What a World Series! It took a wild-card team (St. Louis) to take the the Fall Classic to Game 7 for the first time in 9 years, and then win it in convincing fashion. The wild-card continues to prove its worth: 8 out of the past 11 years has seen at least one wild-card team in the Series and 4 of them have gone on to win it all. On the other hand, (2010 and 2011 Division-winner) Texas rounds out the sorry dozen who have lost back-to-back World Series. The Cardinals have won 11 world titles (second only to the Yankees), while the Rangers have yet to win one in the 50-year history of their franchise.

The elixir of baseball arcana makes one soar to heady heights. The only way out for me is to muse about baseball, sabermetrics and channel management …

Moneyball

I finally got to see Moneyball a couple of weekends ago. What struck me immediately is that the central tenet of Moneyball  (that the astute use of metrics and analytics can level the playing field between the big market and small market teams) continues to hold true. A quick perusal of USA Today’s MLB Salaries Database yields some fascinating insights:

• None of the top 10 teams with the biggest payrolls made it to the World Series. The top 9 either did not make the playoffs or got knocked out in the first round.
• The St. Louis Cardinals with a payroll which was half of the New York Yankees, won the World Series. Similar story for Arizona who spent less than half of what San Francisco did, but won their division handily.
• The Tampa Bay Rays (with the second lowest payroll in the MLB) beat out the Red Sox for the AL Wild-card spot. (Boston boasts the third highest payroll with $161.7M, while the resource starved Rays made it all work with a mere $41M.)
• However, the teams that fought for AL and NL pennants and the eventual league champions, were right in the middle of the pack. So to be really competitive, they had to spend some money.

But I digress, what does all this have to do with us channel mavens?

Sabermetrics

Michael Lewis’ Moneyball: The Art of Winning an Unfair Game appears to hold many lessons for us in the corporate world. Far from the spotlight of mega-stadiums, multi-billion dollar TV contracts and ESPN SportsCenter Web Gems, the analytical (instead of the anecdotal) approach to running a business rings true. More importantly, defining and measuring the right metrics, seems to be the key to success, rather than merely relying on conventional wisdom.

Billy Beane (GM of the Oakland Athletics), and the sabermetricians on his staff, forsook the traditional stats of Home Runs and Hits, and looked at more comprehensive offensive predictors like On Base Percentage (OBP). Metrics were similarly adopted for foretelling pitching performance using Defense Independent Component ERA (DICE). This enabled them to assemble a team of overlooked and undervalued players, who combined to make the Oakland Athletics a highly competitive franchise between 2002 and 2006, while consistently being near the bottom of the salary ladder.

Similarly, while evaluating a channel partner’s effectiveness, raw revenue numbers are not a sufficient indicator of current and future performance. “Channel Sabermetrics” has to include other metrics like margins, weeks of inventory, the effect of back-end rebates, claim accuracy, customer satisfaction and other determinants of channel performance. The closest analogue to sabermetrics in the channel is the Balanced Scorecard. Such a weighted partner scorecard allows you to combine numerous seemingly unrelated metrics into a holistic view of channel performance. Standard partner scorecard templates, based on industry best practices, could be used; or a company could choose to define their own channel sabermetrics, in house or with the help of a service provider.

Competing with the Big Boys

The Billy Beanes of the channel are game changers who are capitalizing on the use of Partner Scorecards and Channel Control Dashboards to get the most out their channel partners: increasing revenues, margins, and customer satisfaction. In fact they often use scorecarding to determine which partner should receive additional benefits like deeper discounts or should participate in Co-op or MDF programs. With such an approach they are building world-class channel operations, while spending a fraction of the millions of dollars that the Intels or Ciscos of the world have spent over the last couple of decades. That’s the way these wild cards stay on top of their game!

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I recently came across a story in the New York Times about how the constant data deluge is forcing companies to come up with new ways to make sense of the mountains of data they aggregate in the course of doing business. The story takes its cue from a report by the McKinsey Global Institute called: “Big Data: the Next Frontier for Innovation, Competition and Productivity,” which suggests that a new wave of innovation related to mining and analyzing huge data sets may be under way.

Big What?

The term Big Data is often applied to data sets ranging from a few dozen terabytes to many petabytes. However, given the explosion of data, and the concurrent increases in processing power, this definition is a moving target. A better, and less geeky, definition of Big Data is data whose sheer size is beyond the ability of commonly used software tools to capture, manage and process. Regardless, since we are all keenly aware of the productivity and competitive advantage that can be gained from leveraging this data, the quest to harness and tame it never ends.

Drawing parallels to the world of distribution channel management and partner relationship management, where the data processing tool of choice is often spreadsheets, a few megabytes quickly become Big Data.

Seeing the Forest …

For channel-driven companies, the challenge of tracking and analyzing large sets of POS, inventory and claims data, causes them to continuously look for better solutions. By the time these companies realize that they need to build or buy an integrated and automated software solution, chances are they have already spent lots of time and money trying to come up with manual processes or ad hoc systems to address the data challenge. Yet, “seeing the forest for the trees” remains elusive.

The New York Times reports that “by one estimate, the amount of business data doubles every 1.2 years.” If this is even close to accurate then it’s imperative for all companies, including those who rely on multi-tier distribution channels, to ensure that they deploy highly intelligent and adaptive systems that can handle current data loads and meet future requirements, without the need to constantly feed the IT infrastructure beast.

Savvy channel companies are embracing the opportunities provided by Big Data. They are deploying automated and intelligent tools for POS Reporting, Channel Data Management, Channel Analytics and Data Visualization Dashboards. These companies will reap the ultimate reward of gaining real-time insight into their channel operations, which helps them stay one step ahead of the competition. Talk about an unfair advantage!

Entomo, Inc. Entomo, Inc. - Unlock Your Channel, Maximize Revenues