Analytics to Lead Tech Spending
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Analytical CRM is said to be the next evolutionary step to operational CRM. "From a theoretical standpoint, advanced analytics can provide both top- and bottom-line growth and savings. It's hard to imagine companies aren't using it," says Josh Greenbaum, a research analyst and consultant at Enterprise Applications Consulting (EAC), based in Daly City, CA. Despite the downward trend in technology spending, an AMR study states that many organizations are starting to use analytics--specifically customer fulfillment--and supply chain management and enterprise performance management (EPM) applications. In a recent report polling technology-buying decision-makers at 100 U.S. companies with 2,500 employees or more, at least 40 percent of all participants will invest in all three applications in 2003. One growing area of analytics is demand forecasting. Although forecasting is often viewed as a proactive approach to padding the bottom line by building top-line growth, it can also help cut costs. "Demand forecasting is specifically defined as the ability to predict the future of sales and the pattern of sales. The trick to it is really reducing the error between the forecast and what actually happens in the future. As you get accurate you can optimize assets like inventory and customer service levels. But the key to all that accuracy is reducing the forecast error," says John Hughes, vice president of sales and marketing at Silvon Software Inc., an analytics software vendor based in Westmont, IL. To meet this increasing interest in analytics, Silvon is building more demand forecasting and inventory optimization products. "We're giving companies tools to reduce forecast error, such as automatic forecasting capabilities that provide indicators when something deviates from the plan. With our product you can watch 10,000 products, and let the solution suggest inventory levels and when reorder points should occur," Hughes says. Silvon is currently working on a software release slated for first-quarter 2003 that will include an optimization piece and additional features that will enable planners to deal with more product lines and manage them in a more accurate way. Hughes expects analytics spending in general to pick up this year. "There's clearly an uptick in interest levels," he says. "There's much more activity in the market place. I think people do see a light at the end of the tunnel. Some are preparing for the future. This down economy has caused many to reevaluate how they're running their business, and they are focusing more heavily on reducing costs and investing in key activities."
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