InformationWeek 500: Data Drives Colgate-Palmolive's Investment Decisions
Business-IT initiative Colgate Business Planning has allowed the company to shift more than $100 million toward more profitable growth areas.
The CBP process depends heavily on technology, and here, too, Colgate relies on consistency: The company's overall IT strategy is centered on using SAP software wherever it can. The power of using a single application vendor is that everything is integrated, Greene says. "With nonintegrated systems, accuracy and consistency depend on the systems in which data happens to reside," he says. "With SAP, the product masters and the customer groupings are all driven by the same master data." As a result, he says, you don't have 12 different people offering up 12 different "versions of the truth" during meetings.
SAP has been involved in all phases of the CBP project. When the process was first rolled out in Canada and Mexico in 2006, it was built on SAP promotion planning and sales and distribution functionality. Now deployed in 17 Colgate subsidiaries worldwide, CBP has been steadily enhanced, most recently (in 2009) with SAP BusinessObjects dashboarding and what-if planning capabilities and SAP CRM 7.0 user interface improvements. "Early on, the maturity of the CRM product wasn't quite what we needed it to be, but we worked with SAP to evolve it into a robust commercial planning tool," Greene says.
The CBP process is now used by more than 1,000 customer planning groups accounting for about 60% of the company's commercial investment spending. ROI analysis by customer makes it clear which types of promotions are driving profitable growth and which aren't, with insight down to specific products. So, Colgate has been able to reinvest $100 million into more profitable promotions.
Colgate has learned many lessons about the profitability and performance of various commercial investments. Greene declined to give away what he called "trade secrets," but it's easy to guess that changes to coupon levels and in-store displays or adjustments to discount thresholds, rebates, and logistics allowances might be involved.
The long-term goal is $300 million in savings that could be reinvested or dropped to the bottom line. That leaves a ways to go, but with the latest BI and CRM improvements, Colgate has next-day analytic visibility into performance bright spots and shortfalls.
"Every morning, every senior executive can see what happened [with net sales] globally, and they can track how we're doing against our monthly plan," Greene says. "We know which subsidiaries are hitting their goals, and we can also look at market-share changes based on Nielsen data."
Colgate's deployment experience and the latest BI and CRM upgrades have made it easier to accelerate the ongoing subsidiary-level rollouts and get CBP insight into the hands of employees. A dedicated team of six marketing and supply chain executives reviews the use of the CBP process and counsels subsidiary-level managers. Dedicated IT teams also support the process, so any difficulties integrating required data or adapting to new interfaces can be resolved quickly.
From the very beginning, Colgate avoided a cookie-cutter approach. The core process is immutable, but subsidiaries can tweak 20% to 30% of the approach to match local market characteristics. As an example, some subsidiaries might have 100 or more key customers whereas others might have just four taking up 80% of commercial investment. Units with a few large customers can develop deeper levels of promotional planning and analysis.
Greene says he's gained a lot of valuable insight through his early involvement in the CBP project. "You have to understand the technology, but the most important thing to a CIO's success is to understand the business so you can marry the two together," he says.
The margin-driving, technology-supported CBP process is just the sort of pairing he's talking about.
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