Competititve Intel For Business Decisions Dec 03 & Case Study

BUSINESS INTELLIGENCE FOR VERIONovember 2003

Cover/Intro Page

Copyright Reserved - Steven Misshula - December 2003

Business Intelligence (BI)?

Business intelligence is…

– a systematic, targeted effort to collect, synthesize, and analyze information on the external operating environment that, when combined with internal company information, should give a manager a complete picture of the total decision making environment.

It should:

– open some doors to new opportunities – warn of looming dangers – validate developments and emerging trends – clarify the occasional fog of events – help you make the most informed business decisions possible


It should also help:

–reduce uncertainty –gain foreknowledge–enhance insight–create awareness about information security

In short, business intelligence is a management tool that can enhance and sustain a company’s competitive advantage.

Business Intelligence?


It can be used at the strategic level:

– for example, “where’s our main competitor headed with this product line in the next two years?”

and at the tactical level…

– for example, “what can you tell me about our competitor’s new product? The customer I’m seeing today says their salesperson was just in here two days ago touting it.”

But it should be proactive and forward-looking:

– “We have just learned from a financial analyst contact that our chief competitor is planning to pull its operations out of the troubled Chicago market.”

– “Based on an assessment of the CEO’s strategic goals, as outlined in several recent speeches, and our competitor’s financial statements from the last two quarters, we conclude that it will be looking for ways to exit this business line within the next year.”

– “We know our costs are lower than theirs so, based on this assessment, we should begin identifying the other markets they will likely exit. We should also begin identifying and attracting the key people we want from operations they’ll have to close.”

For What? How?


Pressures for Continued Growth Maturing Markets Means Keener Competition Relative Price Inelasticity Global Expansion and New Competitors The Information Explosion and New Information Technology

…all of it means that decision makers need every edge they can get.

Why Bother?


For What Purpose?

Defensive, or reactive, strategies, such as :

– defending market share against new product introduction, brand consolidation, price cuts, substitutions

– limiting market share loss to a new entrant

Offensive, or proactive, strategies, such as:

– anticipating and pre-empting competitors’ responses to new product launches or new market entry

– “long range reconnaissance” of potential acquisitions/alliance targets and new product development technologies

– identifying new growth opportunities re new markets, new uses for existing products, etc.

– identification and successful pursuit of key personnel


Business Intelligence is defined by:

1. Hard data-driven requirements about the present, or…

2. Hard data-based, but assessment-driven requirements about the present, or…

3. Hard data-based, but assessment-driven requirements about the future

THE GOAL IS NOT TO BE RIGHT ABOUT EVENTS; IT IS TO BE RIGHT WITH ENOUGH TIME TO BLUNT THEIR

IMPACT.

The Three Tiers of Business Intelligence


How Are BI Efforts Organized?

1. CENTRALIZED—Corporate-driven, usually bottom/up information flow; top/down product flow; designed to support “C”- level strategic decision making.

2. DECENTRALIZED—SBU-driven, usually bottom/up information flow; top/down

product flow; designed to support SBU-level strategy and even tactical intelligence needs.

3. HUB-AND-SPOKE—strategic effort at corporate level; coordinates with separate SBU-strategic/tactical effort.

4. THE CEO-BI “CONSIGLIARE”—designed to support CEO decision making at inner counsel level. Does not support other “C” level or SBU-level intelligence needs.

5. THE BI ORCHESTRATOR—used by small/medium-sized companies where one person manages and coordinates internal intelligence needs with outsource providers and internal resources. ___________________________________________________________

6. THE “LIVING, BREATHING INTELLIGENCE CULTURE”—BI becomes second nature in company; employees recognize importance of BI and take part in collecting, analyzing, and disseminating critical external intelligence.


Verio Case Study: SBC & Yahoo!

July 2003:– SBC requests fixed cost pricing proposal from Verio for support

services– Verio begins analysis to determine feasibility

August 2003– SBC inquires about Verio’s compliance with the California

Information Security Breach Act (forwards an internal email to Verio requesting information). Email includes questions about Verio’s compliance as well as Yahoo!’s

– Verio reviews fixed cost pricing and opts not to offer it to SBC

Fall 2003 – SBC announces that it will no longer be activating shared Unix

accounts on the Verio platform as of January 2004 (approx 70% of monthly activations).

Could this have been avoided?


Could this have been avoided?

Probably not! – The decision was made several levels above Bob Danielson (SBC’s

senior team member handling Shared Web Hosting).

Remember the Goal:

THE GOAL IS NOT TO BE RIGHT ABOUT EVENTS; IT IS TO BE RIGHT WITH ENOUGH TIME TO BLUNT

THEIR IMPACT.

However…




However…

With further investigation and analysis stemming from SBC’s email, Verio might have been able to predict SBC’s strategy.

This would have given Verio the opportunity to blunt the impact of SBC’s planned change of platform via any of the following:

– Fixed costs for support– Cross sell opportunities – Up sell opportunities


Conclusion

This case study represents a gap that Verio faces in its ability to collect data, analyze it, and to act upon that intelligence

- Loss of Unix accounts could be as much as a 400K loss per year.

Per the analysis for the fixed cost pricing for SBC, it is conceivable that we could have locked in a price that would have earned Verio 230K more than we had over an 11 month period.

– This opportunity might still be salvageable

Projections done by the Strategic Solutions Group (SSG) show a 17% decline in total invoice revenue.*

– There could be other opportunities and threats across the existing SSG channels. Examples include:

Verizon is looking for a DIY provider BellSouth has voiced serious concern about Verio operations

* See last slide


Recommendations

It is strongly recommended that Verio begin to organize a Business Intelligence effort:

– Opportunity exists to fill the position of BI Orchestrator (slide #8)

Verio needs to move any BI efforts that are organized towards making Verio a

“LIVING, BREATHING INTELLIGENCE CULTURE”

This can be accomplished by:

– Creating a systemic approach towards the collection and analysis of data– Education of the organization about the safeguarding of intelligence data

such as newly announced strategies, or other information that needs to be earmarked as sensitive

– Creating a funnel for employees to forward data that they think may be relevant to the BI Effort.

– Developing trust between BI providers and their clients (management) – thus enabling more nimble decision making.


Projections 2004

Based on our analysis of current SSG clients the projected recurring revenue for 2004 is:

» $13,562,913– This represents a 7% increase in recurring revenue for 2004 over

2003.

The projected 2004 total invoice for all current SSG clients is:

» $17,811,430– This number indicates a 17% drop in total invoices for 2004 from

2003. This drop is due to the removal of set-up & implementation fees that are associated with the launch of new clients.

– In addition, the numbers do not take into account the following: 10>26 Migration which will cut SBC/AME revenues by an

estimated $500K That Dayco will not pay its arrears of approximately $110K

(2003) and will not pay $200K for 2004 (based on Dayco growth).

The residential deal for RoadRunner may or may not happen. Negotiations for revenue commitments from RoadRunner,

BEZEQ, HKNet, ITNet Any sales in the pipeline Increased competition in the marketplace with the entrance of

1&1.com, Yahoo! and others.


Rights & Information

For More information please contact:

Steven Misshula243 Spoonbill Lane SouthJupiter, FL 33458Or

31 Derby PlaceKings Park, NY 11754

[email protected]@hotmail.com

PLEASE NOTE:Although this presentation is in the NTT/Verio Corporate Presentation Template the information contained in this presentation is the intellectual property of the author(s) – Steven Misshula. Any attempt to copy distribute or modify without the express written permission of the author(s) will result in prosecution to the fullest extent of the law.

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Competititve Intel For Business Decisions Dec 03 & Case Study