Syscos BI Implementation Issues - Case Study Example

? (Assignment) Sysco’s BI Implementation Issues Sysco had its beginning in 1969 in Houston. Presently the company deals in food, food related products and services to restaurants, healthcare, education and lodging, with 45,000 employees as of 2002. As Sysco has more than 100 operating companies which function mostly as independent firms, the IT infrastructure of each company showed considerable difference in its structure and functions. So, the company decided to have a centralized BI program, and for that purpose each independent company transferred their data to a central data warehouse. 1. The obstacles As already mentioned, Sysco is a highly decentralized business with more than 100 independently operating companies (McAfee and Wagonfeld, 2). As a result, each company enjoyed a considerable level of autonomy. In addition, each operating company used to prepare its own profit and loss statements. However, there are more issues that make the implementation of the program difficult. Firstly, the cost of implementation of BI system is to be shared by the independent companies. However, most of these companies have their own such systems already in force. Thus, forcing these companies to pay for the new system is a difficult task. Still, it becomes necessary to change the system as most companies have software and hardware which are totally different from each other. Even the companies with the same core application have it configured differently (McAfee and Wagonfeld, 2). Thus, the information loaded by different companies is totally different from each other. For example, if two companies deal with the same customer, the customer information they collect will entirely be different. So, it becomes a difficult task for Sysco to analyze as to what meaningful data can be extracted from the central data warehouse they create. In other words, data integration is going to be a headache for the company. Yet another serious issue lies with training employees to use the program effectively. In addition, it is yet to ascertain as to what extent the data produced by the BI will be suitable for the company’s operation (McAfee and Wagonfeld, 10). In addition, the company would take long time to get used to the software and hence the huge amount spent up-front will not be returned in short term. 2. The decision to answer two questions initially Initially, Sysco decided to have the software answering two questions. Both the questions were exactly futuristic in nature unlike the kind of information that would only reveal the past performance. The first question considered was as what new products could be sold to each customer. It is possible for the BI to analyze the purchasing pattern of each customer and predict what products best suit each customer (McAfee and Wagonfeld, 8). The second question considered the list of customers who were likely to leave the company (9); a question that certainly has futuristic value in the performance of a company. The answers of these questions could be used by both the independent companies and the headquarters alike for analysis and further development. In addition, the main objective of Sysco was to pay close attention to its customers, (9) and for that purpose, the answers to these questions were satisfactorily sufficient. In addition, Sysco did not want to use the software for more purposes in the beginning because they wanted to give the employees enough time to get used to the software and to understand its effectiveness. Business Objects supported the adoption of these two questions because the questions were the most effective ones to show the practical usefulness of the BI software. Moreover, the information available from these questions were readily useful for the top management at the headquarters and the independent companies and well within the purview of the customer intelligence analytic applications they developed (McAfee and Wagonfeld, 9). As far as tradeoffs are concerned, they are plenty in number. By avoiding the use of other special features of the software for the initial period, the company succeeded in avoiding the chaos the complete use could create. It provided enough time to make the employees familiar with the use of the software and the company managed to get enough time for training. Thus, by partial use of the software in the beginning, the company avoided the friction its complete implementation could create. It provided ample time to learn how the software could be used for more effective purposes through practice. 3. Challenges facing IT and non-IT managers In fact, the implementation of BI involves numerous challenges for all levels of employees. When non-IT managers are considered, a number of issues can be found. The very first among them is the budget. Each company will be forced to pay their share even if they have similar software already in place (McAfee and Wagonfeld, 11). In addition, the effectiveness of the data produced is uncertain. Yet another serious issue they are facing lies with providing adequate training to employees so that they could use the system effectively without affecting the performance of the company. In addition, without getting proper training, the non-IT managers will not be able to utilize the data available through BI for productive purposes. It will be an annoyance for them to see that the software succeeds in overcoming the cultural differences that exist in their own area of operation. However, Return on Investment is the most overwhelming question in front of non-IT managers. However, the issues will be of more serious nature in the case of IT managers. The first hurdle will be the integration of data of each independent company. Taking into consideration the varying nature of data stored by different independent companies, this is going to be a tough task to carry out. In addition, as Sysco deals in a number of different businesses through different companies, ‘business needs analysis’ is to be done very carefully so that the software becomes useful to both the headquarters and the independent company. Yet another serious issue is the implementation of BI overcoming the cultural differences. And the last but very important thing for IT managers to do will be to ensure that all other employees are getting adequate training in using this software. 4. The kind of BI required in Sysco case A close analysis will reveal the fact that Sysco requires a combination of Operational, Tactical, and Strategic BI. For the independent companies of Sysco, Operational BI is of immense benefit as it deals with daily operations and helps in taking immediate steps according to the fluctuations in the local level, thus helping continue the same level of performance through immediate actions. However, for the executives and managers of the middle level, Tactical BI is the best option as there is option for daily to monthly analysis which will help them take promotional steps in the short term. However, in the case of headquarters, these two seem to be useless to a great extent. What it exactly requires according to McAfee and Wagonfeld (237) is Strategic BI that provides information from months to years, thus helping the management to think about long-term goals. Thus, in the case of Sysco, one has to assume that all the types were equally important. 5. The amount of software to be purchased by Sysco initially As explained in the book, there are three possible ways for purchasing BI system. They are ‘bare bones’, middle of the road’, and ‘volume discount’. If the company decides to purchase in volume expecting a possible difference in price of about 30% when compared with bare bone (Exhibit 9, p. 19) a number of issues are involved. First of all, the company will have to raise all the money up-front when the effectiveness of the software in the company operations is still in doubt. Yet another thing is that even after purchasing it fully, the company will take a considerable amount of time for employee training and effective use of BI in the company operations. In addition, there are serious doubts about the quality of data going to be produced by the software. In addition, the return on investment may not be immediate. In total, this bulk purchase for saving a 30% cost (Exhibit 9) may lead to total wastage of money if the work goes wrong. However, if ‘bare bone’ approach is adopted, within six months, the company will lose 30% more money, but the benefits are plenty. First of all, the company will get adequate time to train its employees and to monitor the usefulness of the BI. In addition, it helps the company restrict total access to its data especially when the effectiveness of the BI system is still uncertain. Adopting a middle of the road approach seems the best possible way. In this case, the company gets one year time to purchase more licenses and initially it will have 1300 licenses. Even though there is a 15% loss on the cost, there is ample time for training and to monitor the usefulness of the software. 6. BI as a competitive Differentiator for Sysco The term ‘Competitive Differentiator’ means a certain attribute or attributes that keep a company different from its competitors. It can be anything that makes the company or its products different or more effective. In the case of Sysco, BI is certainly going to help once the system is implemented successfully. It will help the company take short term and long term measures by closely observing the customers (McAfee and Wagonfeld, 237). The BI is highly effective as it provides information in the required form and as the data is available to all the layers of the company over different durations from days to years. Unlike other software that avail historical data, BI is able to make effective futuristic predictions analyzing past and current time data and thus, the company will be able to take necessary steps far ahead of its competitors. Thus, one can undoubtedly say that BI will act as a ‘Competitive Differentiator’ for Sysco. Works Cited McAfee, Andrew and Wagonfeld, Alison B. “Business Intelligence Software at SYSCO”. Sep 11, 2006. Harvard Business School Database. 22 Feb 2011. Read More