A total view

A CIO who asked that her company not be named for competitive reasons says price analysis and optimization software from Zilliant Inc. in Austin cost $500,000 but is adding $2 million a year to the bottom line -- representing a payback period of just three months.

She says the $1.4 billion manufacturer of lighting fixtures used to base its prices on cost, without regard to optimizing margins, and it did so at a very gross level. "Now we take a total view, not just material and labor, but also returns, rebates, promotions, discounts and so on -- things we did not even consider before," she says.

Understanding all the components that affect a deal's contribution to profit provides "a foundation for our negotiations and helps us sustain our price points," she says.

The company is preparing to buy another Zilliant product, called Deal Manager. "This is really where the power of the analytics and the optimization is applied," says the CIO. "It will let us say, 'Can I go higher or lower on this deal?'" She says the company hopes to increase profits by $1.5 million with this kind of real-time sales support tool.