Business Intelligence in Hospitality & Leisure

Transcription

1 Business Intelligence in Hospitality & Leisure Making more money in austere times BY TAHOLA April

2 TABLE OF CONTENTS The Issue Is Data... 1 The Challenge Many Hospitality Businesses Face One version of the truth Automatic updates Self service Connected systems... 2 The Business Intelligence Solution... 3 Planning For Success... 4 Who Are Your Most Profitable Customers?... 6 Where Are The Benefits?... 7 Taking The Steps Toward Investment... 8 Staying Ahead Of Your Competitors... 9

3 THE ISSUE IS DATA Hospitality and leisure business are awash with data. Even modestly sized hospitality businesses collect vast amounts. Huge volumes of often relatively low transaction values create large databases which take valuable time, effort and money to manage. This causes IT teams to grow and for costs to escalate. Management of these databases is vital to ensure no interruption of trade but often the solution to maintaining performance is regular purging of the database. Data is either hived off elsewhere and is no longer readily available or in the worst case simply deleted, never to be available again. Many software systems drive this explosion in data volumes. Whilst epos is probably the main culprit, other systems such as time and attendance, ordering, stock take, loyalty, payroll, reservations, membership, property management, ecommerce and financial systems are all contributors. The problems are further complicated by the fact that most companies select best of breed solutions to ensure the closest possible fit to their business needs. This usually means that the systems are distributed across multiple servers, sometimes in different locations and absolutely in different databases. Business Intelligence in Hospitality & Leisure Page 1

4 THE CHALLENGE MANY HOSPITALITY BUSINESSES FACE So what are the challenges caused by these disparate systems and the data volumes they create? In our experience of working with many hospitality and leisure businesses, they boil down to the following: 1. One version of the truth This is the holy grail of what the business is aiming to achieve. A suite of reports which are accurate and up to date - no matter who runs them or when they are run. These reports are critical for timely and informed decision making. 2. Automatic updates In many organisations, managers spend time extracting data from different systems, loading it into Excel, manipulating it and then creating the necessary reports. In the best case this might take only a few hours a week but in the worst case it can take a few days - and often more than one person s time. This is a waste of time and resource when systems can do this work automatically and more regularly. Managers can be freed up to spend their time understanding and using the information rather than creating it. 3. Self service No matter how good the information is, managers will always come back with more questions, either to the finance department or IT. Given the workloads of these departments, it s often impossible for them to respond to the volume of requests within the required timeframe such that when they do respond, the managers need has gone away and they have moved on to another issue. Managers need a self-service capability; the ability to answer their own questions. This capability needs to be controlled and managed so that obscure and incorrect conclusions are not drawn. Systems today provide this easy management ability. 4. Connected systems Reports regularly need information drawn from multiple systems, for example, stock and ordering data combined with sales data, or property management and payroll combined with financial management. Doing this manually is a time consuming and laborious task. In fact, it is so resource intensive that regardless of the benefits it might bring, it s either never carried out or only very rarely. This means companies miss out on these additional insights that could help them improve performance. Business Intelligence in Hospitality & Leisure Page 2

5 THE BUSINESS INTELLIGENCE SOLUTION A Business Intelligence (BI) system is the solution to these challenges; sometimes referred to as a Performance Management system, MIS / EIS system or Business Analytics solution. In simple terms, a solution often comprises a data warehouse or data mart combined with BI software. Many different solutions are available - ranging from simple point solutions to complete Business Analytics platforms. Functionality differs between solutions and it s important to understand your requirements to ensure the solution you select meets your current and future needs at a price point you feel comfortable with. also to the functionality you need it to provide. Consider areas like: Analysis Reporting Alerts Drill down Mobile capability Dashboards Planning and forecasting When considering a BI solution give thought not just to the results you expect from it but Deployment to field based staff. Implementing new business information systems has been a radical change for the company and these new systems are now invaluable to us. Throughout the project we have built a good working relationship with Tahola and we like having the same individuals stay throughout the course of the project. They offer a good service and are not afraid to work hard for the client. David Radburn, Head of Business Systems Caffè Nero Group Ltd Business Intelligence in Hospitality & Leisure Page 3

6 PLANNING FOR SUCCESS We all plan and most of us use Excel. It seems like a pretty good tool it s available, relatively inexpensive and most users, particularly finance staff, are quite competent with it. In fact spreadsheets are often extremely complex. And this is the problem Excel has almost become too good for its own good. We regularly meet organisations that have built complete applications in Excel. Comprised of many worksheets and many spreadsheets all linked together. Huge volumes of data, lots of complex formulas and usually very, very slow! The problem comes when there s an errorhow can you even identify that there is one, let alone find it with so many sheets, so much data and so many formulas to check. And each year the planning process just gets more complex: Planning by unit by week Planning customer numbers and volumes not just sales Reforecasting quarterly Including planned new openings It s at this point that a planning and budgeting system is required. Handling the complexities of your budgeting and reforecasting, and making the whole process easier, quicker and more streamlined whilst removing the inherent dangers of Excel. For example, planning solutions will automatically accumulate each individual plan into a total plan, they provide workflow to easily manage the planning process, and many are web based for access anywhere. Modern Business Intelligence systems either include planning as part of the product or allow it to be added in the future when you re ready. The planning element can be integrated with your ERP system so that at each period end your actuals can be uploaded allowing easy analysis of variances. But don t just think of planning systems for financial planning. They can be used for other planning functions as well capital development planning, refit / refurb programmes, collection of managers expenses, etc. Automatic rolling forecasts Having different plans for different purposes When planning and Business Intelligence is fully integrated, then you truly have a powerful solution. Business Intelligence in Hospitality & Leisure Page 4

7 What is the first system I would put into a Company, especially in a recession Cognos Planning. To whom did we turn to get things moving Tahola. Their knowledge of the Retail and Hospitality sector was essential and we set them a challenging task. To build a rolling 3 year budget & forecasting model, integrated to our General Ledgers to control and produce budgets, forecast P&L s, Cash Flow Forecasts, Cash Flow Analysis, Funds Flow Statements and rolling Balance Sheets at House, Company, Sub Consolidation and Group Total levels. So what have we achieved? Automatic monthly re-forecasting based on actual movements; profit, cash and ROCE forecasting at House level. Tahola are now helping us to integrate Cognos Planning into our data warehouse where we can manipulate the model by any location attribute a truly powerful management and financial tool that has given our Financiers the confidence to lend. Paul Bignell, Information Systems Manager TCG Management Services Ltd Business Intelligence in Hospitality & Leisure Page 5

8 WHO ARE YOUR MOST PROFITABLE CUSTOMERS? A BI system is not just about producing those reports that used to take hours or days to create manually. An effective BI solution will impact your bottom line. One of the most effective ways to do this is to understand the behaviour of your customers. When times are tough, people have less disposable income and the competition for a share of their spend has never been more intense. You need to truly understand your existing customers and then use this knowledge to attract new ones. Crucially, you need to ensure that your customers are profitable and retain the loyalty of those customers once you have them. The value of Business Intelligence is when you know a customer will be profitable even if it s their first visit. Recent years have seen the most forwardthinking hospitality organisations lead the way by driving value from the wealth of information generated across their businesses. More rigorous and directed use of their business information is helping them: Using their information assets more effectively enables these companies to be more agile and more stable in turbulent times and to stay ahead of their competitors. So how do these organisations control, manage and use their information and how can you gain a similar benefit? Most hospitality companies will have made significant investments in the technology required to run their businesses as mentioned earlier. An additional factor in the hospitality sector is that many organisations are, in fact, a set of distributed companies. With siloed data the challenge is how to knit everything together to deliver a cohesive, consistent, and single view of your business and especially of your customers. You need accurate and insightful information at your fingertips to enable you to make better decisions and to remain successful. To focus on what next? rather than what just happened? gain better insight into their customers and their behaviour; understand their profitability components; optimise their operations. Business Intelligence in Hospitality & Leisure Page 6

9 WHERE ARE THE BENEFITS? So how can you use a BI system and what should you be looking at? Your business is unique and you need to address the challenges you face. Consider what your competitors are doing, maybe even take ideas from them, but develop your own BI strategy in partnership with your BI supplier. A supplier who understands your sector will offer not just software, services and support but also advice, knowledge and experience about best practices in your sector. The following are examples of ways hospitality and leisure companies are using BI effectively to: monitor sales, margin, stock and staff for performance insights to drive decision making; set the right targets and align the organisation and individuals to profitable activities, for example engaging staff in cross-selling or upselling opportunities (basket analysis) to increase spend per customer (ATV); drive and automate marketing campaigns. Using BI for customer segmentation to target customers more effectively and integrate with emarketing systems; model business improvement. Conducting what if? scenarios - for example, what would the outcome be if opening hours were extended and the wage bill increased by x%?; drive future investment. A clear understanding of customer demographics and profitability can help identify potential investment opportunities (e.g. locations for new venues) and inform decisions about trade-offs and competing investments; purchase more effectively: reduce stock holding and wastage, eliminate out of stocks and release cash to spend on income generating projects; manage loyalty programmes by gaining insight into their most loyal customers: are they profitable? What are the characteristics of a loyal customer? Where are the promotional opportunities?; for loss prevention. Most BI solutions now also offer mobile versions of their systems, which means that many more staff can access and analyse the information relevant to them and use it effectively to make better decisions for the business. For example, area managers can access up-to-the-minute information on the move, helping them to provide the right guidance and support to the units under their management. Venue or unit managers can drill down to a detailed level and, for example, run local campaigns to encourage visits during forecast quiet periods. Business Intelligence in Hospitality & Leisure Page 7

10 TAKING THE STEPS TOWARD INVESTMENT But here s the rub. Having an effective BI system requires investment. To make a business case for that investment you need detailed information about where your company will benefit. The irony is that the BI system itself will help you identify where you can make or save the money to pay for it. So you need to be clear from the beginning what it is you want to achieve and put a value on it. It could be to increase gross profit by x% or reduce the wage bill by y%. Or you could build a business case based on a target that you put out to each unit - a 500 margin improvement per unit could be achievable by a small reduction in waste, better utilisation of staff, an increase in customer loyalty or an improvement in the product mix. Not only does this cover the investment, it encourages focussed use of the system throughout the organisation, improving ownership of results and decision making across the board. This in turn will lead to better uptake of the system as individuals see at first hand the impact of their improved decision making capability and its impact on the bottom line. The BI solution from Tahola allows us to analyse our member s behaviour like never before, and all at lightning speed. This has revolutionised our marketing outlook, and has already had significant return on investment by reactivating members who had not visited for a couple of years as a direct result of specially tailoring offers. Ross White, Director of BI TopGolf International Business Intelligence in Hospitality & Leisure Page 8

11 STAYING AHEAD OF YOUR COMPETITORS Today s sophisticated BI solutions allow hospitality companies to focus on addressing the most crucial issues they face, and to do so more quickly than they ever could before. Managers armed with dashboards that provide them with a snapshot of the company s key performance indicators, along with exception-based alerts when those indicators fall outside pre-determined parameters, can see where the needs are and can focus on intervening there. The ability to instantly drill down to deeper reports and analysis about a particular issue means they can proactively change outcomes as opposed to just looking at them in retrospect. Business Intelligence gives hospitality companies the ability to respond more quickly and to take advantage of new market opportunities by seeing things faster than their competitors and being able to act on them. There s no doubt that the hospitality market is facing a tough time, but those companies that have the ability to adapt quickly to changing market dynamics and customer demands will continue to succeed. Business Intelligence in Hospitality & Leisure Page 9

12 About Tahola Tahola are specialists in Business Intelligence and planning for the hospitality and leisure sector. They work with the leading technology vendors to provide the right solution to help their customers access and make more sense of their data, giving them the insight to perform better and to grow. Tahola Ltd - Floor 2, Viking House, Swallowdale Lane, Hemel Hempstead, Herts, HP2 7EA