SPIFI Benefits Tool

[Note: This was a significant project that took over 3 months to complete.  I'm including several key excerpts here separated by:
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SPIFI The POS Benefits Analysis Tool

The presentation was well received. The message seemed to have been communicated that scanning was a very profitable investment. After the presentation I had lunch with friends, Ron Nuti, the POS Coordinator from Dominick’s, and Henry Morris whom I’d come to know from the meat project at Giant Foods. We were joined by two gentlemen from Burroughs checkstand, Don Ernsberger and Dan Hurley, and by Lou Koewler from Toledo Scale. .... On the airplane ride home that afternoon I recalled the business games we had played to learn principles of running a business seven years earlier in the “Marketing in the Seventies” course IBM put on for all field Marketing Representatives. Would it be possible to create a gaming environment to consider the benefits of U.P.C. Symbol scanning? I decided I’d call Dave Clutter again sometime in the next few days.
 
 
 
The best evidence of the acceptance of that presentation came the following day in Raleigh when Tommy Tomlin told me he had just received a call from Tom Wilson, the McKinsey & Company consulting partner responsible for McKinsey’s contract with the U.P.C. Council. Tom Wilson asked Tommy to tell me that my presentation had been adopted as the official benefit analysis of the U.P.C. Council.
 
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The opportunity to see Dave Clutter in person came up sooner than I had thought possible when the team covering Woolworth Stores asked if I would listen to functional requirements Woolworth had, before considering proposing the IBM 3661 for some of their stores. So seven days later I visited them in the Woolworth building in New York City to start the documentation of their requirements.
 
 
 
IBM System Benefits
 
Then I drove up to DPD Headquarters at 1133 Westchester to talk with Dave Clutter. After the briefest review of what had been done with the Benefits Presentation, Dave was more than enthusiastic to assist. I would learn over the next few months that one of the frustrations of Dave’s job with the President’s Class was that he really never got feedback. People talking to customers get all kinds of feedback. Although Dave’s class did have a feedback form, that’s not the same as getting a sales order to confirm you communicated well. I might have been the first student of Dave’s that had come back to implement the material he was teaching in something that would directly help IBM sales people sell. Dave was stoked! We spent an hour or so on approaches and decided to build an interactive model. We thought we could install it on IBM’s internal marketing network known as HONE, Hands On Network Environment. I spent the night in White Plains and we met further the following morning.
 
 
 
Before leaving I walked around to the Distribution Marketing area and discussed the idea with some of the staff there. I think I asked Ed Igler if he knew of any SE’s in the field that might be able to help with programming such a tool. People indicated they would check around. It was only a few weeks before I learned there might be an SE in Toronto that knew how to program in APL and was available to assist.
 
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The name, Howard Katz, an SE starting his career in Toronto, Ontario, Canada was suggested as someone who loved APL and could help with developing the benefits tool. We made arrangements for him to fly to La Guardia the first Monday in December of 1977. I met him and we discussed what this was all about while driving up the Hutchinson Parkway to 1133 Westchester to meet with Dave Clutter. Over the next day and a half we outlined a program that would allow Marketing Representatives to show how conversion from mechanical registers to any form of electronic registers would change their prospective chain’s balance sheet. In keeping with the presentation, all calculation data is carried in percentages of sales, not raw dollars.
 
 
 
Users started as a 100 store, hypothetical chain but the number of stores could be adjusted. We included a store income and balance sheet information based on the most recent industry averages as presented in Chain Store Age, but the numbers could be modified here too. We identified the benefits as a percent of sales, but allowed the user to modify them and we also allowed for a lag factor to be set independently for each benefit. For example, the electronic scales produced their benefit from the first day of operation, but it might take some time to instill the discipline necessary to get the front-end checkout benefit or take time to collect the data necessary to achieve some of the merchandising benefits. Costs would be applied at the install date. Next the user stated an install rate for the type of system being modeled, e.g. 1 per quarter, 3 per quarter, 10 per quarter. The model would then produce pro-forma results projected ahead quarter by quarter for as many quarters as you requested.
 
 
 
Howard was asking the right detailed questions, and Dave and I were answering. Dave’s knowledge of corporate finance and measurement practices was invaluable. I provided the industry swag and overall concept. I felt very strongly that we were starting something really unique and useful.
 
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In late January I attended the Midwestern store system’s Branch Kickoff meeting to present the supermarket benefits presentation again. At that time I announced to the branch that there would be a tool available at some point so that Marketing Representatives could sit with their customers and prospects and see the impact of Point-of-sale investment on their Grocery Chains. Several of the Marketing Representatives were quite interested.
 
Howard Katz was making progress on coding the APL simulation model and came down to Raleigh to show it to me. But before we got started, he had something else he wanted me to see. He logged himself onto the HONE system and started some program that typed out “You’re walking down a trail.
 
“You see a grate with some keys next to a lock…”
 
I just sat there. I had no idea what it was, so I quizzically asked Howard, “What is this?”
 
He just asked me, “What do you want to do?” Well we went back and forth because I had no idea there were computer games on big mainframes like the HONE system was, but the next thing I knew I had opened the grate and entered a cave.
 
At that point Howard pulled out this large map he had drawn on two pieces of taped together flip chart paper that diagramed what he knew about the cave. This was my introduction to “Adventure,” one of the early computer games. Howard explained how you walked from room to room fighting beasts and collecting treasure, carrying things until you were overloaded and had to leave things, then maybe retrieve them later. I couldn’t believe that things like this existed on IBM computers; it was so far from business. I was later to find out hundreds of different games were on IBM machines at that time. This was mostly because the HONE system, although only internal to IBM, was in its own way, very much like the Internet. It was loosely controlled, any and every field sales or systems person had access, and it went to all IBM marketing locations.
 
After Howard had administered my introduction to computer games, one of the future applications of computing, we got back to the project. I was such a straight-arrow. I could see the value of a game to sell IBM Point-of-sale. But games to explore caves seemed a bit frivolous at the time.
 
Howard also had a suggestion for the name: S.P.I.F.I., the Supermarket Point-of-sale Investment Financial Impact program. That was a better name than any I’d thought of, and we adopted it. A few days later I mentioned it while talking with Dave Clutter on the telephone, he liked it too.
 
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In late February I got a call from Howard Katz’s Manager in Toronto. She asked me how he was doing, and I gave her an honest, excellent report. Then she indicated they wanted to give Howard an award for this effort at the branch meeting at the end of the first week in March and felt it most appropriate if I came up and be part of it. I readily agreed.
 
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1978 Food Marketing Institute Show
 
At the FMI Show I spent much of the time in the booth with the S.P.I.F.I. terminals. Although it’s difficult for people to get a full experience using the tool within the short time they will devote while walking through the show, many were aware of the benefit study and were interested in the results.
 
 
 
Then I was told Tom Wilson wanted to meet with me in the hospitality suite at the Fairmont. When I arrived Tom had Jim Oddy of Jewel Tea, and Al Haberman of First National Stores in Boston, with him. They got a brief overview of S.P.I.F.I. and Jim Oddy started making adjustments to the model on the screen. He was intrigued. When Haberman had his turn he indicated he wished he’d had S.P.I.F.I. 3 years ago when his firm was financially challenged. The four of us spent about an hour trying different strategies, asking and answering questions. It was a solid validation for the value of the tool.