SIDEBAR: Tips for Getting BI Right
- Analyze how executives make decisions.
- Consider what information executives need in order to facilitate quick, accurate decisions.
- Pay attention to data quality.
- Devise performance metrics that are most relevant to the business.
- Provide the context that influences performance metrics.
- Take into account users' feelings, and address their concerns up front.
SIDEBAR: The Value of Plastic
CREDIT CARDS: To accept them at Wendy's restaurants or not to accept them? That was the question facing executives in early 2003. Sure, customers would appreciate the convenience of being able to pull out the plastic when they were short on cash to purchase a value meal, but would such an option be a losing proposition? Executives decided to test the impact that credit cards would have on sales by accepting them in select stores. The company used its business intelligence system to determine how a credit card purchase affects sales and speed of service, and to measure the amount of cannibalization from credit cards - in other words, the number of transactions that would have been in cash but that are now on credit because it's an available option. To their surprise, executives learned that people who use credit cards spend more and buy more than they would if they were using cash. People who pay cash tend to buy value meals, which, while good for consumers' pockets, are less profitable for Wendy's. By contras t, consumers who pay with plastic tend to order a la carte, which tallies up to a larger tab. Indeed, the average docket paid for by credit card was 35 percent higher than dockets paid for in cash. With sales numbers like that, Wendy's introduced credit card readers nationally in June 2003.
SIDEBAR: How BI Uncovered Rip-offs
Carlson Restaurants Worldwide (CRW), the Dallas-based operator of T.G.I. Friday's and Pick Up Stix restaurants, uses business intelligence software from Cognos to identify discrepancies between prices they've negotiated for food supplies from their vendors and what their vendors are actually charging them on invoices.
Here's how it works: Cognos parses all of the company's invoices from suppliers and contracts with food vendors in CRW's data warehouse to see if any of the vendors are actually charging restaurants for food at a higher rate than the chain had negotiated. Since CRW contracts with a variety of different suppliers for meats, dairy products and produce, it also uses Cognos to pinpoint the suppliers that offer the best deals - and stick to them.
The company saved $US200,000 in 2003 by remedying these discrepancies and by giving more business to suppliers with the most competitive prices.
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.