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5/11/2005
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How Three Midsize Companies Use Business Intelligence To Their Advantage

A restaurant chain, a producer of hops, and a specialty retailer take different approaches to analyzing their data, but all realize benefits to their businesses.

Rubio's Fresh Mexican Grill is a fast-growing chain of restaurants based on cuisine from Baja, Mexico, such as fresh fish, salsas, avocados, and guacamole. Parent company Rubio's Restaurants Inc. had revenue of $137.4 million last year, up 9.9% from the previous year, and the chain now extends across six Western states from California to Colorado.

Paul Nishiyama, director of IT for Rubio's Restaurants, says business intelligence has played a key role in the chain's growth over the last two years. Much of what had been a frequent demand for business-status reports from his small IT staff has been shifted onto the reporting capabilities of Business Objects SA's Business Objects Enterprise system, with its dashboard-building and reporting capabilities.

Nishiyama and staff continue to prepare some reports, but the company's director of finance and two to three assistants in the finance office have gained the skills needed to produce their own reports, instead of relying on the seven-member IT staff to do it. "BI has been extremely important to us. Finance is getting a whole series of more robust reports that it didn't have before," Nishiyama says. Producing those reports without a business-intelligence system "would be a manual process that would drain our small staff," he adds.

The restaurant chain is managed by regional and district managers, and both groups have the ability to generate queries and review standard reports on how their segments of the chain are performing. District managers close to the restaurants, for example, can review staffing levels and decide whether the potential to generate profit would be maximized with leaner staffing or an addition to the schedule of "guest service agents," also known as cashiers, who are key to keeping traffic moving through the restaurants.

Regional or district managers can spot rising food costs and drill down to particular ingredients to see where the increases are coming from and what adjustments should be made to menu pricing or what dishes are promoted.

Rubio's relies on a browser-based user interface to a central Business Objects server. That setup has the potential to make the business-intelligence tool available throughout the chain, but use at this point is restricted to senior headquarters management and regional and district managers. Scorecards with displays of up-to-date information on key performance indicators have been made available to 40 district managers, who may go behind the indicators to examine the data. They can also check for compliance on such things as employee breaks in states that require them. It's not enough that the company offers breaks, Nishiyama says. Compliance is established by employees clocking out and back in to show they've used them. "It's extremely important to us," he says. "It's helped us be more flexible and nimble in managing our business." Privately held John I. Haas Inc., the largest grower and buyer of hops for the brewing industry, is another company capitalizing on business-intelligence technology. It has built a BI dashboard that includes a highly industry-specific business metric needed by company officials to see where demand is headed.

Haas subscribes to Oracle's online applications, E-Business Suite, and reviews data from them via dashboards built to work with Oracle Application Server Portal. The company has no separate business-intelligence system; it uses the BI capabilities built in to an Oracle database and Oracle Application Server Portal. The metric that's regularly updated for executives is the hops crops' alpha acid measure, an indicator of the hops' flavoring and aroma power in the beer-making process, says Kyle Lambert, VP of information systems.

If it's a weak season for alpha acid production, more hops will be consumed by the large breweries that Haas serves, breweries that produce 80% of the world's beer. Haas executives know from experience how much hops purchasing, processing, and shipping they'll need to produce to meet demand, based on that key performance indicator in the dashboard.

Chase-Pitkin Home & Garden, a chain of hardware and garden-supply stores in upstate New York, decided to use business intelligence to address the issue of "shrink," the mysterious disappearance of goods that have been ordered from suppliers but never show up as having been sold at the cash registers.

CIO T. Christopher Dorsey had been collecting point-of-sale data on all store items in an SPSS Inc. Showcase Essbase for seven years. Showcase Essbase is a data-presentation tool that serves as a front end to Hyperion Solutions Corp.'s Essbase analytic engine, which runs on the IBM AS/400 small-business server. Two and a half years ago, Dorsey implemented SPSS's Showcase Analyzer to dig down into that data.

Dorsey was surprised to see that while his general-ledger system had been able to tell him shrink was occurring, Showcase Analyzer showed in which of the 15 stores it was a problem and which items were disappearing. He had suspected the popular power-tools department was a source. Showcase Analyzer identified the 16 items among the thousands of power tools that were contributing nearly half of the chain's losses. They were the easy-to-conceal but expensive items such as power-saw blades and drill bits.

"When we discovered this, we put policies and procedures in place" to halt the losses, Dorsey says. These procedures included moving the most vulnerable items to areas in the stores where the staff could keep an eye on them. These steps generated $200,000 in savings the first year. Power tools, which used to experience 3.5% shrink across the chain, now have shrink levels of 2% and dropping.

Showcase Analyzer showed Dorsey that gas grills were another source of shrink. He discovered that customers paid for one grill at the cash registers, then either through pickup error or customer deception, went home with a higher-priced model. The chain implemented better item identification on sales receipts and trained employees to avoid being distracted by customers getting out of their vehicles to help them load the grills.

Business intelligence identifies the source of problems and "takes accounting phantoms" out of the process, Dorsey says. Store managers using Essbase by itself would get so many views of their product information that "they'd get data drunk in minutes," he says. Analyzer lets lower-level employees such as departmental managers pick out the information they need with about an hour of training, he says. That's just one of the many features of business intelligence that benefit Chase-Pitkin and other small and midsize companies.

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