A Great System That
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Despite the obvious benefits United Pipe has realized from its customer analysis, there were problems. Besides costing the company about $250,000 up front, the ongoing maintenance costs were considerable. At the time of implementation, "it was not well integrated" with United Pipe's CRM systems, Green says. That made it difficult to get data from the branches into the BI tools. United Pipe had to employ a business analyst just to keep data flowing to it.
When United Pipe's owner and president, Dave Ramsey, died unexpectedly, in May 2003, the project was almost lost forever. The CEO who replaced him was less fond of technology than Ramsey in general, and in particular he did not like the SAS tool. In fact, he looked at the cost of keeping the data warehouse up-to-date and told Green to mothball it.
Green stopped updating the data, but he quietly kept the tools around. The models he'd built were still useful for analysis, even with stale data. He caught a break, too, when that CEO left the firm after ten months, before Green had to decide whether to pay his annual maintenance fees to SAS. A new, interim CEO was more numbers-oriented and told Green to maintain the system, updating it with new versions, but not keeping the data fresh. In late 2004, United Pipe hired Ed Kolasinski as its president and CFO. And after he got his feet under him, Kolasinski told Green the SAS system would be important.
In the early part of 2005, Kolasinski and Green set new priorities. United Pipe was expanding againit now had 28 branchesand needed to improve its inventory control. The SAS tools would be key to thatand the data started flowing again from the branches.
It helped that while the system lay dormant, SAS had developed an Exact-Transform-Load (ETL) utility that makes it easier to get data into the SAS tool. It also helped that other managers, such as Dan Kraxberger, United Pipe's vice president of purchasing, were getting interested in analytics tools. Kraxberger wants to use the activity-based costing tool to do things such as examine the company's competitors to make sure that United Pipe is being aggressive enough on pricing, and use the data to get recalcitrant suppliers to lower prices. He also would like to look at his product lines to see whether some aren't generating the revenue they should.
Kolasinski also charged Green with bringing business-intelligence tools into new parts of the business, such as budgeting, financial reporting and general analytics. For this the company is employing less sophisticated softwarespreadsheets on steroidsinstalled on workers' desktops. It's typical for firms that use business-intelligence tools to adopt several types of them and drive them down throughout the organization, says Kathy Quirk, a research manager at Nucleus Research Inc. in Wellesley, Mass. "They're addictive," she says.
For the new tools, which come from OutlookSoft Corp., company controller Cheryl Summers has become the project champion. Green says the impetus behind this investment, which will also work out to be about $250,000, is less about direct costs, and more about the quality of work being done. He thinks, for instance, that Summers will be able to reduce the time she and the company's assistant controller spend closing the books each quarter, from ten days to three. The budgeting process should also go faster. Will that show up as clearly in the bottom line as finding unprofitable customers? Probably not, Green says. But Green expects the time savings will prove meaningful.
The addition of the general analytics tools will spread their use into a mainstream group of users at the company. Green thinks that can only help reinforce good business practices, like making sure customers start off on a profitable note, and keeping them there.
Michael Fitzgerald is a freelance business journalist based in Massachusetts.