Many technology companies didn’t see the sharp drops associated with
this recession until late 2008, but like others in the home building
market, U.S. Lumber, which caters to customers including Home Depot,
started feeling the pain in 2006.
But things could have been worse. U.S. Lumber, a mid-sized business
with about 280 employees, has weathered the recession so far, and at
least one of the people who work there credits the company’s business
intelligence system with the fact that U.S. Lumber actually made a
profit during its most recent fiscal year — a year when its
competitors continued to struggle to stay afloat.
“We were the first ones into the hole,” says Felipe Herrera, an
industrial engineer and MBA who heads up U.S. Lumber’s implementation
of IBM Cognos business intelligence software at U.S. Lumber. “We are
the supply chain for housing. Our spigot started heading down in 2006.
But we made money last year. I don’t know a lot of people in our
industry that can say that.”
Herrera says that he attributes the profit to “being able to see things
unraveling with the data, and managing our customers.” Herrera says
that because U.S. Lumber was able to recognize the downward trend in
real time, it was able to react quickly to the changing market. It
could recognize who was still buying and direct its sales people
accordingly.
IBM Cognos solution provider channel partner Lodestar Solutions helped U.S. Lumber with the upgrade from Cognos 7 to Cognos 8.
Lodestar CEO Heather Cole says that while IT budgets have changed
significantly in the last six months, now is an even more important
time for businesses to get accurate information faster to make quicker
decisions. U.S. Lumber was fortunate that they already had the Cognos
system in place.
Herrera says before U.S. Lumber implemented Cognos BI “it’s hard to
remember because it was so horrible.” Queries to the ERP system yielded
hundreds of thousands of lines of data that Herrera would have to split
into multiple spreadsheets.
“A lot of the decisions we made on sales programs and changing terms
with customers were all made on a gut feeling,” says Herrera.
But Cognos got its foot in the door at U.S. Lumber about five years ago
when the company’s president and CFO went in search of a new solution
to improve upon the Microsoft Excel spreadsheets they were using for
planning. The company went with Cognos Analyst. Later, U.S. Lumber
invested in Cognos BI to replace the company’s customized third-party
solution that really just provided it with three graphs per day –
inventory, daily sales and margin, says Herrera.
“When we looked at what Cognos had for BI in 2005, we saw the
possibility of so many different things we could do with the data,”
says Herrera. “We only realized then we could do a lot more with
our own data. We didn’t know how much we had. We didn’t realize how
data starved we were until we got Cognos BI.”
While Herrera says it’s hard to quantify the pay off of implementing a
BI system, he says that one thing the company managed to avoid was
spending the $100,000 quoted by the third-party vendor for a custom
software project to gather procurement data. Instead, Herrera ran a
pilot using Cognos to extract the same information.
“Companies have the data,” says Cole. “But they don’t have the tools to
leverage the data from their applications – particularly with ERP
systems. The reporting available with these systems is not the best,
but that’s where Cognos BI really steps up, and it allows you to report
off that data and to be able to see that one version of the truth from
multiple sources”
That’s what Herrera was able to do with U.S. Lumber’s data.
“Any BI user that has this system can do this, but a lot of people
aren’t creative and don’t know how to leverage what they have,” says
Cole. “It was an instance where Felipe could leverage the system to get
all the data the company wanted.”
Lodestar’s participation in the most recent project amounted to some
brief consulting with U.S. Lumber, says Cole, while Herrera really did
the heavy lifting on the project. Like everyone else, U.S. Lumber is
holding off on big consulting projects that will cost significant
money, says Cole.
Cole says that Lodestar’s overall business, which specializes in Cognos
implementations, still sees some deals closing, but those deals are
much smaller than they used to be. Companies will run more pilot
programs.
But pilot programs do tend to pan out, says Cole, who adds that almost
all of the pilots Lodestar began with customers last fall have now
turned into new projects and opportunities.
For example, many companies are looking to move from annual forecasts
to rolling forecasts, she says, because return on investment (ROI) for
that kind of project is very rapid.
“The ability to make a better decision is absolutely key,” says Cole.
“The only way to do that is to have the right data available – and not
have 10 different versions of the truth.”
Herrera reports that the Cognos BI system installed quickly, over a
weekend. In addition, U.S. Lumber was able to use Cognos BI to help
with an ERP upgrade.
“We used Cognos to combine information from two ERPs, pulling data from
both into several SQL tables,” Herrera says. “Cognos helped us through
that process and we didn’t miss a step.”