The use of business intelligence software increases at clubs of all sizes as a method to help owners prepare sales forecasts and analyze trends.
Business intelligence software, once used primarily by Fortune 500 companies, is making its way into the hands of health club executives to help them analyze data, pinpoint trends and forecast sales at their companies. Business intelligence, or BI, is the fastest growing segment of business-to-business software. Until recently, however, software companies only targeted multi-million dollar health club chains with hundreds of locations and a large IT staff. Now, some health and fitness software vendors are developing a more user-friendly BI component within their products for small and mid-sized club companies.
This change could lead to widespread adoption of BI software within the fitness industry, says Jenny Prue, CIO of Town Sports International (TSI), a large, public club company that has been using a suite of BI tools for budgeting and forecasting for the last four years.
“I think if vendors can make BI more accessible and affordable, more clubs will demand it because they'll understand the value of business intelligence,” she says.
So what is BI, and how can clubs use it? Although BI can be defined in different ways, Keith Trawick, CIO of New York Health & Racquet Club (NYHRC), New York, views BI as a set of tools that allows businesses to ask specific questions and get reliable answers. Many fitness facilities run static reports through their club management software, but BI takes the data analysis a step further, says Trawick, who adds that a true BI software product can help executives generate knowledge based on historical, real-time and forecasted information.
BI software doesn't just report on the number of members by category. Instead, it can analyze the effect of membership pricing on the length of membership, measure the effectiveness of a particular marketing campaign or evaluate employee performance and facility productivity.
To make the data easily accessible to executives, BI software often offers tools such as dashboards and scorecards. Dashboards quickly communicate complex information through visually rich presentations using gauges, maps, charts and other graphical elements. Scorecards use metrics, such as online versus onsite registration and membership sales against target sales.
“The better educated your management is on what is going on now and what is expected in the future, the better decisions they can make,” Trawick says. “Business intelligence software is one of many tools that executives and club owners need to make the best decisions for their organizations.”
Executives at East Bank Club in Chicago, which has 11,000 members, understand the value of this software. They evaluate its demographics through a BI module within its club management system and will soon implement new BI software that allows managers to run reports on their own.
When shopping for a new club management software system, Dale McCarrell, CFO at East Bank, says he saw the BI capabilities as a significant selling point.
“Other software allows you to only run canned reports based on high-level information,” he says. “BI software lets you get underneath those numbers and run reports that are unique to your club.”
Sometimes, reports can disprove an assumption. That was the case at East Bank when the BI software analyzed its membership demographics. Although McCarrell and others in management perceived that the membership had grown older, the analysis showed the average member age had remained the same for seven years. By analyzing zip codes of members' home addresses, it also showed that the club had become more of a neighborhood club than it was before, he says.
“It just helps to confirm our demographics, and then we can run the business in that way,” McCarrell says.
The Gold's Gym Fitness Alliance, which operates 14 Gold's Gyms in Las Vegas, Phoenix and parts of California, relies on BI to monitor employee productivity, track members' club usage and identify top salespersons.
Instead of projecting in terms of trends and goals, the clubs can accurately evaluate their past performance, says Troy Freet, IT manager for the Gold's Gym Fitness Alliance.
Evaluation is critical before investing in BI software, Trawick says. Many fitness facilities may invest in BI only to find out that it is underused or simply doesn't provide answers to relevant questions. To prevent this problem, a club's key executives must identify what they want to get out of the software before implementation. The success of BI within an organization often depends on a well-thought-out strategy, he says.
“Business intelligence software isn't for the faint of heart,” Trawick says. “It requires a level of sophistication that most of the individual clubs may not have.”
Four years ago, NYHRC, which has nine clubs in New York City and one in Long Island, NY, analyzed clubs' usage and sales activity in real-time by using data warehousing. This allowed the company to manage, extract and analyze data from various sources.
NYHRC is rolling out a new suite of BI software to allow for seasonalizing of data. This ability is necessary to account for seasonal spikes in sales and membership activity. The company used a team of experts in sales, customer service and operations to design, develop and implement the software.
NYHRC has invested hundreds of thousands of dollars in BI over several years. Although the cost of the suite of tools was relatively low, the real cost came from the time and expertise of those implementing the software, Trawick says.
“Clubs need to understand that to take advantage of a BI suite of products, it's not a one-time cost,” he says. “As an organization grows and needs change, the system has to be constantly monitored.”
Building a data warehouse costs a minimum of $20,000 plus the cost of hiring database administrators to manage the information, says one software vendor. While large health clubs often purchase BI tools, invest in data warehousing and hire database administrators, small and mid-sized clubs are also buying BI software products, he says.
The cost and complexity of BI software may seem daunting, but if applied in the right way, the technology can be user friendly, says Prue of TSI, which owns and operates more than 150 health clubs. TSI's business, strategic planning and IT professionals worked together to design a set of tools that executives could use every day. As a result, executives can spend more time managing their clubs.
“They shouldn't have to be technical geniuses to get information,” she says. “It should be at their fingertips.”
TSI e-mails daily performance reports to 300 general managers, district managers and vice presidents. The company bases the reports on metrics such as sales, revenue from personal training, membership cancellations, club usage and average prices. Executives can review the data by company or region or get data on individual clubs. Executives receive a weekly report by e-mail that ranks the clubs based on sales to budget.
The majority of the work required to implement the software occurred in the front end of the IT project, Prue says. Once the staff identified the key metrics and designed the system, they electronically scripted the information so that reports could be prepared at night and e-mailed automatically to executives early the next morning.
“The pain was all upfront in terms of the extensive work,” she says. “Once we had this built, it runs quite well.”
Not every health club has the resources to build a data warehouse, hire database administrators and invest in BI software. BI tools and technology, however, are beginning to become more commonplace in the fitness industry, helping the industry mature and helping executives make smarter decisions based on sound data and analysis.
Five Ways to Get the Most Out of Business Intelligence Software
- Don't skip the design phase
Before rolling out business intelligence (BI) software, spend time deciding what you want to get out of the system and devise a list of pertinent questions. Investing a significant portion of time in the software's setup is critical to long-term success.,
- Make your goals attainable
If the project looks too complex, try breaking it into smaller subsets and limit the number of questions. Then you can set achievable goals.
- Pull together a team of experts
BI software has many moving parts, and it's more than just one piece of software, database or action. As such, it's important to gather experts in sales, marketing, customer service and operations to help during the design and development process.
- Train your executives and management team
A fitness facility can have all the data analysis tools in the world, but if no one knows how to use them, they aren't giving the club a competitive edge.
- Monitor the data-collection process
When working with BI software, the accuracy of an analysis or forecast depends on the quality of the data-collection process.
How to Select BI Software
When researching the BI software market, ask vendors the following questions:
- What platforms and systems are supported?
- How is third-party security integrated?
- Who can build the required reports, and how long does it take to create them?
- Do you support report templates for fast report creation?
- How do you enable your users to create, manage and read reports, perform analysis, and manage their requirements?
BI Software Tools and Vendors
Health clubs need to understand the difference between business intelligence (BI) software tools and vendors, says Keith Trawick, CIO of New York Health & Racquet Club, New York. When a fitness facility buys a tool, it may not have any value or be usable straight out of the box, he says. Trawick adds that clubs need a vendor to tie a particular tool to a collection system, like a club management system. Here are some BI tools and vendors to get you started:
- Business Objects, www.businessobjects.com
- Cognos, www.cognos.com
- Microsoft, www.microsoft.com/sql/solutions/bi
- Pentaho, www.pentaho.com
- SAS, www.sas.com
- ABC Financial, www.abcfinancial.com
- CheckFree, www.checkfree.com
- Conexion, www.conexionllc.com
- CSI Software, www.csisoftware.com
- Intrannuity, www.ifitness.net
For a list of more software vendors, visit Club Industry's online Buyers Guide.