Repsonsive EIS supports changing business priorities at Toromont

Toromont Industries is a Canadian public company with over 1,900 employees throughout North America. It represents Caterpillar and other equipment lines, maintaining dealerships in Ontario, Newfoundland and Labrador, and through Battlefield Equipment Rentals, one of Ontario’s premier construction equipment rental companies. The company is also a North American leader in Industrial and Process refrigeration.

IT World Canada: What kinds of successful datawarehousing /data mining programs have you implemented at Toromont to enhance decision-making in your business?

Cuddy: In our organization, we don’t really refer to our initiatives in data warehousing or data mining as specific discrete programs. We see them as part of on-going initiatives to provide the management of the company with the kind of information it needs to run the business. On an ongoing basis, we have a number of people dedicated to building new Internet or Intranet based systems to provide a wide variety of management information. That information runs the gamut from low-level operational analysis to high-level key indicators that are viewed on front-line Web pages. In fact, all our Enterprise Information Systems (EIS) are Web-based.

IT World Canada: What kind of information is available and what can you interpret from it?

Cuddy: On one page we have key indicators which are valid as of this morning – things like sales, inventory summaries, receivables, billing performance metrics, as well as external information like share prices, bank debt levels, foreign exchange rates, etc. In another section of the page we are able to view exception indicators that provide the top five or bottom five performers within our own branch organization, based on key measures that are important for us and that are relevant to our current business plan. For example, one of our lines of business is service. We employ mechanics that perform mechanical service on heavy-duty equipment. Often we look at their level of utilization or their productivity at the branch level and that gives us a good idea of the current level of activity in the business. We can make certain assumptions about what’s going on by interpreting this information. A lot of labour hours being booked into the expense category tends to indicate that a branch is slowing down. On the other hand, a lot of overtime labor hours that are billed to customers suggest a branch that’s potentially over capacity. This information is online and up-to-date as of this morning and I can look at it for any of the branches.

IT World Canada: Are there other examples?

Cuddy: Yes. We do the same thing with invoicing. It’s an important metric to us. Once we complete work on a machine, we like to see the job closed and billed to the customer. There’s a chronic problem in this business with having the job closed but not billed until the end of the month. The whole concept of month- to-month billing is a practice that we’re trying to break. It was created during the manual days of accounting. There’s a P&L statement at any moment in time and we need to be able to show it as of today. We have key metrics for invoicing at our disposal that allow us to answer the questions, ‘On average, how quickly are we able to get our invoices closed and out the door?’ and ‘Is the situation getting better or worse?’ and ‘How is each division doing?’

IT World Canada: What other successful EIS initiatives have you developed?

Cuddy: We’ve also used Internet technologies to integrate what might be considered Web technologies with management information and analysis. An example of this is a year ago, managing our inventory was an important element of our business plan at the time. We carry an awful lot of inventory in terms of financial investment, so how well we can utilize it from a return-on-capital employed and a working capital perspective is very important to us. We built some Web-based systems that allow the management to see a breakdown of the total inventory by product, location and how long it’s been at that location. We also built the facility to allow a manager to post a question or a note about a particular machine in inventory. For example, there may be a question about the likelihood of selling a specific machine in the near future. The question is appended to the Web page and an e-mail is sent to the branch manager concurrently. The reply is also appended to the Web Page. The application operates much like the concept of a newsgroup. Later, we calculate the number of questions posted as well as the number of responses and post the results on our key indicators page as a metric. It’s an indicator of how well and how quickly our people are addressing the problem parts of our inventory. It’s also an excellent example of where the technology itself allows us to blend different functions that are traditionally associated with Web and Internet technologies with back end host systems.

IT World Canada: Does the emphasis of the information you’re capturing change from year-to-year?

Cuddy: The content of our systems tends to mirror our business priorities. Last year we were somewhat focused on inventory and some working capital issues. This year we’re focused on sales coverage, market share, and territory-management. In fact, we’ve just finished working on a system that blends together accounts receivable information and customer characteristics to provide enhanced sales support capabilities. The system provides the sales force with the ability to log their activity, and then integrates the sales call information along with some other management information to provide statistics and reports on the activity of our field and whether a customer base is covered, what revenue that customer base represents for us etc.

IT World Canada: Have you been able to realize any productivity gains that you can isolate as a result of managing the analytical information so effectively?

Cuddy: Yes, but like all things having to do with IT, it’s all anecdotal. If your systems work well, the successes are gains that have been created by people who use them in the business function they’re in. It’s not because of the IT capability. By the same token, our president sent out a memo to all his direct reports indicating that our company had invested a lot of money in this technology and asked them to comment on the degree to which it was making their lives easier. All the notes that came back indicated that these systems had reduced the time some managers required to get critical information from days to hours. It was all very positive. One comment that came back from the field last year was, “Gee it’s getting to the point where there’s no place to hide anymore.” One of the philosophies that we’ve adopted is that when we create a model that has multiple geographic or branch locations’ data in it, it’s available to everyone. We do not implement systems that only show one branch’s data.

IT World Canada: What is the platform on which you’re basing these systems?

Cuddy: We have two warehouses or sources, and about 95 percent of the data is derived from them. We extract financial information and place it into a multi-dimensional database built on Essbase from Hyperion Solutions. We use it for financial analysis, modeling and to complete ratio calculations. The operational data, along with some financial information, is processed using SQL server from Microsoft. Those two sources form the platform, and they’re fed by our operational system. We render all that through Power House Web Server from Cognos, applying it against both Essbase and SQL. It’s used for multi- dimensional analysis. As well, we’re programming a lot of things in AST. We try to keep the technology base as simple as possible.

IT World Canada: What are the objectives for applying EIS strategies at Toromont?

Cuddy: One is to get much better, timely information in front of people that is accessible any time and any place. The other part of the equation is to deliver it in the most automated fashion possible. Increasingly, we’re able to integrate information from the EIS level with things that are principally operational to create a new type of function. Over time, you can start tying some of the pieces together according to whatever gives the greatest return. For example, we have information in the EIS that is associated with machines. Some new systems that we’re currently developing allow customers to access their Web page on our site and track a particular machine, its level of activity and even the financial information associated with it, using some on-board equipment.

Pat Atkinson is a freelance writer based in Burlington.

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