Data-Driven Innovation at Grupo Pellas Sugar, Energy and Rum Company

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Case Analysis: Data-driven Innovation at Grupo Pellas Sugar, Energy and Rum Company

Submitted by:

Tito L. Aldecoa III

Masters in Management

In Partial Fulfillment of the requirements for MM 1601

Wages and Salary Administration and Performance Management

Case Analysis: Data-driven innovation at the Grupo Pellas SER Company

Introduction

SER (Sugar, Energy & Rum) was a company belonging to the Grupo Pellas Corporation. The company operated in four countries, had six subsidiaries, employed more than 25,000 people, had more than 43,500 manzanas of sugarcane crops in Nicaragua alone and had global annual sales of more than US$400m. In 2008, due to the negative effects of the crisis on the company’s business model (increasing costs due to higher prices for fuel and decreasing income because of low international sugar prices), the company decided to implement a business intelligence (BI) system to optimize its processes to reduce costs and increase productivity. At that time, the company had more than 100 years of data, information systems that fed into their main business processes and a culture that appreciated data as the basis for decision-making. However, there were inconsistencies among data systems, users received highly complex reports in Excel or green screens and process monitoring happened long after the tasks had been completed. As a response, SER used extract–transform–load to collect and clean data that would be used in the BI system (the case leaves the questions regarding the systems selection unsolved for discussion). Based on their business model, they selected the most critical processes and defined key performance indicators to measure the impact of changes in those processes. They considered graphic design as a tool to make the system more accepted by users and worked together with users so that reports only offered the most important information. The result was improved costs and productivity. They decreased manual time spent by 14 per cent, automated time spent by 10 per cent, and eliminated 1,556 hours of dead time for equipment in the field, which allowed them to increase productivity by US$1m just in sugar. They saved 20,000 trips from the fields to the factories, which represented more than US$1m in savings by monitoring the weight of wagons loaded with sugarcane in real time. They improved client perceptions about the company both locally and internationally by implementing a sugar traceability system.

Background:

Results of the study done with more than 100 Latin American managers about IT adoption had shown that Business Intelligence was number one priority on the IT agendas at companies in Latin America in 2014. This fact was not surprising, as it was consistent with global business priorities. BI was a concept introduced by Howard Dressner at the beginning of the 1990’s. Business Intelligence referred to the consolidation and analysis of internal data.

The benefits of implementing this strategy:

• Improved business processes and cost structures.
• Innovation to position themselves strategically.
• Detected patterns in their target markets.
• Manage risk proactively to create a positive impact in the business.
• Promoting and encouraging an evidence-based culture for decision-making.
• Controlling the business’ performance to reach defined objectives, establishing a proactive framework within which to make decisions.
• Facilitating the articulation and alignment of strategies throughout the company and anticipating and managing change.

However, the challenge in implementing this IT strategy are:

• Combining and integrating data from different sources was a complex task that required highly sophisticated abilities.
• Lack of dedicated Senior Manager leading the process, limited to resources, understanding the rules of game, the quality and integrity of existing data, understanding and managing internal expectations, understanding the culture that is resistant-to-change environment, complex data integration, training and justification of the investment.

The problem that arouse in this case study are the following:

• Lack of experienced leader to interpret large data in the system.
• Large amounts of data were badly managed, ignored or underutilized due to years of in efficient data recording or data interpretation.
• One out of three business managers reported having made decisions with incomplete and imprecise data.  

Problem

Mr. Graham Tercero, Regional Chief Information Technology Officer was selected to be part of the senior management meeting to elaborate Sugar, Energy & Rum (SER’s) business strategy for the next five years. The problem Mr. Tercero is facing are:

• The lack of organizational structure that would lead to successful implementation of Business Intelligence project.
• Lack of support in terms of manpower that ensure reports are interpreted efficiently and precisely.
• Lack of skillful manpower to interpret and analyze data.
• Implement the Business Intelligence and make sure to minimize cost and increase productivity.

Alternative Courses of Actions

• ACA # 1. Mr. Graham Tercero should propose to the Board of Directors to create a department that would handle Business Reports and this will be Management Information System Department which should hire a MIS Quality Manager and Reports Analysts to ensure data interpretation and analysis is precise and accurate.

Advantages

• There will focus on the business report data gathering, data analysis and data interpretation.
• On-time delivery of reports for timely business management decision-making.
• There will be management monitoring and control.

Disadvantages

• Additional cost when there is an increase in additional human resource.
• Time for training will be needed.
• Sourcing and Recruitment will need more time to find the right person.

• ACA # 2. Mr. Graham Tercero can outsource a company that has the capacity to effectively interpret data and has proven its knowledge in the market. Third party providers can help implement capabilities of data interpretation.

Advantages

• Less supervision from management.
• Minimal cost in terms of training and human resources development.
• Outsourcing companies are considered experts.

Disadvantage

• Less supervision
• No control from management.
• Reveal management confidential data.

• ACA # 3. Mr. Graham Tercero should propose that the Agro-Industrial Manager lead the Business Intelligence project.

Advantages

• The agro-industrial manager has the capacity to analyze the data.
• Have long work experience in the company.
• Knows the ins and outs of the company.

Disadvantages

• The company have 120 years of data that needs interpretation expert in reports analysis is a key skill needed.
• This will be an added task for him.

Recommendation

For me, Alternative Course of Action is for Mr. Graham Tercero should propose to the Board of Directors to create a department that would handle Business Reports and this will be Management Information System Department which should hire a MIS Quality Manager and Reports Analysts to ensure data interpretation and analysis is precise and accurate. The advantage is that there will focus on the business report data gathering, data analysis and data interpretation, there will be on-time delivery of reports for timely business management decision-making and there will be management monitoring and control. However, the advantages are: There will be an additional cost when there is an increase in additional human resource of course the time for training will be needed and a time to source and recruit the right candidate might take a long time. Given this recommendation, it is also essential that the time will be given much support by management in terms of timeline of each report update. Also, ensure that the software are updated to ensure quality reporting system.