Challenged to find great solutions to complex problems while carefully managing risk, corporate executives are turning to Business Intelligence systems. Designed to coordinate data from all parts of the organization and deliver reports that support decision making, Business Intelligence systems have become business critical technology. There’s just one problem. Business Intelligence systems often fail to deliver the intended decision making value which corporations demand.
“Business Intelligence systems represent huge investments in time and money,” says Roger Davies, Founder and Managing Director of Impact Dynamics, a UK-based consultancy specializing in Value Management. “The technology itself is expensive as are the ETL (extract, transform, load) processes needed to prepare and reconcile huge amounts of financial, sales, customer, manufacturing process, and other data. Data schemas used for timely query and reporting processes require a great deal of redundancy so data stores grow quickly which, in turn, necessitates increased investments in server and storage resources.” Davies reports that, despite all this investment, corporations typically spend about 80% of their effort reconciling data and only 20% on value added analysis and decision-making.
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Nothing inspires an analysis of a business system like a decline in performance. When financial metrics trend downward, businesses typically turn a critical eye toward marketing strategy, pricing, distribution channels, and product quality and positioning. Unfortunately, small changes in the business environment can break underlying operational systems that appear to be working. Diagnosing the impacts of those system breaks on financial performance can be extremely difficult.
Perplexed by its own decline in revenue, Rent-a-Dozer* turned to Lexidyne, LLC, a consultancy that provides insight into the dynamic processes that drive system behavior, and iThink Systems Thinking software to determine the systemic cause of revenue erosion, test remedies, and return the company to profitability.
*Rent-a-Dozer is a fictional name for a real company.
Durability is a great product attribute if you’re a consumer. It’s not so good, at least not over the long term, if you’re a wholesaler of durable goods; products that continue to work for 20 years or more take their owners out of the market. Business success in the durable good market depends on understanding the dynamics of product adoption, replacement and repair in order to position operations for the most profitable revenue streams.
Warren Farr, CEO of Refrigeration Sales Corporation and guest speaker at both Duke University’s Fuqua School of Business and the University of North Carolina’s Kenan-Flagler Business School, uses an iThink® model to guide both his business and MBA students in the creation of profitable strategies for durable goods companies.
Introduction to Dynamic Modeling with STELLA and iThink
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