There is a price to pay for growth. Since its formation in 1985, White Lodging Services Corp. has had a history of sustainable, profitable expansion. Now, it is a mid-size, private hotel management company with 89 locations employing 5,000 people. With its emphasis on adding value to its overnight guests' stays, White Lodging retains a loyal and growing customer base - and that has created an almost enviable problem.
We were getting too large to control our budget process efficiently, and we needed the ability to control the process centrally. It was very awkward e-mailing Excel worksheets back and forth. A better solution was required because those worksheets were flowing to our headquarters in Merrillville, Indiana, from each of the 89 locations across the United States.
Tracking budget versions and approved budget changes was becoming very difficult. Regional and corporate budget consolidations were also extremely difficult because multiple files had to be linked together.
The solution we sought had to meet three criteria: easy to use, low-cost and flexible. To help meet that low-cost demand, the solution also had to work well with our established IT infrastructure which included OLAP database software and Essbase business intelligence tools.
The search lasted three months, but once the solution from Clarity Systems was found, the decision was very quick. Clarity and its Clarity Performance Management (CPM) solution allowed us to leverage our Essbase technology to the fullest. Others said they could do the same thing, but no other solution was able to demonstrate it. Clarity's CPM also met that easy-to-use stipulation, even in a complex environment.
We use CPM to forecast our business based on budgeted trends and have plans to use it for cash-flow forecasting. We also have a report called flow-through, which is very important to us for monitoring how well hotels are bringing revenue changes to the bottom line. Flow-through is essentially a flexible budget - we take our budgeted factors and apply them to actual sales. The resulting budget is compared to actual results, and the favorable or unfavorable variance is flow-through. Our flow-through calculations have been modeled into CPM and are now turned over within one day of period-end completion. It had been taking about two weeks with Excel. This speed-up stems partly from the improved communication CPM affords. Spreadsheet data can now be transferred directly via the Web rather than indirectly via e-mail. CPM also hastens our number crunching by feeding the data to the powerful, "slice and dice" OLAP database.
This information is being used by all our general managers and regional vice presidents to measure performance and to see what line items are out of control. Being able to consolidate information quickly, look at information from different views, and deploy a report easily is certainly making life better for us. Additionally, the facilitating nature of CPM has encouraged us to take new cost-cutting and productivity-boosting steps.
Now that we know the power of CPM, we plan to revamp our budgeting process to cut our budget cycle time and draw more value from the budgeting process. Thanks to CPM, information is more accessible for decision making. It allows us to move our organization toward one, central repository for financial information. Previously, everyone had to pull numbers from multiple information sources.
The CPM installation and budget template design involved approximately 15 days of Clarity's direct support, and by the end of 90 days the new budgeting system was deployed to end users.
Clarity's sales process allowed us to view a sample of their budgeting application in CPM prior to purchasing the product. Other software vendors were not as accommodating as Clarity. My advice to other companies evaluating this type of solution is to make sure that the vendors demonstrate what you need to see to properly visualize the solution integrated within your organization. Our CPM project with Clarity went very well because of this demonstration.
Clarity Performance Management (CPM)
Clarity Performance Management is a suite of tightly integrated, highly scalable, Web-based applications that support all aspects of corporate performance management. CPM enables organizations to measure actions against their unique business strategies in order to ensure that the objectives, strategies and actions of an organization are aligned.
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