A rainy day is a disappointment for visitors to the Universal Studios Hollywood theme park. It's an even bigger disappoint to the park's management staff.
Taking into account the cost of supplies, labor and lost ticket revenues, a rainy day at the park can put a big dent in the week's profits. A rainy week can affect an entire quarter. That's just one reason why New York-based NBC Universal has optimized its California theme park's operations by implementing business intelligence (BI) and corporate performance management (CPM) tools over the last five years. With the tools, Universal Studios Hollywood can quickly change financial projections and subsequent operational actions. For example, if rain is in the forecast, the park might not staff as many workers and on seasonable days they might extend the park's hours. The project is indicative of a growing trend toward integrated BI and CPM (also called business performance management) systems.
"Access to information was really limited. We had fragmented data sources, inconsistent metrics across the business, model assumptions that were different from business to business," Aptor explained. "It was a really fragmented way of doing business."
Exacerbating the problem were the unique business needs of the park, which is like seven businesses in one, Aptor explained. The park encompasses units for ticketing, food service, merchandise, operations, entertainment and even real estate management. Successfully managing the operation requires visibility across a variety of business models.
So, in 2000, Universal began a data warehousing and business intelligence initiative, using systems from McLean, Va.-based Microstrategy. They started with ticketing data and eventually incorporated all 10 source systems into the new BI system. While the project improved visibility into the business, Universal's planning process was still suffering.
"It's very much a sensitivity model; you don't know what your business looks like a month out," Aptor explained. "If it rains tomorrow, or it rains for the next week, then you're missing your entire month or quarter. It's a thin business as far as margins are concerned."
In order to increase margins, management needed to better plan their labor needs, which is one of their highest costs. Before the new tools, it took a team just to forecast the daily staffing requirements of the park, and the manual forecasts were just not fast enough for them to respond to changing conditions, said Aptor. The company wanted to be able to redo their forecasts every week to more effectively schedule worker's shifts. The group began evaluating CPM tools and settled on MPC from Waltham, Mass.-based Geac Computer Corp., then called Comshare, in August of 2001.
Then the September 11 terrorist attacks occurred and reshaped the business. The park's international business disappeared literally overnight, domestic travel dropped off and the leisure and entertainment industry dropped to 25% of what it had been, Aptor said.
The company suddenly had a new sense of urgency about optimizing the business by implementing the CPM tool, but ran into communication problems between the business and IT staff.
A looming SAP project also complicated the implementation plan, forcing the team to build the tool to be generic enough to integrate data from both the existing legacy system and the planned SAP ERP system.
Now, using extract-transform and load tools, the source system (originally the legacy system, now SAP) outputs daily flat files of the actual numbers, which are loaded into the CPM tool. On a weekly basis, the team uses the Geac MPC tool during their forecasting process to recast their plan for the next three weeks -- taking into account the weather and other outside factors. The tool allows them to flow the new forecast throughout the budget, down to the daily level, Aptor explained. The output from this process is loaded into Microstrategy as the new plan or "three-week rolling projection," Aptor said.
This process enables a constant comparison between the initial plan, the current estimate (likely a quarterly forecast), the prior year's figures and the new, three-week rolling projection. The company then plans labor needs based on the new projection, thus optimizing costs throughout the park.
While the company declined to release specific numbers, the project has impacted the bottom line by millions of dollars. But that's not just from the technology investment, Aptor pointed out.
"It's not just one project; the technology will only give you 20% of the ROI. Process changes will give you 50% of the ROI, and the last 30% of that ROI equation is the people -- that's your change-management piece," Aptor explained.
That said, the company's transformation would have been impossible without the combined BI and CPM tools, Aptor said. And recently, Geac and Microstrategy announced a partnership to jointly offer their technology to other companies seeking a combined BI-CPM system.