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With 120 dealerships in 15 states, Sonic Automotive Inc. is among the nation's largest automotive retailers. And it has plenty of competitors to show for it -- from local and large multifranchise dealerships to auto brokers, leasing companies and Internet-based customer referral services. Mobile business intelligence (BI) and advanced analytics are critical to keeping one step ahead, says CIO Heath R. Byrd. "We view the utilization of data and incorporating data analytics in business process and decisions as our secret sauce."
Analytics is not just confined to Sonic's headquarters: The retailer believes that putting data in the hands of managers and sales associates will boost customer service as well. Byrd is using a mobile business intelligence solution from MicroStrategy Inc. and rolling out iPads at dealerships to help with just that.
Sonic didn't always emphasize BI and data analytics. When Byrd joined the company five years ago as CIO, BI was done mostly on spreadsheets. Most of the retailer's mission-critical business applications were outsourced, with the data dispersed in databases around the country. Consolidating and cleaning up the data was the first step in building a comprehensive BI program, Byrd said. Investing in sophisticated analytics is a recent development.
If Sonic's latest financial results are any indication of the company's focus on mobile BI and advanced analytics, the investment appears to be paying off. In 2011, revenue increased 12% from the previous year, and earnings jumped 40%, to $1.39 per share from $.99 per share in 2010, according to the company's annual report. We asked Byrd about cooking up that secret sauce.
SearchCIO.com: At what point did you formulate your mobile business intelligence strategy?
Byrd: In early 2010 we were at an executive briefing with Apple at their headquarters in Cupertino. We were excited about the possibilities of the iPhone; but from a mobile BI perspective, the size and form factor made it difficult to input and display data. On the last day of our briefing, Apple publicly announced the release of the first iPad. This changed the game. It provided us with a form factor that was more suitable for our vision of mobile BI. We knew that it would be the mobile device that would enable our mobile BI strategy.
We don't do anything because it is cool. It has to create business value.
An iPad believer from the get-go! Did you do a financial analysis before you pulled the trigger?
Byrd: We perform a traditional net-present-value analysis on every investment we make. We never invest in technology just because we think it is cool. It has to have a return. However, this wasn't a hard call. We have 120 dealerships across the U.S. Our regional and executive teams travel around the country all year conducting operational and financial reviews with each dealership.
Historically, the team would travel with these huge binders full of Excel spreadsheets printed out to support the reviews. If we could just provide that same information on an iPad, the convenience factor is obvious.
But another plus is that everyone would be using the same data -- and the report is dynamic: As the data changes, the report changes. What is the value of everyone using the same real-time data to make decisions? In addition, since the iOS platform would enable all applications, not just mobile BI, it was easy to justify the investment.
Why did you choose the Apple iOS platform?
Byrd: If I am going to stake my career on this strategy, I am going to use the leading innovator. In my opinion, that is -- and will continue to be -- Apple.
Whom are you giving access to mobile BI?
Byrd: The executives, regional teams and all of our [general managers], so approximately 250 people.
What have been some challenges so far?
Byrd: From a mobile BI perspective, once you have built the models and reports, they pretty much take care of themselves: They update, they run. The bigger challenge is mobile device management and infrastructure. Installing wireless access points, making sure everyone has the latest versions of the apps and iOS, being able to track the devices, and so forth. These issues were more challenging than developing mobile BI -- and more expensive.
How expensive were management and infrastructure?
Byrd: Five to six access points per dealership, at $2,500 apiece without installation. But we believe that within the next couple of years, there will be very few people who require a PC, so this is an investment that we believe is required to do business -- one that we can't afford not to do. Again, we have a guiding principle for technology: We don't do anything because it is cool. It has to create business value.
You've said that BI provides value to customers. How so?
Byrd: If you have 120 stores that are run by 120 managers, when a car comes in to be appraised, it is going to have 120 different valuations -- the same car! The reality is, the car has a real value. By using BI and data analytics we are coming up with the right answer, not a subjective answer. If I know the value of the vehicle, I can price it right, I can pay customers the right number for their car. All that equates to better profitability, more transparency and a better reputation.
Let us know what you think about the story; email Linda Tucci, Senior News Writer.