Club it -- Part Three

Club IT -- Part Three

The NPV of the wireless order-taking system is $27,553.20, giving the system an ROI of 78.7% over the course of three years. Lisa needs to consider some of other issues, however. The most important one is the degree of sensitivity that these figures have. If the staff reductions are not as expected, the system will not save Club IT any money. It is important that Lisa evaluate whether or not there are any other benefits, because the cost savings at this point are entirely related to one factor. Should that factor not emerge, the system will not have a positive NPV, meaning that the venture has a high degree of sensitivity to one variable. Likewise, Lisa should evaluate where this decision fits in the overall strategy of Club IT. It increases profitability at the club, which the owners figure may lead them to open a second location. However, these two decisions are actually quite removed from one another. The decision to open a second location should be based on a wide range of factors other than the profitability gained through a minor technological change that impacts one worker.

b. Executive dashboards provide a wide range of information regarding the business in a format that is easily understood by managers. There are many types of information that Lisa and Ruben should have. They should be able to know what products are most popular and what products are most profitable. This will allow them to determine which products contribute most to the bottom line. The dashboard should also break down revenues/profits by opening hour, so that the company can potentially adjust its hours to avoid consistently unprofitable times. They can also use the dashboard to determine the club's performance by type of entertainment offered. Breakdowns of food and drink purchases matched against entertainment forms will help them determine appropriate specials to offer for each evening. The dashboard should be able to help them identify price elasticity for cover charges for each type of entertainment so that they can maximize attendance revenue.

The two dashboards that were evaluated were the ones from iExecutiveDashboard and Ecora. The former is based around the concept of the balanced scorecard, such that management can evaluate performance vs. benchmarks set. Both raw data and scorecard data are available. The Ecora system is richer is data but this is presented in more cryptic, less user-friendly format. The iExecutiveDashboard has greater flexibility and user friendliness. Thus, Lisa and Ruben should adopt that system.

c. The waterfall method is a basic technology project development method wherein each step is laid out specifically and completed before the team moves on to the next step. At Club IT, the club can improve its profitability by aligning its marketing efforts with information regarding purchasing habits of its customers. They can also improve profitability by reducing their inventory by integrating their purchasing and supply chain efforts with these marketing efforts. The information gathered should include specific sales and profitability data for each product that they offer (food, drink and entertainment, each broken down into multiple sub-segments). This information can be provided to the marketing and scheduling teams first, so that they can devise a program of events, specials and menus and pricing that will maximize profitability. This information, along with sales expectations, can then be passed along to purchasing, who can work with the supply chain to reduce the club's inventory on hand, getting deliveries as they are needed. Thus, internal stakeholders to be interviewed would include marketing, the kitchen, the head bartender, the entertainment director, accounting and purchasing. Each must be brought into this coordinated effort. External stakeholders would include the major suppliers, in particular for the food and drink categories. They must be aware of the changes that we are making and we must make changes that fit within their capabilities or the system will not have the intended effect.