Gaining Faster Insight to Support Business Growth by Integrating Financial and Operational Analytics »
Like most businesses in the health and fitness industry, Go Health Clubs’ success largely depends on its membership: the more new members it can attract, and the more current members it can retain, the greater its revenues and profits are likely to be. Even its auxiliary revenue streams—such as the retail of nutrition products, equipment and clothing, and rental income from third-party personal trainers who run classes in its gyms—are indirectly driven by membership: the more users each gym has, the more potential customers there are for these parts of the business.
Go Health Clubs growth brought its own challenges. As it integrated new clubs into its business, a lack of standardisation was making it difficult to monitor performance at group level
Go Health Clubs worked with Bistech to build a financial and operational performance management platform based on IBM Analytics software, supporting management reporting, budgeting and forecasting.
- Reveals: sales performance, helping the business focus on high-yield strategies
- 65% faster month-end close processes enable greater responsiveness to financial issues
- Reduction in management reporting workload avoids the need to increase headcount
Business Challenge Story
Dealing with the challenges of growth
As its business grew, Go Health Clubs identified a need to evolve its approach to financial and operational performance management. A new analytics platform from IBM is helping the company plan and budget more accurately, and gain new insight into sales and membership—helping senior leaders guide the business more effectively. Go Health Club’s successful management of the membership equation has led to considerable growth. In the last three years, the company has acquired two new clubs, 10,500 members and boosted its annual revenues by AUD$5 million. Go Health Clubs has also launched two new brands: Yogabox and Arena Fitness MMA.
At the same time, growth has created new challenges for the organisation, as Head of Operations Stefanie Nicholson explains: “We were reaching a point where the kinds of systems and processes that we had relied on in the past were reaching their limits. We had always relied on each club reporting its own key operational metrics, such as net membership movements, average yields and sales team performance—but as we got larger, this was becoming less and less practical. We were starting to find inconsistencies in the data that were difficult to track down, so it took a lot of effort to produce figures that we could be really confident about.”
When Clint Keble joined the company as its new CFO, he saw many of the same issues on the financial side: “We were using spreadsheets to consolidate figures from each club and produce profit and loss statements for the group. With 30 or 40 general ledger items per club, and differences in the way each club structured their chart of accounts, it was difficult to get the data together, and even more difficult to build a budget. Looking to the future, if we continued to expand, we were going to run into real problems.”
The company aims to keep its group management organisation as lean as possible, but its existing manual reporting processes raised a risk that it would need to keep increasing headcount as the business continued to expand. To scale more efficiently, the company began looking for a smarter way to deliver the analytics its decision-makers needed.
Enhancing insight into financial and operational performance
The Go Health Clubs team decided to review its existing IT landscape. It was happy with its two core systems—a CRM and membership platform and a financial accounting system—but neither of them offered the analytics capabilities that the company needed. Stefanie Nicholson comments: “We started looking for a business intelligence system that we could use for operational reporting on top of our CRM system. When we saw IBM® Cognos® Express, we realized it was just the kind of platform we needed. We also learned that other fitness companies were already using Cognos, which gave us confidence that we could adapt it to our business model.”
Clint Keble adds: “When Stefanie showed me the analytics solution that her team was looking at, I was excited: I saw its potential for solving our financial reporting and budgeting challenges too. In fact, the business case seemed so clear that we decided to go ahead with the finance side of the project first, and to implement the operational reporting capabilities afterwards.”
To assist with the implementation, Go Health Clubs engaged Bistech, an IBM Business Partner headquartered nearby in Brisbane. “We initially considered working with companies from out of state, or even from India or the Philippines,” says Stefanie Nicholson. “But the ability to meet the Bistech consultants face-to-face and get them on-site when we needed was a big advantage. Bistech also really impressed us with their technical knowledge of the solution and their ability to understand our requirements quickly.”
Clint Keble agrees: “Bistech’s consultants have a strong finance background, which was very useful during the project. I was always able to call them up and exchange ideas, which helped us build models and cubes that deliver the outcomes we wanted.”
Bistech worked closely with the Go Health Clubs team to build a set of analytics applications that help to satisfy the company’s most important financial and operational requirements. The deployment was accelerated by using Bistech’s “FPM Headstart”—a package of pre-built models and services that can be quickly customized to meet most clients’ needs. As a result, the team was able to get an early version of the solution up and running within eight weeks—considerably faster than expected. Since then, Bistech and Go Health Clubs have continued to work together to add new features and build more sophisticated applications.
Faster, more accurate reporting and budgeting
The IBM platform now serves as a “single source of truth” for important business data, allowing Go Health Clubs to generate budgets, reports and scorecards based on timely, accurate data. Clint Keble gives an example: “Take the budgeting process. Instead of having to pull together all the supporting information in spreadsheets, you can just drop all your historical data into the model and analyze trends based on last year’s actuals. That provides a lot of useful insight into how to build the next year’s budget, without needing to estimate and calculate everything from scratch.” He adds: “It’s also a very flexible system, so if we need to add a new cost center or restructure our chart of accounts, that’s easy to do. If we continue to grow as a business and open new clubs, that versatility is going to be very important.”
By automating much of the work that was previously done in spreadsheets, the solution also helps to save time and accelerate decision-making. Clint Keble says: “We used to take about three weeks to get the financial numbers out after the monthly close—now we can do it in five working days. So if a new opportunity emerges, or there’s a problem we need to deal with, we can spot it much sooner, and take action faster.”
Stefanie Nicholson agrees: “The same is true for management reports and quarterly presentations: it used to take three or four days to pull them together; now it’s a matter of a few clicks and an hour or two of work. The other advantage is that we’re much more confident in our metrics—in fact, there’s now an attitude in the business that ‘it doesn’t count if it doesn’t come from Cognos’. We can see what aspects of our business are working well, and where we need to make improvements.”
One example is increased visibility of sales performance. The company has built a scorecard that rates its salespeople not only on the number of memberships they sell, but also by the total yield of those memberships. The solution has caught the attention not only of the company’s analysts, but also its senior leaders.
As Clint Keble explains: “In the old days, when we had a directors’ meeting and someone asked for some data, it could take days to get an answer. Now, when I meet with our Managing Director, we have the system up on the screen in front of us. Whenever we have a question, we can drill down into the data and answer it straight away—so we can make decisions then and there.”
Stefanie Nicholson comments: “In terms of return on investment, it’s all about giving time back to the team at head office, so that we can be more proactive in our roles instead of spending all our time wrangling with data. This should help us keep our organization lean even as the business continues to grow.”
In the near future, the company hopes to extend its use of the IBM solution by making a closer connection between operational and financial analytics—for example, using key operational metrics as the basis for a more driver-based approach to planning and budgeting.
Clint Keble concludes: “We’re well aware that we are just taking our first steps with financial and operational performance management—there’s so much we want to do in the future. From what we have seen of Cognos Express so far, we’re very confident that it is a tool that can accompany us on our analytics journey, and that will take us as far as we need to go.”