Vállalati Pénzügyek (Corporate Finance)
Business Intelligence in Hungary
by Dr. Jozsef Czimer
Since the mid 1990's IT specialists have developed several user-friendly technologies that have dramatically enhanced the ability of executives and managers to quickly access information about their company, their markets, and their competitors. These technologies have the ability to integrate and summarize information from many sources. With their powerful drill-down features these technologies can support decision making and help in managing profitability.
With quick decisions towards business success
The long promised Executive Information Systems (EIS) have finally arrived. These systems are what are now referred to as Business Intelligence (BI). Very little has been written on this topic in management literature, it has primarily been discussed in research and articles done for the IT sector.
BI Solutions Kft. was launched in 2002 to introduce Business Intelligence (BI) and market its respective solutions in Hungary. The company was started by Ron Nawrocki an American specialist who had eight years experience in Central Europe. The company has a flagship product called the BI OctoPus, a technology enabling executives to make prompt decisions from a systematic but quick study of their company and other market players. The product takes data from existing transaction systems and processes, then transforms these into knowledge and intelligence that can be used to increase the effectiveness, profitability and success of a company.
" From the collected information on a company I can tell you which market, which sales rep, which product, which customer to focus on and I'm not smarter than anybody else who uses this technology," said Nawrocki. He explained that the BI OctoPus combined with the 15 Perspectives (15 P's) methodology the company developed (Profitability, Business Partners, Promotions, Part of the World, Projects, Market Player, etc.) allows nearly all enterprises no matter how big or small, to improve their profitability.
He explained that the US-based discount retailer Wal-Mart and technology giant Cisco are among the most aggressive users of this technology. Walmart is one of the pioneers in gathering and analyzing their business-wide information and finding revenue and profit improvement opportunities in every aspect of their business. The fact that Walmart is the undisputed leading retailer in the world by profit measures indicates the success of BI solutions.
Nawrocki explained that companies like Pepsi spend millions of dollars on integrated systems which take years to implement, from which they do not get the benefits in four or five years what we get in three or four months with the help of "Business Intelligence". "Everything I have done since the beginning of my spanning 28 years career would have been dramatically different, had this technology existed then," he explained.
Slow expansion in Central Europe
Central Europe clearly lags the rest of the world in implementing BI. One commonly cited reason is the lack of good integrated transaction systems, which are the basis for providing the data and information ("raw materials") to BI. The power of BI is most obvious when its data comes from disparate sources. Enterprise Resource Planning (ERP) systems are usually expensive and time-consuming to implement and may not always bring the right result. If BI solution provides the executives with the intelligence they need to effectively resolve company issues, why invest in an expensive new ERP system?
Nawrocki said that adopting BI Solutions' technology on the Hungarian market has not happened as quickly as he had expected. "Frankly, I would say today we are, after 18 months, in about the position where I had expected to be after six months. Things take two to three times longer to accomplish in Hungary than in the developed countries" he said.
He believes that Hungarians are skeptical about using BI Solutions' technology most likely because it sounds too good and too inexpensive to be true. He also uses the analogy of the spreadsheet. If in 1983 an executive was told about a new technology available for $700 per user, that will increase financial analysts' productivity by 400% and/or no business will be managed without it, would you have believed it? "Just like the spread-sheet changed the world, BI will also change the way C.E.O.s (Chief Executive Officers), C.F.Os (Chief Financial Officers) and C.R.Os (Chief Revenue Officers) run their businesses," he said.
BISolutions' survey of CFO's and CEO's shows that fewer than 1% of companies in Central Europe (CE) utilize BI to manage profitability. This number shows the potential for a vast improvement. An argument BISolutions frequently uses in its presentations with executives of companies controlled by majority owners is that BI should be implemented in Hungary as a pilot program.. The costs are low, the timeframe very short, and the risks are generally much lower than starting at the top of the parent company.
One potential impediment to adopting BI in CE, is the inherent transparency it brings. There is no more place left for gray market deals to survive. Luckily this is no longer an issue in Hungary.
Nawrocki feels that it is not enough to just introduce a product, it is very important that users can actually get a first-hand experience. "Once executives test drive the BI OctoPus they understand its benefits", he said, explaining that anyone could be trained in 15 minutes on how to use the technology. At BI workshops executives are given a case study that presumes the given company's profitability has flattened out. All the participants have to do is use the computer to obtain the Business Intelligence, which allows them to analyze the business and find ways to improve the company. It's all there in the technology designed for PC use. Generally everyone gets to the right solutions very quickly.
Dr. Jozsef Czimer