True Religion Apparel Inc. sells 4,000 styles of jeans at prices starting at $200 and running up to $350.
For some of ournon-fashion-victim readers, the question may be, “Why would anyone spend that much money on denim pants?”
For John Dohm, vice president of IT at the Los Angeles clothier, the question is: “What makes a customer buy this pair instead of that one?”
For the first couple of years, True Religion answered that question through the founders’ instinct and taste. That was enough to bring the company from zero sales in 2002 to its current run rate of $300 million in annual revenue.
But with more than 62 True Religion stores supplying copious point-of-sale data, the company has embraced business intelligence software to help it reach its goal of $1 billion in annual sales.
Dohm shared his experience deploying BI tools at True Religion during a speech Tuesday at Computerworld‘s Business Intelligence Perspectives conference.
“BI is a good idea, but almost never done right,” said Dohm, a former Deloitte & Touche director.
One issue is that companies rarely do a strong study of their business processes before embarking on their BI deployment, he said.
Another is that IT tends to over-invest in BI projects, resulting in a “weak value proposition.”
That’s more problematic for BI than for similar-size ERP projects. While ERP usually has a strong ally in the CFO’s office, BI projects usually don’t enjoy any “organizational air cover,” he said.
Dohm said he was lucky because he was hired by True Religion not only to roll out a modern BI system, but also to understand the business processes beforehand to make sure the implementation was done right.
Before Dohm’s arrival, the company used a small order management system. Since he came on board, the company has replaced it with Oracle Corp.’s E-Business Suite Version 12, along with a tool called Aris created by Software AG.
Preferring to run the “lowest-footprint data center humanly possible,” Dohm has just three employees in his IT team. “The goal is to have no more than eight in IT as we grow to $1 billion in revenue,” he said.
The key to that, he said, is to outsource wisely and to be disciplined enough to say no to his bosses when they demand some ad hoc report right away.
“The service mentality that most of us in IT have is dangerous,” he said. “Infinite flexibility doesn’t usually come with an infinite checkbook.”
Dohm also doesn’t believe in fighting users who go around IT’s approved reporting and dashboard tools in favor of the tried and true.
“If everyone is doing things in Excel, then Excel is your BI strategy,” he said. “Let them use Excel to the point where it runs out of gas, because then they will switch to your higher-end product.”
With Oracle E-Business Suite deployed, Dohm said he has finally been able to resolve mysteries such as why “every Easter, our Dallas store sells out of white denim.”
People get in the way
But True Religion’s pragmatic and highly successful adoption of BI technology appears to be more the exception than the rule.
Business intelligence software may have been around for several decades, but it remains an esoteric niche in most companies, according to one analyst.
Unfriendly corporate cultures, not the BI tools or applications themselves, are preventing BI from becoming pervasive.
“The technology has been around for a long time. It’s the people that often get in the way,” said Dan Vessett, an analyst at IDC.
IDC recently conducted a study of 1,100 organizations in 11 countries measuring how pervasive BI is within companies, what factors helped make it more pervasive, and what “triggers” data warehousing architects and IT managers can use to the further the spread of BI in their companies.
In a speech Tuesday at Computerworld‘s Business Intelligence Perspectives conference in Chicago, Vessett said IDC measured BI’s pervasiveness based on six factors:
- Degree of internal use. According to IDC, that figure was 48 per cent to 50 per cent.
- Degree of external use, or how much the company shared data with vendors or customers. Sharing BI data keeps customers loyal, Vesset said. And canny BI users in industries such as retail can sell that data to generate nontrivial revenue, he added.
- Percentage of power users in a company. The mean was 20 per cent in surveyed companies.
- Number of domains, or subject areas, inside the data warehouse. Over five years, the average at surveyed companies grew from 11 to 28.
- Data update frequency. While real-time updates can be indicative of heavy dependence upon BI, “right-time data updates” is more important. “Daily, weekly or monthly could be sufficient,” Vesset said.
- Analytical orientation, or how much the BI crunching helped large groups or the entire organization make decisions, as opposed to isolated individuals. “The fact is that most individuals and companies are not data-driven. They still rely more on experience rather than analytics,” Vesset said.
According to Vesset, these factors in descending order had the most impact on BI pervasiveness:
- The Degree of training, not in the BI tools — “the vendors do a pretty good job” — but in the meaning of the data, what the key performance indicators mean, etc.
- Design quality, or the extent to which IT-deployed performance dashboards are able to satisfy user needs. Satisfied users will talk up the BI software, creating “BI envy” in other employees and thus helping spread the software’s use. Dissatisfied users will go around IT and use Excel or some software-as-a-service applications.
- Prominence of the data governance group.
- Involvement of nonexecutive employees.
- Prominence of a performance management methodology.
Vesset also listed a number of potential “triggers” for BI projects that IT should take advantage of:
- Arrival of new executives, who, if not satisfied with the type of reports or analyses delivered, may help sponsor a new project.
- A need to comply with new legislation.
- The introduction of performance management methodology.
- Corporate reorganizations, including mergers and acquisitions.
- Changes in the organization’s growth, such as when a fast-growing company slows down and then begins focusing on improving its profit margins.
Source: Computerworld.com