Deep in the recession of the early 2000s, HallStar Co., a $125 million specialty chemical manufacturer, was doing what most mid-size manufacturers were doing: pursuing every avenue to cut costs and making do with systems already in place. Then, in 2003, after the market had eased up a bit, HallStar brought in Cognos Inc. business intelligence (BI) tools to try to leverage the information in its new Lawson enterprise resource planning system to make better business decisions.

The first initiative was to reduce inventory, which, at the time, was on the high side at 18% of revenue. After knocking that figure back to 7.5% of sales while increasing its on-time delivery rate in a short year and a half, HallStar plunged deeper into BI. It began to leverage Cognos not just for rear-view mirror insights into its quarterly performance, but also to garner real-time information about how the company was doing in all aspects of its business. Salespeople used the tool to evaluate how well they were meeting sales goals in new markets, such as Asia. The director of marketing orchestrated a BI initiative to pinpoint problems with margin erosion, allowing HallStar to fine-tune its prices to regain margin points.

Today, 75 of HallStar's 120 employees use Cognos 8.0 on a regular basis to monitor all aspects of the company's performance, and HallStar CEO John Paro issues a monthly voice message that serves as a corporate scorecard, highlighting key Cognos metrics. In the past year, the company grew its gross profit by three percentage points, and earnings before interest and tax (EBIT), its key metric, rose 55% from April 2006 levels.

While the BI efforts aren't the only driving force behind the company's notable performance improvement, the tools do serve as a focal point, says Chuck Redpath, HallStar's director of IT. "Once you rally people around specific performance measurements that you can track through a business intelligence tool like Cognos, people understand how they can impact the bottom line," he says. "You see lightbulbs going off over their heads and everyone is rowing in the same direction."

As BI tools become more accessible, a greater number of manufacturers are rowing in the same direction as HallStar, giving operational managers in sales or production, for example, the information they need to manage the business in real time. With a view into how the business is performing at any given time, managers are empowered to take corrective actions that can reduce costs and bolster efficiencies, as well as create revenue opportunities and drive growth.

Real-Time Orientation

"We've gone from backward-looking, historical reporting to looking at what's happening right now or what may happen in the future based on inputs and trends," says John Hagerty, vice president and research fellow at AMR Research Inc. "Before [with BI], by the time you got information, you couldn't do anything about it. Now that you can get information in a more rapid flow, businesses can take action based on what they're seeing."

Much of what's driving the connection between BI and growth is that operational folks gain access to the data they need to take action. Scorecards and dashboard capabilities are big areas of growth in the BI category because they let companies publish to the masses information that was previously locked up in tools used only by a handful of people, Hagerty says. While BI investments, on the whole, will rise only 3.6% to $23.8 billion in 2007, dashboards and scorecards continue to grow at a faster rate — about 4.5%, according to AMR.

"The users for BI are changing. Instead of having a smart Ph.D. in the back office slicing and dicing data looking for trends, now there are many different types of people looking at the data," says Michael Corcoran, chief strategy officer at Information Builders Inc., which markets BI software. "These are people in the call centers on the phone with customers, employees managing the supply chain, salespeople, or people driving trucks. These people don't care about quarterly trends. They want to know what process is required for this day or this hour, and they're forcing the business to become more real-time-oriented."

Armed with a real-time view of the enterprise, manufacturers are slowly orienting their organizations to a performance management culture, using dashboards, scorecards, and other reporting tools to garner a cross-functional view of their performance and to gain visibility into their supply chain. With this insight, a manufacturer can gauge whether it is meeting its intended business targets — for example, sales goals, cycle time reductions, or customer satisfaction metrics — and respond accordingly, by exception and with agility.