Company vision: “A Whirlpool product in every home, everywhere.”
Headquarters: Benton Harbor, Michigan
Annual revenue: $19 billion
Most popular product lines:
- Jenn-Air Maytag
Current SAP implementation status: 28 countries (98 percent of the total business)
- More than 80,000 employees
- More than 100 locations
- Operates in more than 30 countries
“Every one of our strategic initiatives is dependent on analytics,” says Whirlpool’s Brian Murphy, director of global information systems development and business solutions. “If we look at every initiative on our plate, at some level there is a metric or a number.”
The corporation’s vision of “a Whirlpool product in every home, everywhere” builds on customer loyalty, brand-focused value creation, and highly nimble and customer-centric supply chain operations. Analytics are the means by which we formulate and make these strategies operational, explains Tom Ehrman, Whirlpool’s director of global enablement services.
What the Data Means
“Analytics is rapid information around a business process and a decision point that enables action to be taken,” explains Murphy. “Ideally, we want to get a 360-degree view of that information, then wrap it into an analytic to make a business decision.” (Whirlpool created a metrics committee to deal with the various measurements needed; see “Establishing the Metrics Committee”.)
Murphy offers an example of the role analytics could play at Whirlpool: “Suppose an analysis of individual stores shows sales increasing at one location and decreasing in another location,” he says. The typical response would be to put Whirlpool’s resources toward boosting sales in the declining location. However, with a 360-degree view, Whirlpool may find that the store losing sales is actually outperforming others in what is, in fact, a declining market. As for the store where sales are going up, it may be in an area where population is increasing. With analytics, Whirlpool may find that its sales are increasing 3 percent and sales in the region are going up 5 percent.
“But getting at data and discerning what it means is not always easy to do,” says Ehrman. The challenges, he explains, are not only technical, but also institutional; among them:
Establishing the Metrics Committee
Murphy says, “Many of our metrics are based on SCORE metrics [a balanced scorecard approach to measuring your business operations], but each one has twists for Whirlpool because of the way we operate parts of our business. A typical metric would be order-line fill rate, which measures when we took an order and how well we filled it. For example, if a customer orders 100 units, did we give that customer 100 units, and if not, why not?
“Metrics in and of themselves are useless without root-causal analysis. It may or may not be okay to say we met customers’ needs 97 percent of the time (depending on the customers requirements), but if we can’t say why we didn’t meet that 3 percent, then the metric is useless to us. The ability to ‘root-cause’ the number and know why it’s not where we need it to be is more critical to us,” according to Murphy.
“We have a committee that validates all metrics,” says Murphy. “Any metric from SAP BW data needs to be validated by the [metrics] committee, which has a cross-functional membership: finance, sales, sales reporting, and manufacturing. The committee doesn’t validate every single function that uses SAP BW, but it does authorize all the key critical functions and will pull people in, as appropriate.
“Our IT group does not take a metric development task onboard until a metric is defined (i.e., the method of how it is calculated, how often it is updated, how often it’s run, and the levels it runs at). Once the functional specifications are defined, they are brought before the metrics committee during one of its monthly meetings for approval.” says Murphy. “The committee discusses and aligns the metric, balancing different business needs with the goal of having one number, debating the method and frequency until all members are in alignment and sign off on the metric.”
- Aligning execution with corporate strategy. Clear and measurable performance goals are not always in place, including those for individual employees who may not have objectives consistently aligned with strategy.
- Increasing the effectiveness of decision-making processes. SAP NetWeaver Business Intelligence (SAP NetWeaver BI) and SAP Knowledge Management (SAP KM) are not necessarily connected to business processes and applications. As a result, some decisions are either delayed because of lack of information, or they are made using “gut feelings.”
- Providing timely insights into trends, events, and opportunities. In many cases, decision-makers receive after-the-fact reporting. This results in missed opportunities, or worse, critical events that go unnoticed.
- Overcoming budget constraints. Like every company, Whirlpool needs to do more with less and must justify expenditures. This applies to the technical infrastructure as well, where tools are often not integrated, resulting in higher TCO and a lack of flexibility.
Analytics by themselves cannot overcome all institutional challenges, but they can go a long way toward resolving many of them. “If you make decisions with limited information, it stands to reason that the benefit you derive from that information will be limited,” Murphy says. On the other hand, you can have the best information-gathering systems in the world, “but that information is useless unless it drives an action,” he explains. “If you don’t take action based on that information, then you are probably being drawn to the information based on a routine you perform, instead of by exception.”
That’s why Whirlpool jumped at the opportunity last fall when SAP approached the company with a challenge: Build and implement two analytic applications with new tools from SAP in just four weeks. SAP engineers worked with Whirlpool’s global information systems team to implement and install SAP NetWeaver Visual Composer (SAP’s modeling tool for analytics), as well as the relevant connectors to Whirlpool’s SAP BW, SAP R/3, and the Java 2 Platform, Enterprise Edition (J2EE) systems.
For this pilot, Whirlpool installed the following applications: SAP NetWeaver Visual Composer, Flex presentation server from Adobe, and Flash Player (client side) from Adobe. Not only did Whirlpool seek to build and implement new analytic applications in four weeks, but the team also set a high bar for the project’s return on investment (ROI):
- A single, definitive version of the truth: Whirlpool wanted to create one central repository of business information for that “a commonly accepted value for a given metric.”
- Reduced development cycles: “We have a desire to reduce development cycles from months to weeks, and from weeks to days. Faster cycle times will enable us to leap ahead of the competition and create differentiating capabilities faster than anyone else,” says Murphy.
- Visibility into all business information:
Whirlpool collects an immense amount of business information, but can only see the tip of it within any given business process. Says Ehrman, “Turning data into information is a goal for every business, filtering through the mass of data and identifying where the business needs to focus its energy is critical if we are to maximize the use of all of the data in the organization.”
- Fewer points of interaction:
“The [people in the] business hate it when we have to tell them that to get the information they want, we have to run three reports, aggregate the data, and then they still need to go into another system to take action,” says Murphy. “If I can see the information and enact the action required within the same screen, I can increase the connection between information and action and the speed at which I carry it out.”
- An intuitive user interface (UI): “Users don’t want to have to learn a new system; they want a system that provides them with a guided process,” according to Murphy. “Some people go into reports once a month or once a quarter, and they don’t want to have go to a training course to know how to produce [those reports]. The UI analytic should be self-educating. If it’s not clear what the analytic is or how to use it, I create a change-management activity, which is another step toward value realization,” says Murphy.
How Whirlpool Did It
“This was the first time in my experience that SAP gave me a new tool that didn’t require me to put in a new system,” Murphy recalls. “SAP said, ‘Here’s the software; just install it in your existing environment, and leverage the work you’ve already finshed.’ ”
According to Murphy, his team managed to install SAP NetWeaver Visual Composer and its connectors to SAP BW, R/3, and J2EE systems, as well as a service pack to SAP NetWeaver Portal, in just two days. (For Whirlpool’s recommendations about using SAP NetWeaver Visual Composer, see “Modeling for Analytics” below.) “If you’re capable of doing that in 48 hours with a tool you have never touched or laid eyes on, you increase your confidence level significantly,” he says. “And you come out with a paradigm where everything takes weeks becomes everything takes days. ”
Modeling for Analytics
Whirlpool’s Brian Murphy offers the following observations and advice when using SAP NetWeaver Visual Composer, the modeling tool for SAP Analytics:
SAP NetWeaver Visual Composer helps close the communication gap between IT and the business. IT tends to approach problems using an “if … then” form of logic, says Murphy. The business, in turn, tends to be process-oriented. In SAP NetWeaver Visual Composer, Murphy believes SAP has created a tool which bridges that gap — one that presents in business-process terms a way to construct analytics.
Even though using SAP NetWeaver Visual Composer to build basic analytics is relatively easy, invest in someone with expertise. Murphy’s team found SAP NetWeaver Visual Composer to be a simple tool to use. “I had a new hire walk in on a Monday morning, and within a week, even though she had never before touched SAP or any Whirlpool system, she was creating analytic applications,” Murphy said. However, he cautions that while SAP NetWeaver Visual Composer is simple to use to create basic analytics, you will still need someone on the team to be an expert in the application in order to build more advanced analytics.
Don’t lose focus. “What we found with SAP Analytics and SAP NetWeaver Visual Composer is that your mind can go wild with possibilities,” Murphy says. The tool has a lot of capabilities, and “you could almost get lost in the trees.” Murphy recommends that first-time users stay focused and be clear about what will add distinct value. “Keep your scope narrow, build your analytic application, and then move on.”
Start with data you already have in SAP BW. Don’t begin working with SAP NetWeaver Visual Composer by constructing analytics that require you to load new data or need connectivity to another system, Murphy says. Instead, tap business information that already exists within the system until you get the hang of working with SAP NetWeaver Visual Composer.
Buoyed with confidence, Murphy said he sought to stretch his team for the pilot. The team from SAP wanted Murphy’s group to implement two analytic applications over the course of the pilot program. “If we did two, then we met expectations,” says Murphy. “If we did four, we exceeded expectations.” In the end, the team implemented seven analytic applications during the pilot program.
What Whirlpool Implemented
The following are two of the seven analytic applications that Whirlpool implemented over the course of the four-week pilot:
- Sales reporting: According to Murphy, this particular analytic is remarkable because it draws data from a third-party system based in Australia. “The user doesn’t even know he or she is hitting Australia,” Murphy says. “The look and feel is the same.” The back end is invisible, and can be moved anywhere.
The application updates itself every 15 minutes and provides alerts on margin so the leadership can see issues with margin erosion. It provides a summary of sales volume, revenue information, and margin with trend visualization.
|The sales reporting system shows real-time sales information coming from a legacy application. It used existing database and connections to allow Whirlpool to place up-to-date information on the desktop of any user who demanded it.
- Cost center: The user can select the year of interest. The system then retrieves the relevant detail showing the actual and planned costs along with variance levels. In selecting a cost center, the user can see its detail by cost element along with a graph for the year of the actual and planned costs. The screen is interactive so that the user can sort and focus in on specific variances by value or percent.
|The cost center screen allows Whirlpool to provide line managers with better visibility and management of their cost centers, down to the cost-element detail level.
Thanks in part to the experience of implementing SAP Analytics, Whirlpool has made three specific decisions about how it will handle its business information needs in the future:
1] Make SAP BW the go-to system. Whirlpool has made a deliberate decision to make SAP BW the conduit for all business information, either as the central repository or as the tool that directs users to another legacy or source system. “We want all requests for information to hit [SAP NetWeaver] BI,” Murphy says. The goal, he says, is to reach that “single version of the truth,” and the way to do that is to ensure that everyone is pulling numbers from the same place. “We don’t want our leaders to get into a dialog about what the right number is. We want them to get into a dialog about what the real issues are,” Murphy says.
2] Allow use of legacy or SAP data. Although SAP BW is the central repository, Murphy says that not all data is found there. There are several databases at Whirlpool that are either used infrequently, or when used, tap only five percent of the data cell. “Do I want to pay to move it into SAP BW?” Murphy asks. SAP Analytics enables Whirlpool to take advantage of these third-party databases and present the information with a look and feel that is consistent to the user.
3] Continue to shrink the development cycle. The bulk of time required for any analytic application development is to build the data storage, Murphy says. SAP NetWeaver Visual Composer has made the front-end work quick and easy, but the only thing it does for the back end is to speed connectivity. It doesn’t have anything to do with how you collect your data or what data you collect. Whirlpool’s approach is to creatively exploit the data that is already there.
A Composite Future
The real future of analytics, in Murphy’s mind, is in what SAP is calling “composite analytic applications.” Imagine a decision-maker at Whirlpool reviewing his daily orders in SAP Analytics and he finds one from a low-margin customer. From that analytic view, he can send an email to inform his boss of the risk, or if he has some knowledge about the situation, he can add a note explaining the exception that others will see when they view the same information. He can even cancel the order in SAP, all from the analytic view.
By the end of the year, SAP will be releasing its first composite analytic applications, and Murphy says he will be there. “Why do we pursue the bleeding edge?” he asks. “ In my view, we saw this technology as a valuable tool that could really change the face of analytics, and we want to influence where it goes.”