Business intelligence in a changing world Robin Bew, Chief Economist

1. Business intelligence in a changing world Robin Bew, Chief Economist Special Libraries Association Conference, June 7th, 2005

2. Session roadmap • How is the world changing? • short term issues, long term challenges • How are businesses responding? • winning in a world of change • What does this mean for business intelligence? • staying relevant as business needs evolve

3. How is the world changing?

4. Short-term economic outlook

5. Key points for 2005-06 • Exceptional times don’t last • 2004 the best year for quarter of a century • but will not be repeated • Struggle between cash and debt • interest rates rising, but still low • debt levels worryingly high • Growth performance reasonable • but cyclical divergence? • Refocusing on domestic opportunities • Downside risks remain significant

6. US personal debt

7. US outlook • Problems are in the personal sector • corporate sector in reasonable shape • What will stop the consumer? • debt service payments • wealth • housing, equity valuations • Rising debt burden is unsustainable • saving will stabilise (or rise) • Gradual softening of economic growth

8. Japan - blowing hot and cold GDP growth, % • The cold • In and out of recession • Export led • Capex & consumption follow • Strong yen • Fiscal mess • Demographics • The hot • Monetary policy • Banking sector • Domestic restructuring • Inflation outlook Y on Y

9. Euro zone • Poor acceleration, good brakes • Export main growth driver • Only growth driver in Germany & Italy • Domestic demand revival in France, smaller markets • Growth under threat in 2005 and 2006 • US, Asian slowdown • Strong euro • Little policy stimulus • Structural rigidities • Credit data • The meaning of ‘no’

10. Emerging market focus • Asia • the rise of domestic demand, currency pressures • East Europe & the CIS • productivity, trade, oil • the significance of tax rate differentials • Latin America • policy orthodoxy, but still vulnerable • Middle East • awash with liquidity, but security issues • Africa • institutional failure in the second tier countries

11. China and India • China surging ahead • oversupply in many sectors • Risks to leaving investment unchecked • Bad debts, margin squeeze, corporate failure • short-term outlook, also long-term hangover • India has slowed • but no need for despondency • Sector successes • services, manufacturing • But Chinese style performance unlikely

12. Short-term worries

13. Global pressure points • The US dollar • America choking on its own debt • Liquidity withdrawal • risk assets vulnerable • China slowdown • slowing, slowing, gone? • Oil prices • any relief? • Physical security

14. The changing shape of the global economy

15. Changing global demand US$ trn GDP at mkt exchange rates

16. Dynamic markets Real output, 2005=100 E7 = China, Brazil, Korea, India, Russia, Mexico, Taiwan

17. US dominance threatened? US$ trn GDP at PPP conversion rates

18. The changing growth league 2000-09 2020-29 Annual average real GDP growth, %

19. How are businesses responding?

20. Changing business • Business 2010 • EIU study in conjunction with SAP • Survey of 4,000 executives and senior managers • Key findings • Changing strategic priorities • Changing business models • Innovating to stay ahead • Improving the customer experience • Changing role of IT

21. Changing strategic priorities • Specialisation to counter threats • industry giants & emerging mkt start-ups • Speed and flexibility • becoming core competencies • People over technology • finding and keeping the best • Corporate governance • global regulatory reach, so global application • Partnership • adding value via suppliers

22. Changing business models • Need to be adaptable • more important than product innovation • cope with changes in the marketplace • often more important than product development • Technology reinventing the business • internal processes • greatest efficiency gains • e-business • demand driven

23. Innovating to stay ahead • Understanding the customer need • the greatest challenge • more important than time to market, predicting future trends • Using your data more efficiently • internal systems, mobile technology • Maintaining intellectual capital • preventing brain-drain • building a knowledge base

24. The customer experience • Quality • of product and delivery • Customisation • one size fits all will no longer suffice • Availability • opening the company to the customer • on line access to products, information

25. Changing role of IT • IT as a competitive tool • not just a way to cut costs • IT as a tool of the people • technology useless without skilled staff • What should IT allow companies to do? • get the right information at the right time • access to information anywhere • instant alerts as things go wrong

26. What does this mean for business intelligence?

27. A more demanding market • What does the EIU see? • granularity • increased demand for emerging and pre-emerging market information • demand for industry information • demand for risk analysis • understanding the customer need • need for customisation • flexible delivery mechanisms • demand for ever higher quality • relevance, accuracy and speed

28. How has the EIU responded? • Increased our country coverage • 201 markets, 150 with numerical forecasts • Built a strategic industry capability • integrated with our macroeconomic view • Increased on focus on risk • launched an operational risk service • upgrading our financial risk service • Hugely boosted our custom business • market studies, political reviews, industry benchmarking, modelling and forecasting

29. Economist Intelligence Unit Country Analysis Executive Services Economist Conferences Corporate Network Electronic services and publications Custom research and presentations Business meetings and government roundtables Executive peer groups Flexible delivery mechanisms

30. Maintain our tradition of quality • 130 in-house country analysts • 600 contributing analysts based in-country • quantitative and qualitative approach • reliable sources of local data in 201 countries • sensitivity to geopolitical dynamics • independent view • ongoing assessment of global trends and events • almost 60 years of experience

31. Quality centered methodology • Ensure quality • Review of analysis by country experts • Automated checks • Final approval by regional heads • Qualitative and quantitative approach • Apply global assumptions • Use a variety of models • Provide qualitative insight • Gather dependable information • Use in-country analysts • Select most timely, reliable data • Conduct primary research

32. What does all this mean for you? • Your reality • more demanding internal clients • evolving offering from your suppliers • The challenges (as we see them) • match information to the need • ever greater understanding of your clients needs • ever greater understanding of the strengths and weaknesses of your sources • The result • a significant source of value to your business