When Office Depot merger plans with Staples Inc fizzled last year, Wall Street analysts such as Donald T Spindel said it would take the company "several quarters to regain lost momentum".After all, the office supply market leader had lost many of its top managers during the ill-fated merger discussions. It had also lost dozens of clerical staffers who used to help generate reports on product sales at its 600 stores across the US.But a funny thing happened on the way to the shredder. Thanks to its increased use of online analytical processing (OLAP) software by its 200 merchandisers and finance executives, Office Depot managed to generate "respectable" 4% same-store sales growth in the second half of last year. By outfitting its merchandisers with their own analytical tools, the Delray, Florida-based company was able to "operate more efficiently without the people they lost", said Spindel, a retail analyst at AG Edwards & Sons in St Louis, Missouri.Office Depot "is one of the few companies that have used OLAP tools for operational analysis", said Frank McGuff, principal at Telos Solutions, a data warehousing consultancy in Northbrook, Illinois.Office Depot began using Essbase and Wired for OLAP from Arbor Software in early 1996. It has allowed hundreds of merchandisers, salespeople and executives to launch their own queries and "refocus the business", said Bob Nickerson, director of merchandise planning and information at Office Depot.For example, in autumn 1996, Nickerson and Office Depot`s other 100 merchandisers used Essbase to review the retailer`s PC business by generating detailed analyses of gross margin return on investments by store and by produce type."We found that we were carrying too much fringe stock in the wrong stores," Nickerson said. So the retailer narrowed its assortment of PCs from 22 to 12 products. that helped the company eliminate unnecessary inventory and avoid costly markdowns on equipment that was gathering dust.In turn, Office Depot`s return on assets for its computer business "has improved substantially", Nickerson said. He added that the company`s use of Essbase and Wired for OLAP "has translated into millions of dollars in profitability". Last year, Office Depot was ranked third among computer retailers with $2,59bn in sales - trailing behind only CompUSA and Best Buy, according to Computer Retail Week, a trade publication in Manhasset, New York.Even Dilbert, which Office Deport has licensed for use in its current advertising campaign, would have a tough time being cynical about the returns Office Depot has made on its sub-$5m investment for Essbase software and Compaq 7000 servers. Smoothing the way was a previously completed five-year effort to replace a smattering of IBM AS/400s with a 900 MIPS IBM CMOS mainframe sysplex running DB2.A shift to mainframe processing may not sound sexy, but Office Depot wound up with well architected systems that were good at keeping detailed data. That helped Office Depot set up a clean decision support environment comprising 4 Terabytes of mostly DB2 data and 200GB to 300GB of Essbase information that is stored in data marts or "cubes", said Paul Gaffney, senior VP of systems development at Office Depot."It would have been impossible to deliver that data if we didn`t have a good data architecture," Gaffney said.Still, success hasn`t come easy. A single cube can contain up to 30 000 products and up to 53 weeks of financial data for each of its 600 stores, Nickerson said. And when the cubes got too big, Office Depot`s disk servers would bog down.Storage devicesTo unclog these bottlenecks, Office Depot bought multi-channel RAID direct access storage devices from IBM. That helped the data marts generate subsecond responses "on any drill-down requests" on precalculated cubes, Gaffney said.Office Depot is weighing whether to provide suppliers with Web access to its data marts using Wired for OLAP connections. Office Depot already shares sales activity with two key suppliers through electronic data interchange transaction sets, so "we have to decide whether we really need to send them information via Essbase", Nickerson said.(This article originally appeared in the February 9 edition of ComputerWorld.)
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