In-Depth

Salient's Margin Minder Max: Real-Time P&L Insight

Salient promises real-time visibility into profit and loss from virtually any domain perspective

• By Stephen Swoyer
• 08/31/2005

For some time now, Cognos Inc. and Hyperion Solutions Corp. have championed business performance management (BPM)—even when they found comparatively few adopters. Now that BPM is on the verge of going mainstream, however, both companies expect to collect their rewards.

Not so fast, says Salient Corp., a Horsehead, NY-based provider of BPM solutions. With more than twenty years in the BPM space, Salient says it’s been plying the performance management trade for longer than both Cognos and Hyperion combined, and with its new Margin Minder Max 3.0 release, Salient hopes to claim what it says is its rightful share of the BPM stakes.

“When you talk about [performance management], you’re talking about a business need, and our company begins to separate itself from the rest in that we were organized around the business need in the first place. We built the technology to address the [business] need, and we’ve been evolving the technology for the last 20 years to serve the changing needs of our customers,” says Larry Beutel, vice-president of marketing with Salient,

Salient is an established presence in the consumer products space, where its customers include Cadbury Schweppes, Pepsi, Snapple, and Proctor & Gamble. The company claims about 200 customers and 35,000 users of its software.

To a large extent, Margin Minder Max grew out of Salient’s experiences in this vertical. It’s a performance management product through-and-through: it tracks profit and loss, growth, and efficiency at a very detailed level—down to the individual product, customer, supplier, asset, or event. “Ultimately, we’re looking for profit and loss, or profit and loss growth opportunities [for] individual SKUs, individual suppliers. In order to do that, companies typically need to bring data together from a bunch of separate sources—CRM, financial, point of sale, and whatever other [sources] they have,” Beutel notes.

Enter Margin Minder Max 3.0

Salient’s Margin Minder Max has evolved over time, but in version 3.0, Beutel says, that product is taking its greatest leap forward. The revamped Margin Minder Max boasts the ability to see changes in state, for example, which gives it improved visibility into the supply chain, such that individual managers and other ad hoc decision makers can know “where things are, where they were, where they’re going to be.” The upshot, Beutel claims, is valuable insight into the state of a company’s operations, with real-time (or near-real-time) visibility into profit and loss from virtually any domain perspective.

There’s also a business alignment hook. According to Beutel, Margin Minder Max helps managers and ad hoc decision makers quickly understand how even the most arcane of business activities can affect corporate results.

Beutel calls this “super granular accountability,” and he says it is part and parcel of Salient’s approach to performance management, which emphasizes alignment at all levels of the enterprise. “Individual managers have a hard time relating both on a temporal basis—it’s hard to decide what I need to do Tuesday from last quarter’s summary data—and also on a dimensional basis. It’s hard for me to decide what to do next if I know only what sales in the east were, and not what Charlie did yesterday,” he says.

Not surprisingly, Beutel claims, Margin Minder Max purports to address precisely this problem. “The idea is to inform the ad hoc decision maker in the moment as quickly as we possibly can, so that he can understand how his personal behavior drives bottom-line results,” he comments. “This helps make sure these individual managers, these ad hoc decision makers, are aligned with the company’s performance objectives, so they have the temporal information [and] have the dimensional information they need to make these decisions.”

The key, Beutel says, is in the detail data. He offers the example of a retailer using Margin Minder Max to obtain a highly granular view of a product's sales. “We know, for example, that a product occupies five facings in a store, or two linear feet, and we understand how much of that sells through scanning machines. Once we draw the data through [point of sale], we understand the net flow of support from vendors, and then we understand the operating cost of the store in supporting that two feet of space,” he explains. “So we can present profit and loss on the net value of that space.”

Salient says Margin Minder Max 3.0 can pull data from just about any source. The product has numerous hooks into the transaction systems that populate the consumer products and retail spaces, and Salient taps ETL technology from Pervasive Software (formerly Data Junction) to connect to other data sources. “We use the Data Junction to extract the files from the database, so we get into just about anything, because once we can identify the data and the tables, if there are tables, we can pull it in and organize it,” he says.

In many cases, Salient will perform an onsite “interrogation” to determine how a company is structured. “We begin our work with a disciplined process that interrogates a company based on its strategic relationships and growth, in terms of an organizational chart,” Beutel explains. “It’s a professional service for customized applications, and it’s not a terribly long process. We’re not using that service to establish hierarchical relationships; we’re using that to surface corporate knowledge about how individuals interact in the marketplace everyday.” For example, he says, Salient consultants might ask questions about how different tiers of personnel contribute value; about how (if at all) a company keeps track of whether an individual role player is doing her job, and so on.

“We’re not doing flow charts [or] flow diagrams. We’re only asking about metrics. It’s about measuring results. That usually takes three to five days. It might take longer depending on the size of the company,” Beutel explains.

Vendors are often loath to make ROI promises, but in Salient’s case, Beutel doesn’t hesitate. “The bigger the company, the more immediate the ROI is. In any given [enterprise], most of the drivers of cost are hidden. When they become visible, the decisions that proceed [from this visibility] immediately create the pathway to ROI. People start changing behaviors. It’s a chain reaction.”

He touts the example of a Royal Crown (RC) Cola distributor that used Margin Minder Max to successfully increase its floor space in regional Kroger and Wal-Mart stores. “Every day they’re battling the Coke bottlers and the Pepsi bottlers,” he says. “They couldn’t win with a low-priced approach or by being the biggest guy in the marketplace. What Margin Minder allowed them to do is identify the price volume equations at particular customers. Looking at Kroger stores, they found that 80 percent of the volume they were selling was at a certain size, and 20 percent was at a smaller size. Likewise, with Wal-Mart, where 'what have you [the bottler] done for me lately' is the name of the game, they were able to show over a seven-month period how they significantly increased volume and margins.”

As a result, Beutel claims, the RC bottler was able to achieve measurable return on its investment. “The bottom line is that they were able to improve their productivity 10 to 15 percent per case, which is a very high return, a very significant ROI for that project.”