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Is a Revenue Management system based on Excel a risk?

Excel is a great tool and after permanently upgraded versions, it becomes more and more sophisticated. But on day-to-day revenue optimization, Excel may put your company in an unstable environment with a lot of hidden costs. Let’s share a few examples of my personal experiences.

Emmanuel Scuto
April 6, 2016

Excel is a great tool and after permanently upgraded versions, it becomes more and more sophisticated. But on day-to-day revenue optimization, Excel may put your company in an unstable environment with a lot of hidden costs. Let’s share a few examples of my personal experiences.

START BY ANSWERING THIS QUICK QUESTIONNAIRE :

Please take 5 minutes to answer the following survey (also available here):

  1. Do you rely on one or two guys to build and run your piloting reports? |yes| – |no|
  2. do you get updated data every day? |yes| – |no|
  3. do you access the reports from anywhere, no matter if you are at the office or not? |yes| – |no|
  4. Do you various departments (sales, marketing, operations) manage their report and you are not sure that they build them on the same trustee and controlled data source? |yes| – |no|
  5. When your excel experts have left, do you still receive your piloting reports? |yes| – |no|
  6. Do you pay enough resources and invest a significant amount of money to review the macro code to make sure the excel reports will continue to exist after the departure of its creator? |yes| – |no|

If you have more than two no’s, your company knowledge management and yield decision process are at risk.

 

EXCEL SHOULD ONLY BE A TEMPORARY ANALYTICAL TOOL

When I started my RM carrier at Disneyland Paris 20 years ago, I saw for the first time how powerful could excel be in merging databases from various sources into easy-to-use reporting. Every Monday, a 3-hour VBA macro process runs, and hopefully, if nothing broke the query, we got a set of reports for the week at 10 am to analyze the booking patterns and the reservation portfolio.

But, these fantastic VBA scripts were only known by his creator. He was the sole person being able to configure them and fix any bugs. Honestly, it was working pretty well and we got great results. But all the process and system knowledge were in the control of one guy.

 

EXCEL SHOULD JUST BE A MODELING DESIGN

Many years after, during my consulting activities, I was working for a large car rental company. Their Revenue Manager was recently hired. He initially took over the previous excel analytics developed by his predecessor. Assuming a significant amount of time was spent to reverse the initial code used to set the VBA macro process. But with operation pressure, no time: so let’s pray that a couple of daily hours required to update the yield reports did not fail.

Thus he focused on his new set of reports integrating a broader logistic vision on top of the demand perspective approach. Again, new VBA macros in addition to the previous ones have been developed by the guy and known by him only. But good results were generated. So I suggested pushing for a budget to industrialize the process in a more robust code that could be supported by IT. Guess what, not even one Euro cent has been allocated to this project. And when the revenue manager left, the company figured out that the yield and logistic optimization reports were not usable in the long run. And it was 10 years ago.

Guess what is happening today? Still the same. For the large car rental companies we are working for, most analytical daily reports are built on excel. It is nice, it is performing well as long as the people are in-house. When they leave, the Management realizes that nobody knows how it works except the guy that created it.

A new example? In 2016, I know revenue managers still crunch data and feeding their excel spreadsheet automatically…or even manually! Is this improving the company's assets? Is this reinforcing the company analytical pilar? Is this contributing to the company's knowledge management?

 

EXCEL IS TOO SMALL TO AGGREGATE COMPLEX MULTI-SOURCE DATA

Piloting revenue of a car rental company has become more and more complex over the last 5 years. Not only because rental operations is generating a big volume of combinations (12 to 15 duration bands x 20 car groups x 365 days of departure compared with last year!) but mostly because the electronic distribution speeded up the flow of possibilities and time allocated to analyze and to decide in the most efficient way possible.

Mixing so many sources of information (fleet, bookings, channels, sources, competitive market surveys, online reputation, sales actions, and performance tracking) requires a robust and powerful database and robust hardware to support instant computation. And Office Excel, even Access, can not support it!

 

Excel does not provide instant data analytics

When the entire revenue piloting system is built on Excel, it always requires manual input (file controls, macro launcher) that can only be performed by a human. Some reports are taking so many hours to run that they can be updated only once or twice a week. And the results are shared via static pdf email service or are kept locally by the revenue managers for analysis.

EXCEL IS FAR FROM BEING CHEAP

Bureautic software is always seen as cheap. In practice, applications and reports are designed internally by the business analyst. He models what he thinks is the best from his perspective but with limited technical skills. For the company, allocating an internal resource doing this IT job does not appear to be an expense. But it is. Revenue Managers cannot be IT experts at the same time. Their job is to analyze, take actions and measure performance.

So, are you sure all the above examples are far from the life of your own company? May they impact your daily business?

 

No doubt, it is time to move to cloud-based* revenue applications like Cocktail RM or Rateshaker

  1. The applications are built on the expertise of experienced revenue managers that did face the same issues like the one business analyst is struggling with
  2. The application is developed by IT engineers mixing their state-of-art know-how of the last technology in order to answer business needs in an efficient way (SQL, python, mongo databases)
  3. The data go through a detailed parsing process. One error on one transaction will simply isolate it without blocking the entire process.
  4. No matter where you are and if the business analyst is available or not, the data can be accessed from any location on a mobile device or a personal computer at home.

* WeYield uses private servers hosted in France by OVH and not by Amazon, Google nor Microsoft.

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Emmanuel Scuto

Expert in Revenue Management and Pricing in the Car Rental industry for 20 years, I aim to share my optimization experience with our customers throughout the world. I am specialized in revenue maximization, pricing strategy, yield management, reporting based on AI.

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