LUXURY WINE AND SPIRITS IMPORTER Moët Hennessy USA operates in over 50 markets using a performance indicator system that each employee can easily access. BPM Magazine spoke with Laurel Schechter, the company's Cognos business intelligence manager, and Wayne Walsh, director of commercial management, who have one thing to say to finance pros who are considering performance management software: “Invest!”

BPM Magazine: What software does Moët Hennessy use for performance management?

Wayne Walsh: We operate on SAP; that's our global platform. In terms of a lot of the planning work, the finance guys are running Essbase Planning software published by Hyperion. That's where all the planning and consolidation in our head office is done. For performance analytics, we use an internally developed portal called MH Biz, which retrieves data from our Cognos BI system.

Laurel Schechter: That's where all of the reporting comes out of. The data is extracted from SAP and other third-party vendor systems and sent to our data warehouse. We extract it through the enterprise planning module in Cognos, as well as other Cognos products, and then supply reports to the business with that data.

BPM: Can you describe the various kinds of information that you feed into the Cognos system and where they come from?

Walsh: It's pretty much all of the operational volumes: sales, open orders, and what we call “depletions” in the wine and spirits industry. We sell to a distributor and that's our sale, and when the distributor sells to the retailer, or nightclub, or liquor store, that's a depletion for us. That's how we measure the health of our business — by what goes from the distributor to the retailer.

BPM: Is that manually entered into Cognos? Where does that come from?

Walsh: There's a data provider called BDN, Beverage Data Network, which collects information from 99 percent of the distributors in the U.S., so virtually every single distributor in every state, bar maybe five.

Schechter: The distributor sends the information to Beverage Data Network and we get feeds from them every single night for whatever the distributor sends to them. We put that into our data warehouse, and then that data is put into Cognos and married with the data that gets entered in the enterprise-planning tool as far as the budgeting information is concerned.

BPM: At that point, what types of analytics do you do?

Schechter: Well, generally, we'll look at the budget against the actual depletion numbers and also the budget against the sales numbers. Then we also look at what we call demand, which is the sales plus the open orders, and at the budget against that as well.

BPM: Can you give me some examples of decisions that are affected by those sorts of analyses?

Walsh: We plan our year using information coming out of Cognos. We have three rounds of budget forecasting process: We have the budget, which is normally done in August of the previous year; LE1 (LE stands for latest estimate), say, in April; and then LE2 in September/October. Basically we rerun the numbers, based on the economy, based on performance; come up with our new target; and measure the total in terms of sales and orders against the LE2. We take the total company number and break it down to the 50-plus markets.

BPM: You use the depletion information to look at product turnover, basically? And you budget based on that?

Walsh: We take the total company depletion number and break that out by market, based on who can deplete the most, who's got strong business going. We try to put the volume targets in the right place. Then, based on that, we arrive at the annual sales target, taking into account the number of days that we are trying to plan the distributors out in terms of inventory, apply that against the depletion number, and give them each a sales target by market.

BPM: Any decisions that you've made differently because you've had access to this information?

Walsh: All of our decisions are based on this. It's a critical tool in our company.

BPM: Before you implemented Cognos, were you able to look at depletions in this way?

Schechter: The planning tool has only been around for a few years. And I think that what I heard was that the reporting used to take several weeks to get all the information to Excel.

Walsh: It was very manual, requiring updates in Excel daily. And obviously, with Excel there's opportunity for errors and files changes. Cognos is just a very stable platform for sharing information across the company.

Schechter: And everybody can run reports whenever they want because the information is available to everyone. So now, when we get the data to load, it takes only a matter of an hour or so to load it, and then the reports are ready to go. Whereas, as Wayne said, before it was a very manual process. There was a higher margin for error. And that was true also for the distribution — it had to be manually e-mailed to people or put on a shared drive and people had to find it. Now it's just right on our internal Web portal.

BPM: Who has access to information on depletions? Does everyone?

Walsh: Everyone in the company, yes. It's the key performance indicator for the business.

BPM: Does that drive employee action and employee performance? Is compensation tied to it?

Walsh: Part of the sales force bonus is based on depletions. There are other elements, obviously: personal achievement and the total company hitting the global target. But a large part of the sales bonus is based on depletions in the market.

BPM: I believe you mentioned that you have 50-plus markets. How are those broken down?

Schechter: It's by state, each state having its own regulations for wines and spirits. In addition, California is broken up into Northern and Southern, and New York broken into Upstate New York and Metro New York.

BPM: Do you break down your depletions in any way other than by state? Do you look at other dimensions of how your products are moving?

Schechter: The other dimension (apart from time) is by product or by marque. We go down to what we call the marque or quality level. So instead of a whole brand — for instance, Hennessy — we'll look at it by each of the individual marques or qualities, like VS and XO. We can go down as low as the SKU level — for example, 750ml, 1.0L, and 1.75L, if necessary, depending upon the analysis that's being performed.

BPM: Does MH Biz include dashboards and other visualization tools to help people see how your products are moving?

Schechter: We have some. We do definitely need to update those. One of the things that we're going to be rolling out is a Cognos Excel add-on, because a lot of people are more comfortable in Excel. And a lot of the work that people do here has to do not only with the depletions information, which Wayne was talking about, but also with accounts sold, which is the depletions at the account level such as a bar, restaurant, or liquor store. Most of the brand teams look at that information so that they can see the results if they've been doing different programs or putting different things in place. They can see if that's affecting their sales, their depletions.

BPM: It sounds like you're running your entire business based on the information coming out of this system. Obviously, not every industry has something like the Beverage Data Network to feed them information, but what would you say to someone who is trying to make budgeting decisions based on spreadsheets and guesswork?

Walsh: Invest! Invest some money in technology and information systems.

Schechter: We've found that it's been well worth it here, to get the information out to the majority of the people in the company. A large part of our team is here in New York, but we also have satellite offices, as well as people like market managers who work from home. They have all of the data that everybody else sees readily available to them on the same portal, in the same place, in the same way. For our company, that's been a big plus. It's been a good investment; I don't think that anyone has seen it otherwise.

Walsh: The only add-on to the investment in the technology is the investment in education and training.

BPM: Is that something that's ongoing? I know that you've had this in place for quite a while.

Walsh: Yes. We have regular training sessions.

Schechter: I do them as often as I possibly can. When we have new employees, one of the first things that we try to do is to sit down with them and review MH Biz. We review what data is available, how to access it, how to view it, how to download it — and what you can do with it.

Moët Hennessy USA

• INDUSTRY: Wine and spirits importing
• COMPANY SIZE: $1.1 billion

System Setup

G/L: SAP

Planning: Essbase Planning (Hyperion) and Cognos EP

Management reporting: MH Biz (company internal data portal) on Cognos BI platform