The Impact of Technology on Business Where will we go from here?

Transcription

1 The Impact of Technology on Business Where will we go from here? 17 June, 2011 Scott Raso Asia Pacific Leader - Deloitte Analytics scraso@deloitte.com.cn Venue: HKICPA Annual Conference, JW Marriott Hotel, Hong Kong

2 Disclaimer The materials of this seminar / workshop / conference are intended to provide general information and guidance on the subject concerned. Examples and other materials in this seminar / workshop / conference are only for illustrative purposes and should not be relied upon for technical answers. The Hong Kong Institute of Certified Public Accountants (The Institute), the speaker(s) and the firm(s) that the speaker(s) is representing take no responsibility for any errors or omissions in, or for the loss incurred by individuals or companies due to the use of, the materials of this seminar / workshop / conference. No claims, action or legal proceedings in connection with this seminar/workshop/conference brought by any individuals or companies having reference to the materials on this seminar / workshop / conference will be entertained by the Institute, the speaker(s) and the firm(s) that the speaker(s) is representing. 1

3 Deloitte Analytics Defined Deloitte Analytics is the practice of using data to drive business strategy and performance. It includes a range of approaches and solutions from looking backward to evaluate what happened in the past to forward-looking scenario planning and predictive modeling. 2

4 CFO Priorities The 2011 Gartner Survey indicates performance management is a top priority for CFO s Top 3 Priorities Take Away s 65% say Analytics and Performance Management is a top priority Business Intelligence as a capability is IN ( Show me the ROI! ) Integration of Performance and Risk Management is a growing trend Source: Gartner (May 2011) another increasing trend is to allow CFO s greater control over IT 3

5 CIO Priorities The 2011 Gartner Survey on CIO Business and Technology priorities indicates performance management is also a top priority for CIO s - Where CIO s Business and Technology priorities intersect 4 4

6 "Do we think, or do we know?" -Gary Loveman, Chairman, President & CEO of Harrah's Entertainment Inc., the global US$11billion provider of branded casino entertainment 5

7 Macro emerging technology trend: Analytics as a Source of Competitive Advantage Most of the competitive strategies organizations are employing today involve optimization of key business processes. Instead of throwing money at issues, they seek to optimize use of capital. Instead of serving all customers, they want to target and maintain relationships with customers associated with the highest level of profitability and lifetime value. Instead of looking historical financial performance, they seek to understand how nonfinancial activities (call center activities, customer website activities, HR management, jobsite activities, etc.) drive optimum financial performance, and to make accurate forecasts of future performance so they can react in advance of situations. But strategies involving optimization require something different than those based on taking business as it comes. They require extensive data on the state of the business environment and the company s place within it, and extensive analysis of the data to model that environment, predict the consequences of alternative actions, and guide executive decision making. Moreover, they require analysts and decision makers who both understand the value of analytics and know how best to apply these for driving enhanced performance. Sources: Competing on Analytics, Thomas H. Davenport,

8 Present From what I need to do to what I need to know Over the last two decades, companies have been investing heavily in origination and servicing systems to streamline their processes. This has resulted in a significant increase in organized data and a shift in focus toward analyzing information to improve performance. Origination and servicing systems Core platform implementation Product System implementation Back office consolidation Analytics Information Management Performance Optimization Analytic Insights Operational reporting Looking back Slice & dice Understand What happened? Uncommon insights Looking forward Discover & simulate Predict What will happen? Analyze Key Performance Indicators (KPI s) Optimize Key Performance Predictors (KPP s) Information value 7

9 Analytical Competitors Cut Across Industries 8 Dell Predictive models to recognize trends in the marketplace, take preemptive action on prices, price optimization and products. Also, to effectively compete on configuration. MCI Focus on revenue, w/no control over costs. Implemented an activity-based costing program with comprehensive costing analytics, w/management compensation tied to cost and profitability information. Amazon.com (and others) Test and learn approach as operational R&D to studying page views, time spent on site, click-throughs, user response to advertising, and other user activities. WPP Group Econometric studies on advertising effectiveness (i.e., selection of medium, cost of color, selection of days to run ads, etc.). Sprint Customer life cycle analytics to help determine the best ways to maximize customer loyalty and spending, and reduce churn, over time. O2 UK mobile network operator uses artificial intelligence software to personalize content. UK market share is 50% of mobile internet traffic. IRS (US) - utilizes advanced analytics to walk through its gigabytes of data on taxpayers in a new effort to find and ferret out the cheaters. Google - studies the timing and location of search-engine queries to predict flu outbreaks and unemployment trends before official government statistics come out. Sources: Competing on Analytics, Thomas H. Davenport, 2007 Usama Fayyad, Gregory Piatetsky-Shapiro, and Padhraic Smyth. From Data Mining to Knowledge Discovery in Databases. AI Magazine, 1996 An introduction to data mining. Discovering hidden value in your data warehouse ( Judi Hasson, IRS plans a little data mining to catch tax cheats. September 1, 2009

10 Implementing analytics is not a big bang. Develop capabilities over time and customize them to your needs Philosophy Adopt a crawl, walk, run approach Value first Technology second Transfer knowledge and capabilities Allow for adjustments to plan and resourcing with minor disruption Enable executive go/no-go decision points Rationale Achieving analytics excellence requires focusing on each major process separately. Addressing the entire process will delay results and could lead to poor implementation decisions. Relentlessly focusing on margin improvements prevents the program from being a only technology driven. Value is delivered through operational and decision-making improvements not a new platform. Maximizing the value of you advanced analytics investments requires adequate knowledge transfer to build strong in-house capabilities to use analytics in a repeatable and sustainable way. Program needs to be flexible to meet unexpected changes in the business and priorities. Investments are made based on prior success. Limits downside of the business case. Executive interactions are more frequent and ensures a focus on value.

11 XBRL Missing out on an opportunity? 10

12 CFO Priorities How Do Organizations Plan to Use XBRL 11 11

13 Are you shortchanging XBRL opportunities? Evaluate the potential benefit of deploying XBRL beyond the requirements of regulatory mandates The requirements of XBRL regulatory mandates will likely be limited to external reporting. While limiting implementation only to external reporting will likely carry the lowest direct cost to the company, it will limit the benefits of moving to XBRL. Key questions to consider: Does the organization currently have multiple IFRS or statutory reporting requirements? Does the use of disparate accounting systems and reporting platforms drive challenges in consolidation and other internal reporting processes? How frequently do acquisitions, divestitures, or other business events drive a need for extensive reporting and systems integration efforts? Adopting XBRL is not just about external reporting and complying with specific regulatory mandates. Introducing XBRL-based processes and applications can have a critical effect and benefit, directly impacting the way companies manage their business

14 Questions?

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