I am attending InterACT San Francisco 2007 this week and blogging live (or nearly live) from the sessions. This session is "Agility Pays Off: A Case Study (Avnet)" and Jim Joy of Avnet ran through how and why they developed a rebate management system.
Avnet's challenge was managing the complex and interlocking rules for rebates from the companies that supply them with the hardware they resell. These rules change every quarter, sometimes by a lot, but they often change in the middle of the quarter and sometimes only for the short-term (until the end of the quarter). Some of these incentives are linked (sell some of these and then your rebate on these other things will go up). Also the companies Avnet supplies want to track how well they are doing against their targets and then even get more aggressive about their pricing to hit the targets..
Speed matters because they and their customers need to change their behavior quickly when a rebate changes. If it is the middle of the month with a deal only good for 4-6 weeks, can't wait weeks to see it. Old way involved making coding changes every time. A change like a payout percentage might need to be changed in 12 places! Software was fragile, often broke, changes took 1-6 weeks and this could mean that there was no way to make the change before it a deal ended! The ongoing maintenance also meant that almost nothing else could be done - this is important because information is a key asset as margins are small and so everything helps. Speed to payment also made a big difference both for Avnet and their smaller resellers who needed their rebates to survive. 2 people were maintaining 2 programs but wanted to have 20 incentive programs! Compliance, showing what had happened in the past for a supplier's audit, was really difficult.
Clearly this was not going to work and considered a table-driven approach but the incentives change too much and too significantly so went to rules. Interestingly the IT department still seem to make all the changes but are able to make the changes and test them far more quickly - the logic is all completely separated and is a lot easier and faster to change. They also took the opportunity to make some other agility changes too. The new solution is based on a batch process, running every few hours, around Blaze Advisor. The batch process also summarizes the data every 2 hours and the system stores all the rules used so that can tell how things were in the past.
- 10x improvement in changing pay out percentage or target level!
- 5x improvement in changing the logic for a bonus calculation!
- 2 people used to support 2 programs, now they support 11 and will have 20 supported soon as now they have time to add them!
- Empowers partners and sellers to really manage their business more effectively
- Paid for in 2 months with a 4% increase in revenue!
- Year to implement - 5 months for requirements and design, 3 months for the rules, 3 months for the rest of the architecture.
He shared some great testimonials including an inside sales manager who reported increased sales, program manager pointed out that the system delivers much more accurate and consistent results, and operations director of their largest customer who said that the information they get from the system drives critical decisions and is now timely and accurate. Here are some slides on how they did this and what results they got:
I have blogged about Avnet before when they were covered in an Enterprise Systems Journal article - Rules Management Solution Powers Customer Incentive Program. They use Blaze Advisor with Informatica, webMethods, Business Objects and all the other bits and pieces of a modern architecture.
You can find the full set of posts from InterACT in this category.