Essbase means lots of dough for Nabisco US
Not surprisingly, as one of the world`s largest enterprises, Nabisco US has dozens of financial analysts and managers who strive to identify and leverage every advantage in improving the profitability of each product and each customer. All costs associated with specific SKUs and individual customers must be tracked to determine profitability accurately. And in addition, SKUs change, depending on market conditions, sales promotions, and packaging. The linchpin of this effort is the Product Income Comparison (PIC) that provides a detailed profit-and-loss statement for each Nabisco US product.
In years past, teams of IS staffers, whose job was to create reports using mainframe-class reporting tools such as IFPS or NOMAD, also created PICs for each operating unit. Mike Hearn, director of financial and administrative systems for Nabisco US, says demand far outstripped available resources.
A single platform for financial analysis
"Previously, we were using four general ledger tools to do a lot of this work," Hearn says. "The problem was, they were complex tools that required IS people to be heavily involved just to do the reports, not to mention the subsequent analysis. We recognised that what we needed was a single spreadsheet-accessible platform for analysis. Our idea was to use Microsoft Excel throughout all of the financial community within Nabisco US. We didn`t want multiple spreadsheet applications and spreadsheet files all over the company.
"In the mid-90s, multidimensional technology began to emerge as a viable, usable platform for financial analysis," Hearn says. "We looked at several market offerings and selected Hyperion Essbase OLAP Server for our company-wide financial analysis and budgeting."
The Nabisco Financial Planning System - driven by Essbase
Using Essbase, Hearn and his staff created the Nabisco Financial Planning Systems (NFPS), a series of Essbase-driven OLAP data marts on Windows NT for financial analysts in each of Nabisco`s major operating companies: Biscuit, Life Savers, Planters, Food Service, Table Spreads, and Specialty Products.
NFPS provides monthly reporting for each Nabisco US SKU. Some key data dimensions in the data marts include time, store class (such as grocery, drug, mass merchandiser), and profit and loss accounts. Altogether, Nabisco US manages more than 70GB of data in Essbase data marts, the largest being the 22GB data mart used by the Sales & Integrated Logistics Division which supports Nabisco`s non-biscuit operating units.
"The system was just what we needed," says Hearn. "Now our analysts can perform profitability analysis based on a particular product or a particular customer. Financial analysts can look at the data from an almost infinite number of perspectives - without the involvement of IS professionals. It`s taken the IT department out of the ad hoc reporting business. That`s a huge benefit."
Wired for OLAP brings visual reporting to sales team
For Nabisco US sales managers, the challenge lies in ensuring continued profitability. "Our intent is to drive our business by profit - not just sales volume," says Hearn. "We want to make sure each customer relationship is profitable."
Tony Galli, senior manager of customer information, believes Essbase is instrumental in achieving that goal. "We have 22GB of quarterly data that goes back two years," he says. "We use our sales database and various transaction-level expense reporting such as cash discounts, spoilage, transportation, warehousing, and promotions to see which customers are most profitable."
Using Hyperion Wired for OLAP, the OLAP-centric analysis and presentation tool, Nabisco US sales executives can navigate quickly through their data in a visual - rather than numerical - style. WIRED for OLAP complements existing user tools with a compelling desktop analysis environment for non-spreadsheet users that features easy-to-use graphical displays, intuitive OLAP navigation, and robust analytics.
"This is the right tool for these users," says Galli. "Wired for OLAP is a slick front-end. It has on-screen hotspots and buttons that represent the different dimensions. I can click on different dimensions, drill down or drill up with a double click, or click on stoplight charts that show whether data is above or below my pre-set thresholds."
Essbase a million-dollar `Life Saver`
Hearn also notes that this analysis empowerment helped uncover savings opportunities almost immediately. "We first rolled out the application to Life Savers, which has more than 2 000 SKUs. They could look at their holiday products - special bundled gift packs - and when they added up all of the allocated costs for manufacturing and marketing, we realised these SKUs were losing money. Without this analysis, it could have taken much longer to discover this. That insight alone saved Nabisco US as much as $1m."
Don Valenzano, VP finance for Life Savers, is a big supporter of the Essbase data mart. "We have a complex array of products," he says. "We have single rolls, multi-packs, and many flavours. The profitability dynamics of the package sizes and flavors can depend on where they`re stocked in the store. Analysing these SKUs was very difficult before. Now, we can aggregate the data in multiple ways. We can look at the profitability of each package size. We can determine the profitability of front-end (near the cash register) sales versus aisle (regular shelf-space) sales.
"We also use Essbase to analyse the time dimension, because we have different seasonal events such as Halloween, Easter, and Christmas. Before it was a laborious offline process to assemble that data. Now, we do it instantly as part of our regular month-end reporting. This has been a tremendous time saver for our analysts. The integration with Excel is providing us with tremendous efficiencies - several days each month - in preparing our month-end financials, which allows us more time to do analytical work that can help us identify problems in our business, and recommend corrective action steps. "We`re using Essbase extensively because it`s helping us manage our business more efficiently. It`s providing new insights such as profitability by class of trade and by sales location within a store, and it`s increased analyst productivity."
Hyperion Essbase and Hyperion Wired for OLAP are distributed in South Africa by the IBD Group, a company in the Global Technology group.