Canadian Tire Case Analysis

Canadian Tire Corporation (CTC) is an $8Billion dollar network of businesses involved in retail, financial services and petroleum operations. They had just completed a strategic plan in 2002 with a clear corporate goal “to become a top quartile performer in our market sector as measured by total return to stockholders”. This mandate guided CIO Andy Wnek to create IT strategies, imperatives and vision of “an agile It team, aligned to business priorities, operating a simpler technical environment with the appropriate standardized processes” to support the main goal.

The Cost of Extensive Expansion:Since 1994, CTC had undergone a massive expansion from being a distributor to retailer, then rapidly expanding to the financial and petroleum sectors through organic growth and business acquisitions. This rapid expansion led to the following IT-related problems: 1) the creation of shadow IT teams operating independently in silos, causing 2) a severely fragmented IT infrastructure incapable of cost tracking and managing security risk, further compounded by 3) report standardization issues. Standardization was a major problem that there were as many as 6 different numbers just for inventory levels alone. Other data was not available at all such as sales comparison figures for certain products sold in its 450-plus stores throughout Canada.

Faced with an organizational structure of 5 large, unwieldy business groups (utilizing a total 100 mainframe servers, 14 operating systems, 7 databases, 450 applications), and plagued with frequent “quick win”/ad-hoc requests, Wnek and IT Director Michael Eubanks now question how to move forward with implementing long-term strategic plans and reconciling them with critical, short-term business requirements (quick wins). CTC is In the midst of a common, yet very challenging business situation of how to keep the plane in flight while it rebuilds its engines.

Business Intelligence: Its Impact and ConsiderationsThe decision to undertake a Business Intelligence Project will definitely help CTC align its IT capabilities with the overall business strategy particularly in 1) data gathering (ie: getting the right information); 2) data consolidation and integration (to optimize operations and business processes in a standardized way) and 3) most importantly, allow effective decision making by delivering relevant, valuable data to the right people at the right time. This is a tall order, considering the size, scope and complexity of CTC’s network of interdependent operations. For business analytics to be successful, managers must have a clear understanding of the relationships between an organization’s strategic and operational metrics and business performance. This statement highlights 2 of the most critical challenges for CTC: 1) data quality (ie: the supreme importance of knowing what drives value into an organization) and resisting the temptation of adding further complexity by collecting all possible data “just in case” and 2) the need for a carefully thought-out business rules analysis. Identifying critical success factors that drive performance is key.

According to the survey of 1,648 companies, fully half of all IT professionals surveyed don’t think they’re sending accurate data to the analytic applications that corporate management is increasingly depending on to run their businesses. Keeping the 7C’s of data value (correct, complete, current, consistent, context, controlled) will definitely guide CTC qualify its data if it aims to graduate from stage 1-2 of the Data and IT Analytical Competition. Next would be managing cultural change and expectations by educating users that not all data tells a relevant story. Should CTC put effort into this, they may be able to minimize quick win requests and better focus on full integration and BI implementation. All of this, of course, will not be possible without a strong executive sponsorship from no less than the CEO of CTC himself.

Potentially Detrimental Factors:One of the substantial threats to the BI project is the Shadow IT groups. With each group operating in different functional areas and geographic location, information tends to be stored in hard-walled, disparate silos and redundant (therefore costly more than beneficial), resulting to a disorganized mess. If not managed well, shadow IT’s may also create multiple standards and may be a strong force that would resist changes brought by the BI project (further highlighting the importance of executive sponsorship and mandate, cultural change and managing user expectations). In short, the presence of IT groups offered opportunities (and may well be the catalyst) for consolidation, simplification and integration. To achieve this, immeasurable amounts of technical challenges would have to be resolved (ex: conversion of various databases to a common language, ETL, creation of lean, well-functioning datamarts, selecting information to the dashboard to name a few).

Conclusion:Needless to say, an enterprise-wide approach to managing data analytics is a major departure from current practice and is almost never easy. However, if a firm takes great pain in ensuring technical and architectural decisions are aligned with business strategy, corporate culture and management style, Business Intelligence may provide competitive advantage and unparalleled business performance through high quality, scalable, integrated,well-documented, consistent and relevant data.

Sources:

The Architecture of Business Intelligence, Harvard Business School Press, 2007.

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