The Company

Gulf DTH, Showtime, a joint media venture of Viacom and Kuwait Projects Company (KIPCO), is the leading digital satellite pay-TV network in the Middle East and North Africa. With offices in Dubai, UAE; Saudi Arabia; Egypt; Jordan; and London, the network offers 50 premium television channels, including 10 CD audio channels, with a broadcast reach of more than 20 countries.

The Challenge

As a television service provider, Showtime considers customer service, acquisition, and retention top business priorities. Subscriber information is stored in an Oracle database. Finance, sales, customer service, and marketing personnel would access the information in the database using extraction tools to build forecasting and trend analysis documents with manually generated ad hoc Oracle reports, MS Access, and Microsoft Excel. The IT staff devoted considerable time to supporting employees who required assistance in building and maintaining these reports.

Showtime needed a business intelligence system to provide easier access to its subscriber database, with strong reporting features that would enable employees to easily build their own reports rather than rely on the IT department’s assistance. It also sought a solution that would help improve the quality of its customer data to ensure that business analysis was being conducted on the most accurate information. Improved insight into customer trends and demographics would enable Showtime’s marketing team to build more effective campaigns to its subscriber base and also provide a better mechanism for tracking the success rate of its marketing programs. Showtime’s finance group would benefit from faster retrieval of data used to build forecasts and track business metrics such as churn rates, customer acquisition costs, and revenue per subscriber.

The Strategy

Initially, Showtime’s IT group began investigating the process of creating report templates that could be reused by employees but then realized what it really needed was a business analysis tool.

While the company wanted to address the need for easier reporting from its subscriber database, it also needed a solution that would improve the quality of the data it collected.

During the vendor investigation process, Showtime had a 3-day workshop with Microsoft to learn about its business intelligence system. The workshop demonstrated the flexibility of the Microsoft SQL Server 2000 system in meeting Showtime’s requirements, with the most important factors being ease of use and ease of integration with existing data sources. The combination of the technical capabilities and the strong familiarity both the IT and departmental staffs had with Microsoft products made Microsoft SQL Server 2000 the most cost-effective choice for Showtime.

In February 2003, Showtime engaged one Microsoft consultant and two external consultants in a 10-day project to create a test lab. Using a test scenario, the team extracted data, cleaned it up, and imported it into a SQL table structure. Because the IT staff was well versed in Microsoft technology, the proof-of-concept exercise focused on creating communication between servers and learning how to deploy data in online analytical processing (OLAP) cubes.

Showtime’s business intelligence system was built on top of the Oracle database. End users can access the system via a Web browser. The IT team built several fixed reporting templates with Crystal Reports, which are updated on a daily basis and can be accessed by business users via the browser. The business intelligence system is integrated with multiple databases and other operational data sources such as the customer service system. With this level of integration, the company can create a wide array of reports that draw on data contained throughout the enterprise.

The system was completed ahead of schedule in April 2003. Enduser training was conducted for 40 people in Dubai and London. Because the users were already familiar with Excel and no user interface training was necessary, the training focused on how to access and present the data within pivot tables accessible via a browser.

Key Benefit Areas

Using Microsoft SQL Server 2000 for its business intelligence system has provided Showtime with easier reporting and more accurate data on its subscriber base. The company has realized the following key returns from the solution:

• Reassignment of personnel. Because of the improved data mining process and the ease of building reports with the new system, Showtime has been able to reassign personnel from finance, customer service, and IT to focus on other tasks.
• Cost avoidance. To develop reports with the depth and quality of those produced with the Microsoft business intelligence solution, the company would have had to hire at least two additional people.
• Increased productivity. Increased information organization and access have reduced the amount of time it takes for employees to create reports. The quality of the reports, which provide greater clarity of the data, has also removed the requirement of spending time with colleagues to explain data presentation details, resulting in faster data analysis. The time to gather key metrics such as acquisition costs per customer and average revenue per subscriber has been reduced, and the company will now be able to get better information on the success rate of its overall business strategy.

Showtime expects to realize further benefits that will directly impact its customer service and retention operations. Customers can now go to the company Web site, which provides cleaner data, to update their account information. Since the initial rollout of the system, employees have been offering additional suggestions of data sources that can be brought into the system to deliver an even richer source of data for business decision making.

Key Cost Areas

Key costs for the project included personnel, consulting, software, and hardware. Personnel costs were 48 percent of the total, with the bulk of these costs associated with the ongoing support and maintenance of the business intelligence system. Consulting costs for the initial development of the system were 23 percent. Software costs for Microsoft SQL Server and a Crystal Enterprise server made up 20 percent of the total. Hardware costs for two servers totaled 7 percent, and training session costs for 40 staff members totaled 2 percent.

Lessons Learned

Showtime considers the rollout of the Microsoft business intelligence system one of the most successful projects it ever conducted. It had three months to get the system running, and it rolled it out to users in better form than expected in 2.5 months. Although Showtime had a few challenges regarding networking to provide Web access to all users, it had very few issues in the deployment overall.

Calculating The ROI

Nucleus quantified the costs of software, hardware, consulting, personnel, training, and other investments over a 3-year period to quantify Showtime’s total investment in the Microsoft business intelligence system. Direct benefits calculated include the reassignment of three employees who previously concentrated on building specialized customer reports. Indirect benefits including increased productivity of employees were calculated based on the average fully loaded cost of employees. Other indirect benefits quantified included the avoidance of hiring two additional employees to build reports with the frequency and quality of those available through the Microsoft business intelligence system.

Summary
Project:	Microsoft SQL Server 2000
Annual return on investment (ROI)	208%
Payback period (years)	0.48
Net present value (NPV)	332,301
Average yearly cost of ownership	94,255

Annual Benefits	Pre-start	Year 1	Year 2	Year 3
Direct	0	132,000	132,000	132,000
Indirect	0	274,500	274,500	274,500
Total Benefits per Period	0	406,500	406,500	406,500

Depreciated Assets	Pre-start	Year 1	Year 2	Year 3
Software	0	0	0	0
Hardware	20,000	0	0	0
Total per Period	20,000	0	0	0

Depreciation Schedule	Pre-start	Year 1	Year 2	Year 3
Software	0	0	0	0
Hardware	0	4000	4000	4000
Total per Period	0	4000	4000	4000

Expensed Costs	Pre-start	Year 1	Year 2	Year 3
Software	56,766	0	0	0
Hardware	0	0	0	0
Consulting	65,000	0	0	0
Personnel	10,000	42,000	42,000	42,000
Training	5,000	0	0	0
Other	0	0	0	0
Total per Period	136,766	42,000	42,000	42,000

Financial Analysis	Results	Year 1	Year 2	Year 3
Net cash flow before taxes		364,500	364,500	364,500
Net cash flow after taxes		184,250	184,250	184,250
Annual ROI - direct and indirect benefits				208%
Annual ROI - direct benefits only				53%
Net present value (NPV)				332,301
Payback (years)	0.48
Average annual cost of ownership		198,766	120,383	94,255
3-year cumulative ROI	376%
3-year IRR	201%

Financial Assumptions
All government taxes	50%
Discount rate	15%

All calculations are based on Nucleus Research's independent analysis of the expected costs and benefits associated with the application profiled in the accompanying case. Financial modeling tool, format, and methodology copyright Nucleus Research Inc., all rights reserved.

© 2004 Nucleus Research, Inc. Reproduction in whole or part without written permission is prohibited. Nucleus Research is the leader in the return on investment analysis of technology. Please visit www.NucleusResearch.com