Enterprise Data Warehouse Delivers Cost Savings and Process Efficiencies
Founded in 1884 in Dayton, Ohio, the NCR Corporation is now a $5.6B NYSElisted company providing technology solutions worldwide in the retail, financial, insurance, communications, manufacturing, and travel and transportation industries. NCR solutions include store automation and automated teller machines, consulting services, media products, and hardware technology.
When acquired by AT&T in 1991, NCR operated on an autonomous country- and product-centric structure, in which each country made its own decisions about product and service offerings, marketing, and pricing, and developed its own processes and reporting norms. Under the country model, dozens of different financial and operational applications were required to capture the total results of the company, by no means an enterprise solution.
In 1997, when NCR was spun off on its own again, company operations were losing substantial amounts of money each day. The spin-off provided NCR with the much-needed funds to engage in the deep process changes required to maintain and strengthen its competitive position in the global market and undertake the transformation to a truly global enterprise.
The goal was to move from a primarily hardware-focused and country-centric organizational model to an integrated, solution-oriented business structure with a global focus. To do this, NCR needed to globalize, centralize, and integrate its vast store of information resources. Only then could it gain effective control over the necessary business changes. NCR's Enterprise Data Warehouse (EDW) initiative was critical to the company's successful transformation and would be vital to the successful deployment of a new worldwide, single-instance, Enterprise Resource Planning (ERP) system planned for several years later.
NCR Finance and Worldwide Customer Services (WCS) led the drive for implementation of the EDW. Business teams from Finance and WCS, Financial Information Delivery (FID) and Global Information Systems (GIS) respectively, worked closely with the EDW team to ensure that Information Technology (IT) understood the business requirements for the new structure. The Teradata® system was chosen for its scalability, its flexibility to support unstructured queries and high numbers of concurrent users, and its relatively low maintenance costs.
The enormous potential of the EDW spread throughout the company, driving organizational and process changes in Finance, where the financial close cycle was reduced from 14 days to six and worldwide reporting integrity standards were established; in WCS, where individual customer profitability profiles and improvement plans were made possible; and in Sales and Marketing, Operations and Inventory Management, and Human Resources. ERP operational standardization and a dramatic improvement in the business of serving its customers, mean NCR is poised for the future. Internally and externally, NCR has become a global solution provider, supported by global business processes.
The returns have already been superb. Not only has the EDW project proved to be more than self-funding at the project cost level, but revenue generation is around the corner. Some of the benefits include $100M annual savings in inventory carrying costs, $200M sustainable reduction in accounts receivable, $50M reduction in annual finance costs, and $22M cost savings over the first five years of the EDW implementation for WCS.
There is still much to be done and significant value to be realized by the project. Beyond cost savings and process efficiencies, the strategy going forward is to use the EDW to drive growth.
Although the EDW project was not undertaken as a profit-producing opportunity, it was self funding. The cost savings far exceeded the expense of implementation. As the EDW matures, growth-focused goals are developing and the EDW will drive profits in the future. The quantified benefits of the EDW speak for themselves. There are many more benefits of a qualitative nature. Below is a sampling of both.
- Reduced financial close cycle from 14 days to six
- Heightened reporting integrity to corporate standards
- Created individual customer profitability profiles and improvement plans
- Provided consistent worldwide reporting processes
- Improved on-time delivery
- Decreased obsolescence due to enhanced inventory management
- $50 million reduction in annual finance controllership costs
- $200 million sustainable reduction in accounts receivable which translates into $20 million per year savings in accounts receivable carrying cost
- $100 million sustainable reduction in finished inventory, which in turn equals a $10 million per year savings in inventory carrying cost
- $22 million cost savings over the first five years of the EDW implementation for WCS including automation of the SLA reporting to customers; headcount savings; and lower customer maintenance costs
- $10M for improved supply chain management
- $6.1 million NPV of cost reductions over five years as a result of reducing headcount from the F&A reporting function
- $3.5 million reduction in telecommunications costs
- $3M savings through the reduction of ERP transition costs
- $1.7 million saved on report development costs in the rollout from Oracle 10.7 and 11 to 11i, for reports that don't have to be custom written for Oracle
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