Leveraging Operational Intelligence for Competitive Advantage
By Kumar Singh, Research Director, Automation & Analytics, SAPinsider
The Evolution of Business Intelligence
As businesses become more diverse and complex, so do their information systems and associated business analytics systems. Imperatives like the need to build near real time visibility, building a data driven culture and digitalization have forced many organizations to invest in a plethora of data and analytics tools and technologies. Though technology and computing power have rapidly evolved during the last decade to support this proliferation of tools and technologies, many of the underlying aspects and features of these tools themselves need to evolve as well, to align with the business complexities.
Abovementioned trends, along with the rapid emergence of fields like data science, advent of Artificial Intelligence (AI) & Machine Learning (ML) algorithms and rapid adoption of cloud computing, are disrupting the field of business analytics. One category of analytics tool that is ripe for disruption is Business Intelligence (BI) tools. BI tools have been around in some form for more than four decades and like many other business analytics tools, are evolving to catch-up with business trends in the digital age. Considering this evolution, many SAPinsiders who have been leveraging BI tools for a long time have a question on top of their minds – “What is going to be the future of BI tools?”.
While there are many aspects and features that are evolving as business intelligence tools evolve, one key aspect is the transition from leveraging BI tools as providing historical insights into “what happened” to being tools that also provide answers to questions like “what is happening” and “what can happen”. And this is where Operational Intelligence comes into play. Operational Intelligence is an evolving transformation of BI and SAPinsider recently had the opportunity to sit with Ratheesh Ravindran, COO of OpsVeda, an AI based Operational Intelligence platform, to discuss the current state of Operational Intelligence and the path it is headed on. What is Operational Intelligence ?
In simple terms, Operational Intelligence or Operational Business Intelligence is an evolution of BI tools in a way that the insights generated by the BI tools are near real time, and hence those insights enable decisions and actions “in the process”, to help run the processes better in near real time. As Ratheesh states: “We think of Operational Intelligence as a tool that helps operations organizations with data driven insights in near real time, to help them perform their tasks better. It is about bringing agility into day-to-day operations and operational execution. It is a tool geared for improving operating margin by enabling smarter execution and higher productivity.”
Is it just about data and insights latency ?
While one of the key aspects of Operational Intelligence is definitely the ability to generate near real time insights, another key aspect that reflects that Operational Intelligence tools are not BI tools but evolution of BI tools is the type of insights that is generated.
Traditional BI tools typically leverage descriptive analytics methodologies. What this means in simple terms is that they are more focused on answering the question “What happened?”. However, if you revisit the definition of Operational Intelligence, it becomes very clear that answering just the question of “What happened?” will not work. The beauty of Operational Intelligence lies in having the ability to answer three additional questions:
- What is happening in near real time?
- What can happen in the short term, tactical future?
- What can be done about it?
And let us try to understand this by using an example from supply chain management. If you are leveraging BI tools into your Inventory data, traditional BI tools will help you understand which items went out of stock, post the event. What this means is that you will find out the data on which SKU went out of stock, where and when, after the stockout has already occurred.
Now let us compare this with Operational Intelligence tools. With an Operational Intelligence tool, you will get -up on the stockout, with prescriptions/recommendations on how to mitigate the stock-out. As Ratheesh highlight: “As an example, our Inventory Optimization solution helps warehouse and inventory managers to address manufacturing and distribution exceptions in a highly proactive, efficient and scalable manner. A real-time view of backlogs, unconfirmed orders and the ability to draw on filtered and prioritized task lists provide quick relief. Several key solutions are available and come ready out of the box when OpsVeda’s Inventory Optimization solutions are used. These include:
What does this mean for SAPinsiders ?
Operational Intelligence tools definitely fill a significant gap in the BI tools portfolio for operations heavy organizations. As Ratheesh quotes : “Operational Intelligence tools have been around for some time in various forms but are getting more and more attention now.” This focus and attention obviously comes due to the advantages discussed in previous sections but a key question that many SAPinsiders may have is how do we embark on the journey of embracing this evolved form of BI? Some aspects that SAPinsiders need to keep in mind when planning to build Operational Intelligence capabilities are:
Don’t be afraid to start small. Operational Intelligence tools today provide quick and easy integrations with a plethora of data sources. While you definitely need to modernize your data infrastructure for an end-to-end digital transformation, it is not a pre-requisite for experimenting with Operational Intelligence tools. Ratheesh indicates that many of their customers have even leveraged Excel workbooks to feed data to OpsVeda’s Operational Intelligence platform to test and validate the solution. Getting this head start is critical.
Choose your solution prudently. The good news for those actively looking to build this capability is that you do not have to re-invent the wheel. There are some good off-the-shelf solutions available in the market. The important aspect however is to perform a robust analysis of all options to understand which solution is a better fit for your unique business nuances. You can leverage your RFI and RFP process to get specific insights, that will help aid your selection process.
Pay specific attention to the “people” aspect of capability building. It will be the people leveraging these tools who will decide the success or failure of these initiatives. Leaders often miss the important fact that success or failure of technology implementations largely depends on people, both implementing the solutions as well as those who will be leveraging these solutions. It is therefore really important that those helping with the implementation as well as those who will use the tool in their day-to-day operations are well trained. This applies more to the the frontline workers who will use these tools. Intense training needs to happen before the production go-live to ensure the tool is leveraged to its full potential.
Kumar Singh is Research Director, Automation & Analytics with SAPinsider and can be reached on firstname.lastname@example.org