By Paul Jeruchimowitz, firstname.lastname@example.org
Large retail organizations are under constant pressure to improve margins and their overall performance. The key to improved performance, in many cases, is data – not just better data, but data organized and accessed in ways that make it easier and faster to make enterprise-wide decisions.
Retail chains sometimes face particular problems in this regard. When a potential customer enters a store looking for a specific item and doesn’t find it on the shelves, the store can experience a lost sale. Similarly, when shelves are stacked with merchandise that customers don’t want, that can represent lost opportunities and wasted resources.
Having the right data at the right time – particularly about what products are popular at that moment – can help management make the right decisions about what to promote, what to overstock, and how to price. Getting that data, however, has never been easy. In many retail organizations, different geographical units or business units may choose their own key performance indicators (KPIs) and report them in ways that are skewed to make their own groups look good. That can hinder enterprise-level managers who need to use such data to make important supply chain decisions.
These are challenging problems, but some retailers have found a promising approach to data management by evolving their shared services to create integrated business services (IBS) organizations. These integrated business services organizations, which are designed to deliver back, middle and front office services from areas including HR, IT, procurement, supply chain and logistics, and sales and marketing among others are typically accountable to the C-suite, and collect a tremendous amount of data which can be aggregated and analyzed to provide useful insights to the enterprise.
In the world of retail, such an enterprise-wide master data, reporting and analytics capability used in conjunction with enterprise data management and enterprise analytics, could support a retail organization at nearly every level, from geography to region to individual stores, with “one version of the truth” about the chain’s global business, regions and individual store operations.
As outlined in a recent Accenture paper, “Integrated Business Services: The New Answer for Your Master Data, Reporting and Analytics Needs,” there are five challenges that organizations commonly face when master data, reporting and analytics capabilities are spread across functions and business units.
1. Building consistency in data structures and centralizing quality management. Even with a strong corporate governance structure, a retail enterprise can face a higher risk of data quality issues when functions and business units or geographies develop their own master data, reporting and analytics capabilities. When different business or geographic units have control over how they use and report on information, they may present the data (using unique formats or views, non-standard time periods, revised data definitions, and other methods) that reflect the business or geographic unit in the most favorable manner. At the same time, corporate decision-makers often struggle with disparate presentations that may drive different conclusions.
2. Meeting the evolving analytical needs of the business. In today’s fast-paced environment, retailers can benefit from the ability to move quickly into new territories or new segments to stay ahead of their competition. At other times, they may find themselves dealing with an increasingly volatile marketplace. Time is often of the essence when making business decisions
in these situations, and if the data/reporting structures are not in place, the enterprise may miss opportunities or see substantial impact from risks that materialize.
3. Developing cross-functional, data-driven insight. When it comes to data-driven insights, the whole truly can be greater than the sum of its parts. Although functions and business units may realize initial success when developing their own master data, reporting and analytics capabilities, the complete picture can come into view when organizations are able to quickly, easily and confidently link the data across business silos, such as marketing and logistics. Additional insights (and value) may be generated if the organization can adeptly layer in and manage third- party data sources as well.
4. Providing career paths for master data, reporting and analytics resources. The skill sets within any proper master data, reporting and analytics capability can range from transactional data management to basic reporting to predictive analytic skills that may require a PhD. In many organizations, there can be a delicate balance between hiring enough resources with the proper skill sets to meet business needs while maintaining a sustainable payroll cost structure. It can become difficult, expensive and, in some cases, unrealistic for retail organizations to duplicate this capability across multiple functions.
5. Maximizing master data, reporting and analytics technology investments. When different functions and organizational entities make autonomous decisions to invest in their own master data, reporting and analytics capabilities, the investments may not achieve maximum return. The individual entities often develop their own methods to analyze data and provide reports to their constituents in their own format (which may or may not resemble that of the other organizational entities). Consequently, what started out as smart investments by individual organizational entities may turn into a costly way for the enterprise to run its business as a whole.
In the face of these challenges, the IBS model offers significant potential benefits to retail organizations. For example: Establishing master data, reporting and analytics as a service within an IBS organization can mean that there is a single owner of the governance and management of the data across the enterprise. Moving control of data to IBS may introduce a much-needed independent authority over data standards. By moving ownership of the master data, reporting and analytics capabilities to IBS, the enterprise can tap into the structural support needed to easily scale, modify and improve the services to meet the changing needs of the business. And, IBS can offer talented individuals in specialized fields the opportunity to progress through a variety of roles, including management.
IBS has significant real world implications. In fact, a number of global retailers have built offshore retail analytics support centers that deliver more consistent information and better insights than the stores, regions and business units can deliver on their own. These retail analytics support centers introduce common KPIs, common data definitions and common reports giving business leaders one version of the truth and actionable data to leverage across the enterprise.
In a hyper-competitive environment, retailers can benefit from multiple possible edges in outmaneuvering their rivals. As retailers continue to focus on developing data-driven business insight, master data, reporting and analytics may be a prime target to deliver as a service via an IBS organization. By embedding this capability within an IBS organization and offering it as a service, retailers may have the opportunity to put data governance, quality and standards into the hands of an objective organization dedicated to driving efficiencies, improving processes and ensuring consistency in data and analytics.
Paul Jeruchimowitz is a managing director at Accenture, a global management consulting, technology services and outsourcing company. He can be reached at email@example.com.