Getting Business Buy-In
BI can be complicated and expensive. So for mid-market companies, with smaller IT budgets and staffs, convincing the business to invest in a BI application can be daunting.
That's why John Gowers, director of IT for Blue Mountain Ski Resort, says one of the most important steps in convincing the business to embrace BI is to start off with a relatively small investment, show a return and then expand the program from there. It's the plan he followed when 50 percent of the ski resort was purchased by Intrawest in 1999. (The Fortress Investment Group purchased the resort in 2006.)
Blue Mountain has multiple lines of business, from hospitality services to retail to equipment rental. Intrawest's ambitious plan for Blue Mountain included raising the number of skiers visiting the resort on an annual basis from 300,000 to 700,000, increasing lodging units from 200 to 1400 and taking the number of restaurants and boutiques from a handful to as many as 70. To manage that kind of growth and complexity, Gowers knew he needed BI applications to collect some basic information to manage the company's revenue and investments. He wanted to help the business determine which investments were yielding acceptable rates of return, how sales of certain products and services affected the sales of others at the resort and how to manage an expanding inventory of capital, including equipment and accommodations.
In February 2002, Gowers began working with Datavision to construct a simple BI tool to track property management and point-of-sale transactions. He kept costs down by using an older, free version of Datavision's Applix TM1. Using Applix as the back end, Gowers paid Datavision $US40,000 to build an ETL (extract, transform and learn) interface tool to manipulate and display the data. The application allowed the resort to track sales, such as ski rental revenue, beverage purchases and the number of lodging nights paid, on a per-skier basis. Sales could also be tracked by day and time. In the past, the resort had no way to measure sales other than in the aggregate, and those sales were stored in disparate business unit databases. This meant it took days, sometimes weeks, to collect, collate and distribute the data to executives. The resort thus had less time to develop special marketing campaigns to drive business during slow periods or to respond to unexpected up-ticks in business.
Within months of implementing the BI tool, Gowers was able to show the restaurant, ski rental and lodging businesses when their sales dipped or increased. Working with marketing, these businesses now could increase sales by knowing when to push incentives to customers. Sales for the resort's hospitality business have increased 67 percent in the past four years, an increase Gowers attributes in part to better business intelligence. In 2005, he used this earlier success to persuade business unit leaders to invest $US50,000 in a more up-to-date version of Applix to make it easier to incorporate new products and services.
The updated system soon paid off. For example, the ski shop typically would run out of ski boots on weekends, limiting revenue from lift ticket sales and ski rentals. Simply put, the resort had too many big boots and not enough midsize boots, which resulted in fewer rentals. The shop needed to shift its boot buying patterns to meet demand. But how best to do that?
Gowers turned to the updated BI application. He ran an analysis of the rental data to determine how to pay for more purchases of the midsize footwear by reducing purchases of large-size boots. The project started last northern winter, and by the end of the season, the ski shop had increased rental revenue by as much as 15 percent without raising its boot budget. By not turning away skiers, Gowers says, the resort had more satisfied customers, which, while hard to measure, certainly means more repeat business.
"In that particular case we showed a quick return," he says, "generating more revenue by making more intelligent decisions on how to run the business. As you do that, everybody begins coming to you with ideas, which only builds more support."
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