Chickasaw Nation Division of Commerce drives decision-making

With a tribal jurisdictional area encompassing 13 counties in south-central Oklahoma, the Chickasaw Nation is a federally recognized Native American nation. The Division of Commerce (CNDC) is the Nation’s economic arm, and strives to support the Chickasaw people and their way of life through a diverse range of enterprises, including banks, retail stores, hotels, casinos, radio stations and many other businesses. It employs more than 6,000 people.

The challenges of growth
“Over the past decade, we have seen massive growth, particularly in our gaming business,” comments Rob Jacks, Chief Information Officer at CNDC. “We have gone from a few thousand slot machines to more than 15,000 gaming devices, and we now own the largest casino operation in Oklahoma and the third largest in the world. As the organization grew larger and more complex, the need for greater insight into finances and operations became more apparent – but our existing systems and processes were struggling to scale to meet the demand.”

Patrick Neeley, CNDC’s Chief Financial Officer, adds: “We had outgrown our current forecasting platform, and in terms of business intelligence we relied on spreadsheet extracts from our transactional systems. This created a great deal of manual effort in order to plan and report on the business. Equally, we were not able to provide decision-makers with the clarity and the timeliness of information that would really allow us to be nimble in the marketplace. At the end of the day, we are trying to create stable plans over a long-term time-horizon, helping us collectively guide our organization, create sustainability in our businesses and make a real contribution to the quality of life of the Chickasaw Nation.”

Widening access to data
Previously CNDC’s data was held in a number of financial and operational systems, and was only accessible to skilled users in the finance and IT departments. As a result, the whole burden of management reporting fell on these users: they had to manually extract the data, format it in spreadsheets and email it to decision-makers throughout the business. This not only distracted them from more valuable work – it also increasingly created an information bottleneck, as the demand for analytics outstripped their ability to supply it in a timely manner. As the business continued to grow and diversify, the volume and variety of requests increased, which placed even greater strain on these resources.

As one example, CNDC controls a large number of valuable fixed assets, including land, hotels and casinos. Each year, users in the finance department needed to create a fixed asset roll-forward schedule: taking the opening balance, analyzing any additions and disposals, and reconciling the resulting balance with the general ledger. Without enterprise-class business intelligence tools this was largely a manual, spreadsheet-based process. IT specialists had to extract the data from source systems and provide it to finance teams for analysis, with the whole process taking between 400 and 500 hours every year. As the business grew and the asset portfolio increased, this type of analysis was only going to get more time-consuming.

One of the key objectives that Rob Jacks laid out for the CNDC IT team was to put the ability to run the business in the hands of business users – not to confine it within the IT department. This meant ensuring that users had the right tools and access to the relevant data to enable them to perform analyses and create and distribute reports in near real-time to key CNDC teams. This would empower them to collaborate with key stakeholders within and across different business functions, leading to more confident, fact-based decision-making.

“Our philosophy in the IT department is to provide the business users with the tools enabling them to run the business without IT’s involvement,” explains Rob Jacks. “Given the fast-paced, ever-changing nature of the business, we can’t afford to be the gatekeepers to all knowledge – we want to enable the business users to take charge of their own destiny.”

Enhancing analytics
Aside from the high levels of manual effort required to create reports and analyses, CNDC also saw the creation of a Business Analytics platform as an opportunity to gain insight into new areas of the business. For example, special offers and promotions are a keystone of marketing in the hospitality and gaming industry, yet in most organizations decisions on customer promotions – design, investment level and duration – are based on gut feel, not fact or analysis. CNDC realized that by analyzing the revenue data from different areas of its business – slot machines and gaming tables, restaurants and bars and the hotels and other lodgings – it could gain much greater insight into patron behavior and the profitability of its promotions.

Patrick Neeley comments: “We want to ensure that we are being the best possible stewards of the Nation’s resources, so where there’s an opportunity to enhance our performance, we need to take it. By spreading analytics to the operational side of the business, we would gain a better understanding of how the patrons of our hotels and casinos behave, what the costs are, and where the opportunities for increasing profits can be found. We needed a new solution, and we needed IT, finance and operations to work together to find it.”

The CNDC team evaluated a number of business analytics products, and sought advice from Kurt Salmon, a leading specialist in business intelligence and performance management solutions. The Kurt Salmon consultants recommended a solution based on IBM Cognos, IBM SPSS and IBM InfoSphere software – creating a comprehensive data warehouse and business analytics platform that could cover all the bases, from financial and operation performance management through planning and forecasting to complex statistical modeling.

Ease of use and architectural simplicity
“When we looked at the IBM Cognos portfolio, we realized that it had a lot of the intuitive features that our business users were already familiar with,” says Rob Jacks. “For someone who is used to working with spreadsheets, it’s not a big change. When I started using the business planning software, I was able to figure out how to create my budget with little outside assistance. That gave me a lot of confidence that it would be easy to roll out to our broad user-base.”

From a technical perspective, the team also appreciated the solution’s ability to interface with the company’s existing data sources. Kurt Salmon was able to provide pre-built connectors that enabled easy integration with the Microsoft SQL Server and IBM DB2 databases that support CNDC’s Microsoft Great Plains ERP system and IBM i based gaming management system.

CNDC also appreciated the ability of the IBM Business Analytics solutions to evolve and keep pace with the rapidly changing needs of its business, as well as its ease of deployment.

“Compared to some of the other solutions we had seen, the IBM offering seemed to be simpler to deploy and integrate, so we believed it was less of a risk than some of the alternatives,” says Rob Jacks.

Bite-size business analytics
As CNDC embarked on its business analytics journey, it was extremely important to focus on initiatives that would have the highest impact and ensure that results were achieved along the way. Working closely with the Kurt Salmon consultants, CNDC developed project plans accordingly. The goal was to break projects into logical stages, allowing delivery of quick wins as the work progressed. This helped to ensure users were gaining value as quickly as possible, and was critical to help gain user adoption as quickly and seamlessly as possible.

“Essentially, we have been able to break projects down into bite-sized morsels,” says Myron Weber. “Long term success, based on our experience, is strongly correlated with the ability to deliver continuously digestible, usable solution components that users can immediately take advantage of.”

Patrick Neeley agrees: “The important thing to remember is that analytics should be led by the business, and delivered for the business. Our business analytics strategy is a critical initiative driven and supported across senior management, led through a strong partnership between finance and IT, and in partnership with Kurt Salmon. When we start a new project, our rule of thumb is that we should deliver production-ready solutions to our users – whether they work in finance, marketing, accounting, operations, human resources or wherever – within 120 days.”

Establishing the CNDC Performance Solution Center
The goal of business analytics at CNDC is to drive business performance. Providing the analytical tools to measure and assess performance is only a first step: the real challenge is to embed the performance management capability into the culture and working practices of the entire organization by fostering the adoption and ongoing enhancement of those tools.

To this end, CNDC created an internal competency center for business analytics known as the Performance Solution Center (PSC), tasked with building organic expertise around the business analytics solutions, defining best practices and creating an education program that will sustain a performance-focused culture throughout the business.

“We want to empower everyone, not just the finance people,” explains Patrick Neeley. “Performance is the key to everything. If we can show people how they can measure performance in their daily work by giving them access to the right information, we can transform the way they make decisions and assess results. The PSC is critical to spreading knowledge across all functions and creating a population of power users throughout the business.”

“What is unique about the PSC is that it is basically run by finance with IT’s blessing,” explains Wanda Harris, PSC Manager. “It was designed in a collaborative effort to create a process whereby line-of-business users could be exposed to best practices, collaborate with the center team on how to develop a solution specific to their area, and then be educated on how to create their own reports.

“The PSC has created an environment of collaboration and communication that has enabled our end users to no longer think in terms of the analytics that they have always had. They are now thinking in terms of what is possible; of the more meaningful analyses that they will be able to do.”

Faster financial reporting
Among the first key areas to benefit from the business analytics solution were CNDC’s finance and planning departments. Financial reporting, budgeting and forecasting capabilities were enhanced using a combination of IBM Business Analytics financial solutions, including IBM Cognos Business Intelligence and IBM Cognos Planning.

“By improving our ability to analyze the vast amount of information housed in our general ledger, we are able to save hundreds of hours which were previously spent on error-prone, highly manual, untimely reporting processes,” comments Patrick Neeley. “Take the fixed-asset roll-forward schedule, for example: we used to spend up to 500 hours on this each year; now it’s almost completely automated, so we no longer need any help from the IT team, and the time that our accountants used to spend on manual data collection and processing can be devoted to more useful analyses. The increased automation has also helped accelerate the monthly financial close process by 50 percent.”

Far-sighted financial planning
From a financial planning perspective, CNDC’s ability to budget and forecast has been transformed. The organization has reduced the amount of time it spends on budget preparation by more than half, while increasing the engagement of budget-owners across the business by enabling them to contribute to the process. CNDC has also extended the budget horizon from 12 months to 24, which helps the organization plan more effectively for the long term, and introduced 12-month rolling forecasts that help manage resources more efficiently.

Patrick Neeley comments: “One good example is revenue forecasting, which we do with a combination of IBM Cognos business planning and IBM SPSS solutions. We’ve built a very accurate model for mid-month and month-end cash forecasting that uses regression analysis to show us what our cash requirements are likely to be over the coming weeks and months. When our forecasts relied more on the opinions of financial experts, we used to have to keep a ‘cushion’ of a few million dollars in case their estimates were wrong. Now we have much more confidence in the forecasts, so the cushion can be much smaller.”

Building industry-specific applications
To enable analysis of CNDC’s hospitality and gaming processes, the organization worked with Kurt Salmon to build an application based on the IBM Cognos platform that would provide a specific general ledger for the gaming business, and also enable insight into operational areas such as slots and table revenue, food and beverage revenue, accommodation revenue and labor management. The application was developed using the powerful tools available in the Cognos Application Workbench, enabling Kurt Salmon to provide CNDC with an intuitive yet sophisticated analytics solution that meets its unique needs.

“The application makes it easy to analyze the behavior of casino patrons by looking at all the different sources of revenue within a resort – accommodation, food, drinks, casino revenue, and so on,” explains Myron Weber. “It pushes out management reporting from the general ledger so that it gets beyond the finance team and actually reaches all the operational managers within the specific casino – so they can use it to make decisions more effectively. Being able to leverage these new kinds of analyses and information has had a dramatic impact on casino performance metrics because CNDC can make decisions in near real-time based on specific patterns, trends and behaviors of patrons.”

Patrick Neeley comments: “Effectively, what we’ve been able to do is support the process of promotional planning for our marketing team. We can now see how profitable all the campaigns and promotions are, allowing us to confidently determine which types of promotion perform best in which revenue areas. For the first time, we can decide which promotions to run based on facts, rather than gut feel. As well as giving us more detailed insight into our promotions, the solution also helps us plan and develop them more quickly: we can conduct promotion analysis in the system about 75 percent faster than before.”

In the longer term, CNDC intends to supplement the existing patron analytics environment by using IBM SPSS software to provide predictive modeling. On the financial side, this will be combined with IBM Cognos TM1 to enable more flexible real-time planning and forecasting.

A monstrous appetite for analytics
Rob Jacks comments: “The solution has been extremely popular – the users understand the decision-making power it gives them, and they’re hungry for more. It’s almost like creating a monster and then realizing how much you have to feed it – but that’s a good problem for our business to have!”

Patrick Neeley concludes: “With the IBM Cognos business planning and SPSS software, we have been able to reduce reporting and planning cycle times by up to 50 percent in some cases, and saved hundreds of hours on low-value manual tasks. This has a knock-on effect on labor costs: even though our businesses have been growing close to 20 percent year-on-year, our staffing levels have remained steady.

“We’ve developed additional management reporting capabilities and increased the speed of decision-making, because we can get the information faster and with less effort. Best of all, we have begun to spread the concept of performance management throughout the organization and embed it into the working culture, so we can focus on the things that are most profitable for us and quit doing the things that aren’t. As people start to see what business analytics can do for them, their appetite grows enormously. As a result, we are really helping the business to operate more efficiently and deliver greater value to the Chickasaw Nation.”