Jeff Kuckenbaker became vice president of IS and technology at Star Trac at a watershed time for the treadmill...
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manufacturer. In fewer than five years, the treadmill manufacturer's revenues had ballooned from $70 million to $200 million. With 3 million customers in more than 70 countries, Star Trac has been growing fast -- too fast, in fact, for its information decision systems to keep up.
Like many midmarket companies, Irvine, Calif.-based Star Trac had data quality issues. Inconsistent and out-of-date versions of data resided in various applications and information silos. Almost 80% of reports were created manually and distributed via email, Kuckenbaker reports. Not surprisingly, Star Trac's president, a former engineer who's very detail-oriented, mistrusted the data he needed to make key decisions.
The former director of IS at The Black & Decker Corp., Kuckenbaker recognized that an effective business intelligence (BI) system was crucial in order for any firm to move forward with its growth strategy. However, he soon learned that a midmarket company like Star Trac poses very different BI challenges from a Fortune 500 enterprise.
Star Trac business groups, accustomed to owning their own data, needed to be trained and reoriented in order to take advantage of the cross-functional, high-level information a BI system would provide. Furthermore, the treadmill manufacturer did not have the budget to go with a full-throttle BI deployment.
Star Trac chose BusinessObjects (now part of SAP AG) Edge Series, a BI suite that provides reporting and ad hoc data querying across different information silos without the need to deploy a data warehouse up front. Kuckenbaker hired a BI analyst to do data modeling and data definitions to ensure that the data is reliable, cleansed and consistent. Some hundred reports have been defined. The whole company, including European sites, uses Business Objects to generate reports and queries across multiple data sources.
The paybacks are already coming in. Accurate, up-to-date supplier information has enabled purchasing to save tens of thousands of dollars per month, "by shortening time to receive supplies, holding suppliers accountable and keeping the chain tight so we don't have to pay extra freight," Kuckenbaker says.
Less quantifiable but equally important has been improved visibility into the order-ship-billing cycle, which has shortened time to payment and improved customer satisfaction.
Going with Business Objects allowed Star Trac to buy what it needed while keeping within budget and maintaining a good TCO, Kuckenbaker says.
Midmarket products on the rise
Other types of BI products geared to the midmarket include the following:
- Scaled-down versions of major enterprise BI platforms, which typically provide wizards, prepackaged reports and dashboards, and support services. Such products help midmarket firms get up and running within weeks. Vendors include IBM, SAP, Oracle Corp. and SAS Institute Inc.
- BI appliances, which typically provide a basic data warehouse and prepackaged applications on top of a customized hardware platform. While a 10 or 100 terabyte (TB) enterprise BI platform typically runs to millions of dollars, BI appliances generally support at least 100 TB, and run between $100,000 and $700,000, according to Claudia Imhoff, president of Intelligent Solutions Inc., a BI consulting firm in Boulder, Colo. Vendors include Vertica Systems Inc., Infobright Inc. and Netezza Corp.
- Open source BI. Imhoff cautions it isn't always free, however -- customers end up paying the vendor or consulting services to help them set up and design the system. Vendors include JasperSoft Corp., Pentaho Corp. and Actuate Corp.
- BI on-demand service providers, which take over the work of extracting, transforming and loading customer data into a hosted data warehouse. End users can then access and analyze data using prebuilt, downloaded applications. The service provider should offer some kind of audit trail to track what happens to data when it leaves the customer's domain, Imhoff warns. Otherwise, the customer has no way of resolving data inconsistencies, and can run into regulatory compliance issues as well. Service providers include LucidEra Inc., Xactly Corp. and Oco Inc.
- Microsoft Excel, which remains the BI tool of choice for many firms. Combined with SQL Server and a growing body of BI tools that Microsoft is integrating into Office, it can fill midmarket BI needs quite adequately, Imhoff notes. However, it's crucial that someone is put in charge of auditing and enforcing data-entry policies. "Unfettered use of Excel results in a spreadsheet hell of untrustworthy data," Imhoff warns.
Moving to a higher level
According to a recent IDC survey, many, if not most, midmarket companies see themselves moving to a data warehouse-based BI system in the next few years.
Claudia ImhoffPresident, Intelligent Solutions Inc.
Star Trac is entering that phase now. "My initial goal was to provide reliable, on-demand, enterprise-level operational reporting, to regain confidence in our data," Kuckenbaker says. "In this next phase, we'll be moving to higher levels of complexity with drill-down analysis. Our president understands the promise now: He wants that multisource, multidimensional viewpoint."
Whichever path a midmarket company takes to BI, the paybacks are well worth the effort, according to Imhoff. They include more effective and efficient management of business processes, growth and acquisitions; better responsiveness to customer needs; and the ability to compete with larger enterprises. Imhoff adds: "The better you understand your customers, products and channels, the better you'll do in this economically stressful time."
Elizabeth Horwitt is a contributing writer based in Waban, Mass. Write to her at email@example.com.