Business Analytics: Measuring ROI with Hot Chocolate
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How much hot chocolate did the Cincinnati Zoo sell to visitors who came to see its December 2009 light show?
Before it decided to implement an integrated point-of-sale system and business analytics software, the Zoo would have had to go through individual receipts and manually count each cup sold.
But now, with its new POS and IBM Cognos analytics system in place, the Zoo has the ability to find out not just how many cups of hot chocolate it sold during December 2010 (44 percent of its sales, meaning hundreds of gallons). It can also tell you whether sales spikes correlated with drops in temperature (they did).
The project began two years ago when the Cincinnati Zoo realized it wasn't leveraging its IT and point-of-sale systems to their fullest potential. It had several systems across the organization that were not automated, nor were they able to share data.
"Our food service, for example, had cash registers. The only thing they were plugged into was the wall. We had a separate system for retail. We had a third system for our admissions and we had a fourth system where we sold zoo memberships," John Lucas, Director of Park Operations for Cincinnati Zoo and Botanical Gardens, tells CIO Insight."To a large extent we couldn't have been more fragmented."
The Zoo hired Boyertown, Pa.-based solution provider Gateway Ticketing Systems to bring in an integrated POS system that would have the ability to connect its sales networks and integrate data. At the same time, the Zoo brought in BrightStar Partners, a Chicago-based IBM partner, to help them deploy IBM's Cognos business analytics software solution to make sense of all that data it could now collect.
Leveraging business analytics software, the Zoo could now see who its 1.2 million annual visitors were, and where they were spending their money. And the results are paying off. The Zoo anticipates an additional 50,000 visitors this year and a $350,000 increase in revenue.
"The kind of insight that we're able to now do is profound for us. We come from a world where even finding out what yesterday's food sales were might take me three days," Lucas says. "We're now able to report on what members are doing, all the way down to their name level."
The system launched in July 2010. In March 2011, the Zoo will begin a loyalty program that non-members can join that will give more insight into how they're spending once inside the Zoo.
Lucas says the Zoo spent about $250,000 on updating and integrating its POS system. He says he cannot disclose how much the IBM Cognos solution cost, but adds, "we received a return on investment on the IT spend for analytics in the first quarter. We're beyond thrilled about that. "
Before launching the BA tools, the Zoo's IT team was comprised of an IT director, a database administrator and a hardware specialist. To manage the Cognos solution, the Zoo hired an additional database administrator, bringing its IT staff from three to four. "It truly is transforming our business, but that being said, it doesn't mean we can go out and hire six people," Lucas says.
For other organizations looking to get the most out of business analytics and help IT meet business needs, Lucas has two pieces of advice.
"The most important thing you've got to do is have buy-in from your president or CEO, your CFO, your marketing VP and whoever handles operations and things like that. This is not one of these projects that you get buy-in from the bottom up. You want to get buy-in from the top down," he says. "At the end of the day no matter what kind of analytics you are extracting out of your business, if your CFO doesn't believe in it, you're not going to move the needle."
When bringing business analytics the Zoo, Lucas says he formed a committee that touched all levels of the business, including the Board of Directors, to make decisions. "From the time we formed the project and on through, [the committee] was aware of how it worked and how the pieces worked together, and what role, for example, the loyalty program had in the big picture."
It's important for that committee to have a single point of contact for the project, he says. In the Zoo's case, Lucas filled that role. "Having the buy-in across department lines is key, but you also still need a single point owner . . . Whoever that person is in another organization needs to be someone that other pieces of the business listen to, that has the business acumen to actually form the business outcomes and communicate with the rest of the committee," he says. "You need someone who is very forward-thinking about business outcomes."
For more on how enterprises are making the most of business intelligence tools, read the article Business Analytics: Numbers and Nuance.