McDonald's Credits Business Intelligence for Recent Growth
CHICAGO -- For several years, the corporate growth strategy for McDonald's was relatively simple: Open more locations and sales will increase. But by 2002, as the company's stock price began to fall dramatically, the restaurant chain needed to move away from a "build it and they will come" philosophy. In its place, the company turned to business intelligence (BI) for insight about how to improve business strategies, according to Julio Ortiz, senior director of IT business intelligence at McDonald's, who discussed his company's use of BI during the keynote address at the Microstrategy Fall Symposium here Tuesday.
First, McDonald's established a BI strategy, which it termed "Plan to Win," with key metrics centered around place, people, products, and promotions. From there, McDonald's built standard questions and scorecards for mystery shoppers.
"We needed a way to accurately measure the customer experience," Ortiz says. "We wanted to review everything from top to bottom from an internal perspective." The company also added a toll-free line for customers to call with comments -- good or bad.
The scorecards are now in use in 29,000 of the company's 31,000 stores and are one of the critical reasons behind the company's improved performance the last few years, according to Ortiz, who noted there were other contributing factors as well, such as menu changes and expanded hours at many locations.
A key element in developing the scorecards was establishing an enterprise data warehouse, using Microstrategy's business intelligence platform, Teradata's data warehouse, and IBM's storage technology, according to Ortiz. One of the major challenges in that effort was to develop common metrics for the numerous countries where the company has operations. The company had to develop a master file, and it it took until mid-2006 for the metadata to be established. Now, McDonald's uses 130 metrics to produce 80 different reports.
But McDonald's corporate officials also knew they didn't want to get into the report-writing business. So they're training executives throughout the organization to do the reports themselves. Training takes about three hours, according to Ortiz. After training, reports can be generated in a few minutes. Reports generated from the corporate office would typically take about three times as long, Ortiz said. Report users can also access dashboards to get a more graphic representation of statistical information.
"It's not all about sales," Ortiz told the audience, noting that customer service and product and other information had to be included as well. He recommended that other companies seeking to introduce business intelligence make sure they adopt it in a way that reflects their respective corporate cultures. For example, McDonald's has a very decentralized corporate culture, with separate operations in each country due to differences in menu preferences, currencies, and other factors. The individual franchise owners also have some autonomy. So McDonald's is training them to run their own reports and queries, rather than having to request reports from a centralized location.
Ortiz also warned enterprises to adopt a business intelligence strategy designed to deliver value, not one that collects data merely for the practice of collecting data. Any company attempting to adopt a business intelligence strategy throughout its organization is sure to face challenges, he added. In facing those obstacles, Ortiz had blunt advice: "Stick with it. Work through the challenges. Build on your wins."
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