The recession is fostering interest in Business Intelligence software, which helps companies analyze the data they collect for new cost-cutting or sales opportunities.
By Rachael King
Sifting through all that data
With restaurants stretching from Seattle to the Osan Air Base in South Korea, the Chili’s Grill & Bar chain gets a lot of visitors. For parent company Brinker International, that makes for a lot of Triple Dippers to keep track of. Also the owner of such chains as On The Border Mexican Grill & Cantina, Brinker has to gather information on sales, inventory, and other operations at 1,700 restaurants in 27 countries that receive more than 1 million customers a day. An even bigger challenge, though, is sifting through all that data, organizing it, and then using it to make the business run more profitably.
Making smart use of that information is all the more urgent as customers dine in more often and spend less even when they eat out. Amid falling revenue, Brinker (EAT) already has resorted to cutting jobs and shutting restaurants. “At Brinker, we are not waiting for external actions to strengthen our company,” Brinker CEO Doug Brooks said during an earnings conference call on Jan. 22. “We have taken considerable steps to remain competitive and position our brands for accelerated profitability once the economy eventually does improve.”
Interest in Business Intelligence is on the rise
One of those steps is analyzing the reams of data the company collects at its restaurants. Using what’s known as Business Intelligence software, Brinker gets a better handle on consumer spending patterns to make a host of decisions, from altering staff levels to moving around menu items. Interest in business intelligence software is on the rise, analysts say, as economic woes force companies to pursue profit by delving deeper into the information already at their fingertips. “There’s a tremendous pressure on cost containment, on developing accurate forecasts of sales and expenses and trying to align the expense stream with projected revenue stream,” says John Van Decker, research vice-president at research firm Gartner (IT).
Top priority for CIO’s
Business intelligence software can bring together data from disparate parts of the company. Once that happens, companies can do analysis, run reports, and make predictions based on past performance. Some Business Intelligence software lets companies weave in external information, such as the price of gas or the unemployment rate in certain regions, to better understand how market swings or economic trends are affecting customer behavior and the company.
Calculate the optimal staffing level
Brinker used Business Intelligence to help with a challenge faced by many restaurants: determining how many staff should work each shift—a task that can be especially daunting during a recession. The company tapped a restaurant performance management system built with Information Builders’ WebFOCUS business intelligence. Among other things, this software can calculate, based on sales, the optimal staffing level during a particular shift at a specific restaurant.
Business Intelligence remains on the CIO’s top list
Business Intelligence software tops the list of technology spending priorities for companies in 2009, according to a Gartner survey of more than 1,500 CIOs worldwide released in January. That priority remains, even though IT budgets are expected to be essentially flat in 2009. Market researcher Forrester Research (FORR) expects the Business Intelligence market to generate more than $12 billion in revenue in 2014, vs. $8.5 billion in 2008. Expectations for increasing demand helped fuel a wave of consolidation in the BI market. Software vendors including SAP (SAP), IBM (IBM), Oracle (ORCL), and Microsoft (MSFT) all made big BI acquisitions in recent years.
Cost analysis tool
As useful as it may be, Business Intelligence software can be expensive. And companies that don’t take the necessary pains to ensure it works properly risk making decisions based on incomplete or inaccurate data. Companies can spend as little as thousands of dollars on BI software, or up to millions of dollars. A typical business intelligence deal in a large enterprise with a large vendor is somewhere from $150,000 to $300,000, says Boris Evelson, principal analyst at Forrester. Typically this includes just the software licenses and the first year of maintenance.
Spend on services
Add in other essential services, and a company can expect to spend more on Business Intelligence than for other types of software, Evelson says. “For every dollar you spend on business intelligence software, you better expect to spend five to seven times as much on services,” such as ensuring it jells with the rest of the company’s software, he says.
Turning bits of data into useful information
Welch’s says using the software to reduce transportation expenses makes BI worth the cost. The beverage company makes some 50,000 shipments of its juices and other drinks to supermarkets each year, generating reams of data. The challenge for Welch’s has always been turning those millions of bits of data into useful information. But using online business intelligence software helps the company drill down and tweak individual shipments to make sure they’re carrying full loads. “We started doing this prior to the recession, but it’s been a wonderful tool in the face of the recession because it gives us more insight into our cost structure than we’ve ever had,” says Bill Coyne, director of purchasing and logistics for Welch’s.