Case: Management: Piloting Procter & Gamble from Decision Cockpits

Business Sphere and Decision Cockpits

Making buried data in databases and spreadsheets understandable to ordinary people. Focus on how to best apply and visualize information instead of debating whether underlying data and data sources are correct (usually most of a meeting sometimes).

P&G has made available to 50,000 users analytical solutions called Business Sphere and Decision Cockpits.  Business Sphere was developed in partnership with BOI, Cisco, HP, SAP, Nielsen and TIBCO Spotfire.

Focus is on accuracy of the information AND the interpretation. Objective is to Understand Correlation between two variables (events or actions) vs. Causation (one action directly causes another action). The broader strategic goal is to continuously enhance the customer experience online and in store.

The first project, launched in 2010, is the Business Sufficiency program, which gives executives predictions about P&G market share and other performance stats six to 12 months into the future. At its core is a series of analytic models designed to reveal what’s happening in the business now, why it’s happening, and what actions P&G can take.

The “what” models focus on data such as shipments, sales, and market share. The “why” models highlight sales data down to the country, territory, product line, and store levels, as well as drivers such as advertising and consumer consumption, factoring in region- and country-specific economic data. The “actions” analyses look at levers P&G can pull, such as pricing, advertising, and product mix, and provide estimates on what they deliver. 

Q1: What management, organization and technology issues had to be addressed when implementing Business Sufficiency, Business Sphere, and  Decision Cockpits?

1.     Management Issues:

The management dimension of information systems involves Human resources management, strategy and management behavior:

The issues had to be addressed are:

Human resources management:

The main function of HR is ensuring training – how to train the existing employees to adopt and use the new tools, try to hire skillful employees, retain/maintain skillful employees and pay compensations to employees. Human resource strategies are to make sure that data didn’t leak and obtained by competitors and to make sure that the data obtained have been fully utilized by the managers and make decisions. Human Resource Management behavior is toward maintain the Management integrity

Organization issues:

The organization dimension of information systems involves the organization’s hierarchy, functional specialties, business processes, culture and political interest group. Since P & G pursue new IT innovation to maintain the competitive advantage, the management issues that need to be addressed involves such as:

1.     Functional specialties - P & G need to structure back the functional specialties especially in IT department

2.     Business processes – Business process will be change and spouse to be in line with the new approach

3.     Culture – New culture will be created and how fast the employees can adopt the change

Technology issues:

The organization dimension of information systems consist of computer hardware, software, data management technology and networking / telecommunications technology (including the Internet).

By implementing Business Sufficiency, Business Sphere and Decision Cockpits, P&G change the way its gathers, reports and interprets data. Hence, the technology issues need to be addressed consists of:

1.     Computer hardware – to suit the program,

2.     Software – to upgrade accordingly,

3.     Data management technology – to store the huge data, and

4.     Networking/telecommunications technology – to support the solutions

Q2: How did these decision-making tools change the way the company ran its business? How effective are they? Why?

Business Sufficiency:

This program furnished executives with predictions about P&G market share and other key performance metrics six months to one year into the future. Based on a series of analytic models showing what’s occurring in the business right now (shipment, sales, market share):

1.     Why it’s happening?

2.     What actions can be taken?

The effectiveness of the tool is based on the analytic models as follows:

    The “why” models highlight sales data at the country, territory, product line and store levels along with drivers such as advertising and consumer consumption, factoring in specific economic data at the regional and country levels.

    The “actions” show ways that P&G can adjust pricing, advertising and product mix to respond to the predictions.

    As such, this program helps the CEO and executives to examine the top categories of products and country markets that are responsible for 60 percent of sales.

    This tool provides data visualizations that show changes in sales and market share.

    Moreover, this program furnishes more detailed data as required by executives such as: Is the sales dip in detergent in Germany because of one large retailer? Is that retailer buying less only in Germany or across Europe?

Business Sphere:

o   Interactive system designed to reveal insights, trends, and opportunities for P&G’s leaders and prompt them to ask focused business questions that can be addressed with data on the spot.

o   Thousands of algorithms and analytical models aggregate data, organizing it by country, territory, product line, store level, and other categories and monitor trends like response to advertising and consumer consumption within individual regions and countries.

o   This tool allows top executives to answer their own specific business questions and to visualize data in a more intuitive way.

o   It was envisioned as a kind of command center, where top managers gather either in person or via high-quality video conferencing, and immediately determine the biggest problems facing the business and who can fix it as soon as they arise.

o   P & G now has more than 50 Business Sphere around the world.

o   This tool is effective because P&G now can obtain data about sale, inventory, ad spending and shipment data much faster and more frequent time intervals.

Decision Cockpits:

o   Give more of its employees access to the same common data sources,

o   These cockpits are dashboards displaying easy-to-read charts illustrating business status and trends.

o   It feature automated alerts when important events occur, control charts, statistical analyses in real time, and the ability to “drill down” to more detailed data

o   By providing a one-stop source of accurate and detailed real-time business data, all employees are able to focus instead on decisions for improving business.

Q3: How are these systems related to P& G’s Business strategy?

Procter & Gamble uses “Distributed development” as part of their global model. This model allows for the adaptation in a set of tools and practices that fit an organization’s needs. To success, P & G has been robust information technology and willingness to pursue new IT technology to maintain a competitive advantage in its industry. The Business Sufficiency program, Business Sphere and Decision Cockpits, give managers and executives the faster and better decision making. The system have been reduced complexity involved a statistical report, as well as cost reductions. The implementation of systems also able to better anticipate future events affecting the business and more quickly respond to market stimuli. These systems eliminate time spent debating different data sets, and instead use a system that allows management and employees to focus on immediate business decisions using the most accurate data available at that precise moment.