Convenient Intelligence

Hot dogs are a staple item in the quick-paced world of convenience retail, joining other stalwarts like coffee, gasoline and tobacco products. For Altoona, Pa.-based Sheetz, a staple for remaining competitive is unfettered, ubiquitous visibility into the operations of its 400-plus stores — all the way down to the hot dog buns.

Family-owned and operated Sheetz operates throughout the mid-Atlantic. Business is thriving for Sheetz and its more than 14,500 employees: Forbes magazine’s annual ranking of America’s Largest Private Companies had Sheetz in 58th place last year, up from No. 79 in 2010.

So how do they track those hot dog buns? Sheetz employs a sophisticated technology-based business intelligence platform that gives company executives and store managers a holistic view into operations.

“Basically, they are watching the margins,” says Sheetz senior IT analyst Nanette Pittman, whose department administers Pentaho Business Analytics, a business intelligence platform from Pentaho Corp. “They can watch and measure metrics down to hot dog sales.” Tucked into those margins are variables like portion control, usage and waste that can affect an item’s profit.

Sounder decisions
For retailers, business intelligence (BI) systems offer two primary benefits — understanding what their customers are buying and why, as well as how goods are moving in and out of stores from the operations side. Having that detail empowers retailers to make sounder decisions based on price, buying patterns, promotions, inventory and growth opportunities.

Market researcher Gartner forecast global BI growth at 9.7 percent in 2011 for a total market of $10.8 billion, making it one of the fastest growing software segments. Organizations are turning to business intelligence to run their businesses leaner and smarter, according to Gartner’s February 2011 enterprise software survey.

“In retail, speed becomes important because really you want to determine your sales opportunity very quickly — as soon as the customer walks into the door or logs into your website,” says Pentaho senior product marketing manager Farnaz Erfan. “You want to know ... their market basket size and how can you, through your product placement tactics, expand that market basket size.”

Sheetz incorporated the Pentaho platform in 2009 in an effort to reconcile the numerous data marts and reporting tools in the organization, Pittman says. Those multiple data sources and methods typically produced competing reports, despite using the same underlying data.

“What was happening is that operations and marketing would come to the same meeting with two different reports that made sense in their own worlds,” she says. “But when they brought them together the numbers were different. It caused everyone a lot of time trying to understand why the differences were there and what they were.”

User-driven reports
Part of the issue was the lack of automation within data gathering and reporting, according to Pittman. Sheetz’s executives and managers were relying too heavily on Microsoft Access and Excel as reporting tools and needed a common reporting infrastructure that would facilitate self-service reporting and analysis within the chain.

Additionally, Pittman says, IT had become a hindrance to the timely dissemination of data because generating reports was a lesser priority than the department’s other duties. In addition, users often were unclear about the data they needed, tapping further into coveted IT resources.

Now, through an automated platform, Sheetz’s users need not worry about distinguishing data attributes, such as business dates or transaction dates. “They don’t have to worry about some of those underlying issues,” Pittman says. “They can just create their report.”

Erfan says a user-driven approach to business analytics is one of the emerging trends in business intelligence. In the past, where IT organizations would build reports and forward that information to business users, now tools are targeted specifically to those business users, she says.

“Now it is more about business users who drive analytics themselves. IT in this picture becomes an enabler,” Erfan says. “Users can build reports when [and how] they need them ... and don’t have to wait for data from the IT organization.”

For instance, the Sheetz finance department can regularly consume store sales data to spot trends and anomalies, while the chain’s maintenance department is able to independently monitor equipment and maintenance labor costs associated with the gasoline operation.

“They’ve become more analytical because they are not spending the time gathering the data,” Pittman says. “They have the time now to do more analysis and create the advanced reports they need.”

Sentiment analysis
Gartner notes in its survey that “BI tools must be simple, mobile and ‘fun’ in order to expand use and value.”

Erfan says other emerging BI trends include a focus on accommodating what is called “Big Data” — data measured in terabytes or petabytes that is merging from every corner of the business, including financial and retail transactions, web logs, radio frequency and sensor networks, social media and electronic commerce.

Enterprises not only must accept and accommodate data volume, but enable the variety and velocity of that data, Erfan says, adding that velocity accounts for the speed with which data becomes available for analysis.

Additionally, new platforms are giving retailers an opportunity to market around social media networks like Facebook and Twitter and exploding consumer mobile device use.

“Marketing has drastically changed for retailers,” Erfan says. “We see a lot of interest around sentiment analysis, along with web click-throughs and online ad click-through analysis.”

In conjunction with use of the Pentaho platform, Sheetz set up a data governance council to create and enforce data management policies, priorities and procedures across the organization. The goal, Pittman says, is to improve data quality and data sharing.

“It has provided us lots of structure,” she says. “When we have data issues, that’s the group we talk through it with. It is representative of the various departments in the company, such as finance and marketing, that traditionally had been working on data analysis in their silos.”