Even though the company uses BI to help manage its supply chain, ward off fraudulent returns and monitor corporate performance, senior vice president and CIO Steven Stone said he still gets asked by other executives whether there is a dollar value associated with the better -- and faster -- decisions BI makes possible. "In the end, you're likely to be faced with some form of 'proof' question," he said yesterday during a keynote presentation in Las Vegas at the MicroStrategy World 2007 user conference.
And, he stressed, "definitive proof is hard to come by."
For example, the company several years ago used its Teradata data warehouse and MicroStrategy BI tools to help it solve problems with collecting delivery charges from its stores. By using BI to analyze which stores were collecting the charges and which weren't, collections increased $30 million the following year, he said. "This is an example of what BI is adding to the bottom line."
Still, the Lowe's CEO at the time asked Stone how he could definitively link the bump in collection fees to the use of BI. "There is no silver bullet, (but) if you continue to deliver value, the funding always seems to inch its way back to your budget."
Lowe's has several new projects that Stone said show the value of BI to the company, which runs 170,000 reports per week. Those reports are accessed by internal users and almost 1,000 Lowe's suppliers.
Lowe's uses BI to track 50 million items against billions of transaction records to plan inventory at its 1,400 stores. BI is key to analyzing the 4,000 to 6,000 quantity discount programs the company has in place with suppliers to determine which are most effective. In addition, the company's returns department uses its BI tools to analyze product returns in real time to try to identify potential fraud.
"They can properly handle our real customers and reduce theft," he said. "When you know your customers, you begin to understand the value of a single decision."
He noted that Lowe's has been able to improve margins in its lawn and garden business and identify the best places to put its cash registers through the use of BI.
Stone, in an interview, said that as BI has become more linked to operations decisions, the company has figured out infrastructure changes it needed to make. For example, the company this month completed a move from Microsoft Windows to IBM's AIX for its BI operation. The new system is now running on 3,000 servers so Lowe's can handle spikes in demand more quickly.
In addition, the Mooresville, N.C.-based company is slated to complete a second data center in San Antonio by the end of the year. Lowe's plans to run its Teradata data warehouse in the new center as well as in its existing data center in North Carolina using Teradata's Dual Active System Solution, an architecture that allows data and applications to run in different geographical locations.
"When you make [BI] operational, you think about how you will recover from a disaster," he said. "If my data warehouse is driving my supply chain, you have to have a way to back it up. Once you start making operational decisions that impact the life blood of your company, you have to make it a Tier 1 application in your company."