Business intelligence for strategy planning at ABB

Interviewed for this case was Daniel Niederer, Assistant Vice President, Head of Strategy Controlling & Operations at ABB Group. Niederer leads a team responsible for operating the ABB Group’s Strategy Controlling process. He operates a standardized financial portfolio assessment methodology for the ABB Group, and leads the corporate Business Intelligence program.

Background on ABB

Intelligence activities at ABB weren’t always in such a visionary shape. In 2004, ABB was in the process of recovering from a lengthy crisis that had resulted from poor financial performance. The cost-cutting exercises had slashed most non-business critical activities in the short term, and Business Intelligence had been one of the sufferers. Niederer describes the situation: "New executives were hired who obviously had an urgent need for accurate business information, based on which they could make decisions on both strategic and operational level. Back then, we came to the somewhat embarrassing conclusion that investment banks and consultants knew more about ABB’s competitive situation than we did ourselves. Virtually no-one was equipped to provide answers to the management’s questions in-house. We made it our mission in the Corporate Strategy department to change this." Niederer continues: "Because of the dramatic downsizing that had taken place earlier, we still had a relatively poor intelligence capability back in 2004. We were faced with several challenges:
  • Business Intelligence work was mostly an insular activity
  • Business Intelligence was poorly coordinated, and different types of Business Intelligence products existed in the organization that were completely unknown to each other
  • There was no-one clearly responsible for corporate Business Intelligence
  • No Business Intelligence recognition or awareness existed from top management
  • As a result, no commonly shared understanding existed about the competitive landscape."

Structured Market Intelligence for ABB’s Strategy Process - Framework

Getting to work to improve ABB’s Business Intelligence operation, Niederer and his team developed a Business Intelligence model that was based on three different frameworks. These frameworks serve to ensure that ABB has a continuous process in place to cater to the Business Intelligence needs of different end users, while at the same time maintaining an umbrella view of the business environment of the entire organization.
  • The first of the frameworks is the standard intelligence cycle that helps ABB get the structure in place for an on-going Business Intelligence capacity.
  • The second framework presents the different Business Intelligence areas where ABB is active. Business Intelligence as a whole has been divided into Competitive Intelligence, Market Intelligence and Macro Intelligence, illustrated in the graph below.
  • In the third Business Intelligence framework, ABB has made the distinction between strategic and operational intelligence, as illustrated in the graph below.
abb_areas of business intelligence   Focusing specifically on strategic intelligence, Niederer lists out the primary issues under ABB’s radar screen:
  • Long term strategy of competitors
  • Articulated long term goals and targets
  • Mergers, acquisitions and investments in the industry
  • Portfolio analysis & touching point analysis
  • Market share development and regional competitive position
  • Footprints: manufacturing, engineering, R&D
  • Financial benchmarking
"From the long list above, we generally need to put specific focus on the common denominators between ABB’s very diverse businesses in order to reduce complexity", Niederer says.

Results of the Strategic Intelligence Capability

"At ABB, we have developed a portfolio of different Business Intelligence products in order to respond to different end users’ needs in different situations", Niederer tells us. "It is very important to standardize the Business Intelligence products in order to reduce complexity through operationalized Business Intelligence and high recognition value with all Business Intelligence stakeholders." The matrix below presents examples of Business Intelligence products that have been developed at ABB to support strategy work: abb_intelligence delivered through standard BI Products The output is delivered through several media; Presentations, face-to-face discussions, seminars, and workshops. Each Friday, a report is sent to the ABB Group’s CEO, CFO and other members of the executive committee. The purpose of the Friday briefing is not to provide any rocket science, but rather to recap the most important issues from that week. ABB’s intelligence team also produces quarterly reports for management that cover the macro environment, vertical industries, markets, and competitors. The quarterly report is a thorough research package with extensive analysis included. "We also give intelligence presentations to ABB’s Head of Corporate Development, who is member of the ABB executive committee who in turn makes presentations in the executive committee or to the Board of Directors on a regular basis", Daniel Niederer says. "However, most Intelligence products end up being delivered through our dedicated Business Intelligence Portal, so that everyone with an access to the tool can retrieve the information for their personal needs."

Case: ABB Group Strategy 2011

"We provided a lot of input to the Strategy 2011 project", Daniel Niederer says. "One part that, we were especially heavily involved in was the competitive landscape and the market size/share analysis. The board of directors eventually gave us feedback that the analysis was a "Master-piece of work". "It is indeed gratifying to be recognized for one’s intelligence work by people who sit on a number of boards in global companies", Niederer considers. "One key success factor in our analysis was the transparency at comparing the present market situation with the future scenarios. We had developed an in-depth understanding of the present market share data. We were therefore able to provide future estimates based on the estimated growth in various vertical sectors on a regional basis. That way, we were able to present future scenarios that were backed up by very thorough research", Niederer describes.

Case: To divest or not to divest

Niederer describes a specific decision-making situation where strategic intelligence was needed to back up the decision: "Management was evaluating the potential divestment of a certain part of a business. The perception was that the business did not seem to have a sound outlook for the future since the market growth was limited." "We did our analysis and came to the conclusion that the future capital expenditures of the particular vertical industry where this business was active in, were in fact likely to increase quite dramatically. Based on this intelligence, the divestment plans were stopped. It seems now that our analysis was indeed right, the industry sector picked up and ABB is making good business in that field."

Lessons Learned

When asked about the key success factors in developing effective strategic intelligence, Daniel Niederer raises three different points:
  • Become a preferred business partner to management by delivering customized and dedicated intelligence services. "We should be the preferred speaking partner to management. We do this in-house by adding the kind of value to the output that no external source could achieve."
  • Deliver professional intelligence - go beyond the facts. "It is essential to deliver intelligence rather than just data. In order to be able to do this, resources will be needed in the form of both time and money. Integrating Business Intelligence with the strategy process is vital; We have already ensured that we are part of the "Strategy 2011" process at ABB by providing a number of intelligence products related to it."
  • Communication and customer awareness. "Business Intelligence output has little impact if it’s not marketed internally. Business Intelligence products should be discussed in management meetings, sales events and marketing meetings alike. End users of intelligence output should be aware of the intelligence efforts in order to be able to learn from each other and share best practices in Business Intelligence. One thing for instance that we could have done better from the beginning is to have focused more on the intelligence needs of BU Marketing Managers."


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