From Innovations, a website published by Ziff-Davis Enterprise from mid-2006 to mid-2009. Reprinted by permission.

Sometimes, even a successful and profitable business can contain huge hidden opportunities for savings.  Such was the case with Vicor Corp., a $180 million maker of industrial power conversion equipment based in Andover, Mass.

Vicor’s business is highly customized. Each of the 8,000 customers it will serve this year buys a somewhat different configuration of its products.  Because its market is so specialized, Vicor can derive big profit gains from identifying deficiencies in its operations.

In 2002, Vicor’s operating profit margins were in the high 20-percent range. This year, gross margins will approach 45 percent.  That’s a remarkable improvement in just four years. The difference is focus. And cubes.

Vicor made the migration to PeopleSoft Financials in 2002. The ERP system gave Vicor unprecedented insight into its own operations. But what really accelerated the transformation was the addition of business intelligence (BI) tools, according to Joe Jeffrey, the company’s director of manufacturing.

Vicor saw BI as a way to focus its problem-solving. Managers thought they spent too much time identifying problems and not enough time solving them. They believed that BI would be the tool they could use to ask better questions, which meant getting answers more quickly.

The company made a commitment to BI. It armed its managers with an assortment of data cubes. Cubes are multidimensional database views that give users a way to examine data from different perspectives and to drill down to a fine level of detail. Each cube was a roll-up of database records, and the multidimensional analysis gave managers a way to look at information from a variety of perspectives: for example, over time, by product and by customer

If a manager noticed an anomaly in inventory, for example, she could drill down to find the exact work order where the anomaly originated. “When a question is posed about what happened, it’s now a much more specific question,” Jeffrey says. “It makes questions tactical, which means you’re focusing on solving problems rather than figuring out that problems exist.”

Vicor went a step further. It made sure that the metrics it was tracking in the data cubes were linked to specific business goals. Those goals, in turn, were tied to individual performance plans. When a goal is reached, a new one is quickly set and reflected in the individual performance plans of employees. Users are responsible for monitoring the metrics that will decide their performance. In effect, they can’t afford not to use the cubes.

The result is that managers across Vicor are totally bought in to the value of business intelligence. That has paid off in innovative uses of the tool across the organization. For example, the analytical program that users write can be shared and applied around the company. A routine that works for volume analysis, for example may also be used for dollar analysis. Jeffrey said some programs are used in a half dozen different applications, even though each tracks different things.

Users also understand that the business intelligence tool is intrinsic to their own success. Because their metrics for success are so closely tied to reports, users have an incentive to learn how to use business intelligence. That’s created a widespread acceptance of the tool and a spirit of innovation around it.

The difference at Vicor was that the company made a commitment to a technology at an early stage and stuck with it. It made sure that the tool was central to everything its managers did and it created a culture in which success with the tool equated to success in business. I wish more companies would take a chance like that. Too often, we’re tentative with our adoption of technology and leave it to the individuals to decide whether to use it. Vicor’s experience demonstrates that commitment and vision creates the most effective scenario for deployment of  technology for strategic advantage.

Has your company experienced success by committing to a new technology at a high level and then sticking with it? Let us know by posting a comment below.