Analytics is becoming more central as retail and CPG decision making speeds up.
P&G OverviewP&G’s has 127,000 employees and 300 brands sold in 180 countries. P&G averages about 4 billion transactions daily. P&G CEO Bob McDonald has staked out a strategy to “digitize” the company’s processes from end to end, and Business Sufficiency, Business Sphere and Decision Cockpits is enabler of that agenda. P&G is building analytics expertise at a time when P&G is cutting costs in other areas, including eliminating 1,600 nonmanufacturing jobs. The company’s IT organization itself has cut $900 million in total spending over the past nine years.P&G is investing in analytics talent, even as the company cuts in other areas, to speed up business decision making. True leaders develop the capabilities required for making good and timely decisions in unpredictable and stressful environments. CIO Filippo Passerini says he plans to increase fourfold the number of company staff with expertise in business analytics. CIO Passerini who leads the Global Business Services (GBS organization) is investing in analytics expertise (almost like a business competency center or center of excellence) because the model for using data to run a company is changing.
Business Sphere and Decision CockpitsP&G has made available to 38,000 users analytical solutions called Business Sphere and Decision Cockpits. The Business Sphere was developed in partnership with BOI, Cisco, HP, SAP, Nielsen and TIBCO Spotfire.The first project, launched in 2010, is the Business Sufficiency program, which gives executives predictions about P&G market share and other performance stats six to 12 months into the future. At its core is a series of analytic models designed to reveal what’s happening in the business now, why it’s happening, and what actions P&G can take. The “what” models focus on data such as shipments, sales, and market share. The “why” models highlight sales data down to the country, territory, product line, and store levels, as well as drivers such as advertising and consumer consumption, factoring in region- and country-specific economic data. The “actions” analyses look at levers P&G can pull, such as pricing, advertising, and product mix, and provide estimates on what they deliver. (source: P&G Turns Analysis Into Action).Business Sphere is the further integration of technology, visualization, and information enables leaders to drill-down into data to get answers in real-time.
- To answer a set of questions, the program analyzes and connects as much as 200 terabytes of data (equal to the amount of information contained in 200,000 copies of Encyclopedia Britannica), allowing for unprecedented granularity and customization.
- The way the data is presented uncovers insights, trends, and opportunities for the business leaders and prompts them to ask different and very focused business questions. If one question elicits a follow-up question, it can be addressed with data on-the-spot.
- The visualization helps people to “see” the data in ways they would not have been able to with just numbers and spreadsheets. It challenges assumptions while simultaneously presenting the data in different ways, revealing potential solutions that previously may have not been apparent.
Evolution of the P&G Decision Making modelThe old IT model was to figure out which reports people wanted, capture the data, and deliver it to the key people weeks or days after the fact. “That model is an obsolete model,” Passerini says.The new model Passerini envisions is something of a virtual, instant-on war room, where people huddle in person or by video around the needed data, pulling in the right experts to fix a problem the moment it arises.This decision-making environment requires better collaboration via easy-to-use video, more real-time data, and business analytics expertise.A new building block is high-quality videoconferencing, because people solve hard problems faster and better when they can see one another, Passerini maintains. P&G has been an avid user for several years of room-sized Cisco telepresence systems. The video is used as part of a collaboration environment P&G calls Business Sphere, which CEO Bob McDonald and his executive council use to collaborate with colleagues worldwide. It combines video with large screens that display data visualizations on sales, market share, ad spending and the like, so everyone in the meeting is seeing the same information. In the past year, P&G added 50 smaller Business Sphere systems around the world, giving more people access to the technology.Passerini’s team is working on a video platform that broadens access even more by letting people join in regardless of the video system they’re using, whether it’s Cisco telepresence or WebEx or FaceTime. That would mean a key team member can video in from an iPad, Droid smartphone, or PC if need be.In terms of data, this strategy needs the right real-time data.What’s real time? The goal P&G’s working toward is that as soon as data is collected, it’s available for use, Passerini says. P&G isn’t after new data types; it still wants to share and analyze point-of-sale, inventory, ad spending, and shipment data. What’s new is the higher frequency and speed at which P&G gets that data, and the finer granularity. Passerini says P&G has about two-thirds of the real-time data it needs.Passerini talks about the what, why, and how of a problem. “What” is the problem itself — is market share stable or has it shrunk two points? He thinks P&G has beaten the what problem by giving 58,000 employees business intelligence “cockpits,” which are dashboards that link to common data sources so people spend little time arguing over whose data to use.”Why” is the cause of a problem — was it a bad TV ad, out-of-stock shelves, or a competitor’s new product or price cut that caused a problem? Right now, the P&G IT team is working on automating analysis of the why, so employees get alerts when key events like a supply chain snafu or rival product launch happen.If P&G can eliminate “what” discussions and some of the “why,” and decision-makers can jump right to how to solve a problem, “that radically increases the pace at which they do business,” Passerini says.The final piece is bringing in that business analytics expertise. These are people “at the intersection of business and IT,” Passerini says. They need to be as well versed in P&G business issues as a marketing pro. And they need to be skilled in finding information, building data models, and creating simulations.For example, when CEO Bob McDonald and his executive committee meet each Monday, one data slice they look at is the “top 50″–combinations of products and country markets (Brazil hair care, perhaps, or U.S. pet care) that are the company’s 50 largest, making up about 60% of sales. Data visualizations show at a glance if sales or share are moving materially.If they are, and executives want to drill down:- Is a sales dip in detergent in France because of one retailer, so that’s where to focus? - Is that retailer buying less only in France, or across Europe?- Did P&G cut promotions or raise prices, letting a rival grab share, or is the category overall losing sales? Data helps executives decide how to respond. Passerini pictures analytics experts sitting in on more meetings to make sure the “how” to solve problems gets sorted out right then and there, not postponed until everyone gets more information. The old model would mean “let’s get back to this in two weeks,” he says. “You need to be able to answer that question immediately.”Passerini describes the video and data collaboration efforts, and the role of the busines analysts, as “harmonizing” how people do business across P&G. It’s the opposite of creating standard reports. It’s about creating a standard environment with the right tools, then it’s up to the experts in that room to use whatever data they need to make the right decisions.
Data Infrastructure in P&G – SAP and Oracle ExadataP&G has collected data from its core SAP ERP and other applications for years, putting it in SAP BW and Oracle data warehouses (the latter now transitioning to Oracle Exadata). But before the Business Sufficiency program, all that work led to reporting silos that were hard to correlate. Individual country and product line managers could see their performance, but cross-company comparisons required labor-intensive data manipulation and analysis.
- Source: Chris Murphy, InformationWeek February 16, 2012 - http://www.informationweek.com/news/global-cio/interviews/232601003
- P&G Turns Analysis Into Action
- Here is a YouTube video with my friend Bruno Aziza interviewing P&G BI leadership about Business Sphere.
P&G’s Global Business Services – Transforming the way business is done
1999 – 2002 – Creation of Shared Services
• Service consolidation & basic infrastructure
• Re-site services to central locations
2003 – 2005 – Building a Progressive Business Model
• Strategic sourcing with external partners
• Run our services as businesses
• Business Service and IT integration
2006 – 2009 – Agility, Flexibility & Change Anticipation
• Dramatic IT-driven Innovation
• Ever greater reduction in costs
• 3-fold increase in org capacity & flow-to-work
2010 — …GBSe – Running Simpler, Flatter, Faster
• Focus on key audiences: employees, functions and BUs
• More dynamic identification of priorities
• Scaled capabilities to build, operate & deliver GBS service