They're still using analytic dashboards, but tying the data to strategic goals.
It's 7 a.m. in San Antonio, Texas, and Rich Marcogliese, chief operating officer of Valero Energy, is holding his usual morning meeting with the plant managers of 16 major refineries throughout the United States and Canada. On the walls of the HQ operations center are a series of monitors centered by a giant screen with a live display of the company's Refining Dashboard. Whether the executives are in the room or connected remotely, all eyes are trained on the Web-accessible gauges and charts, which are refreshed with the latest data every five minutes.
"They review how each plant and unit is performing compared to the plan," says Valero CIO Hal Zesch, "and if there is any deviation, the manager explains what's going on at their plant."
For Valero, surprisingly little-known for a Fortune 10 (that's right, one-zero) company with more than $118 billion (with a "b") in revenue, just one dashboard needle moving from green to red might signal millions of dollars at stake. The point of the dashboard isn't to call managers out; it's to give executives timely information so that they can take corrective action.
Valero's Refining Dashboard is just the sort of cutting-edge decision-support tool that thousands, if not tens of thousands, of companies are now attempting to create. Those companies have embraced the idea that decisions based on fact will consistently beat those based on gut. Business bestsellers including "Competing on Analytics," "Super Crunchers," and "The Numerati" have documented that it's an approach that works. Financial analysts, board members, and even the news media increasingly expect sound, data-backed analyses from top management. And when things go wrong, regulators and, in some cases, even district attorneys follow the numbers to trace bad decisions.
Plenty of obstacles stand in the way of better decision support, from backward-looking metrics and ill-advised goals to antiquated budgeting approaches and technophobic executives. For management teams that can make use of the data--and these days there's always plenty of data--there are huge opportunities to improve efficiency, develop innovative products, get closer to customers, and outsell competitors.
Start With Goals
Valero rolled out its dashboard in early 2008 at the behest of COO Marcogliese. He had launched a Commitment to Excellence program aimed at improving performance, and he wanted to see real-time data related to plant and equipment reliability, inventory management, safety, and energy consumption.
Whether driven by Total Quality Management (TQM) programs, Balanced Scorecards, or another methodology (more on those later), information-driven companies tend to succeed by establishing clear goals and expectations that are aligned from the top of the organization down to departments and individual employees. When results start coming up short, executives can manage the exceptions along the way rather than hoping for the best and reacting to surprises at the end of a quarter.
With this special issue, InformationWeek is launching multimedia executive summaries of select stories, called Media Snaps, which you can view on your computer (by clicking the video player above) or smartphone. Sign up for e-mail delivery to your phone.
Valero's goals and measures were inspired by Solomon benchmark performance studies well known in the oil and gas industry. Real-time performance data is compared against daily and monthly targets, and there are executive-level, refinery-level, and even individual system-operator-level dashboard views. It's rare among business intelligence deployments to get fresh data every five minutes, but Valero has tapped directly into "process historian" systems at each plant in a six-month deployment of SAP's Manufacturing Integration and Intelligence application. The data is aggregated and displayed using SAP BusinessObjects Xcelsius software.
A major focus of Valero's Commitment to Excellence program is reducing energy consumption, so the company is rolling out separate dashboards that show detailed statistics on power consumption by unit and plant. "Based on the data, managers can share best practices and make changes in operations to reduce energy consumption while maintaining production levels," CIO Zesch explains. Estimated savings to date: $140 million per year for the seven plants where the dashboards are in use, with expected total savings of $230 million per year once the dashboards are rolled out at all 16 refineries.
The successes have created dashboard-envy within Valero, so IT is working on similar dashboard programs for sales and marketing as well as the strategic sourcing unit.