More than you think, as reporters at SAS Media Day discovered this week when they attended a panel featuring Bill Nowicki, Director of Ticket Operations for the National Hockey League’s Carolina Hurricanes, and Bobby Hull, Corporate Systems Analyst for textiles giant BGF.
While the aim of the two organizations is wildly different, both use SAS for optimization. The Carolina Hurricanes (2006 Stanley Cup Champions) play in a 18,680 seat venue and use optimization software to calculate the optimal ticket price. While BGF, a leading manufacturer of high-end, high-tech textiles such as the woven fiberglass, Kevlar and carbon used to build planes, uses SAS to determine the best combination of equipment, raw materials and processes to yield the best quality products.
Nowicki explains: "On an annual basis, the Hurricanes’ executive team gets together and tries to determine, based on the previous sales cycle, what the optimal base price will be. We've looked at our promotions we've run previously, and seen how well they fared. But the team lacked a scientific model that could look at those past sales, analyze them and come up with a price that would allow us to maximize revenue, maximize utilization and also keep the team competitive with other entertainment options,” he said.
“We wanted to do that based on more than gut instinct,” Nowicki added.
Similarly, at BGF, optimization software gives the company a scientific way to look at data to determine the best placement of equipment, people and materials. “The raw materials we use are incredibly expensive and we manufacture products at a high rate of speed, so when something goes wrong, it goes wrong really fast and causes a great deal of financial damage,” said Hull. “We can’t afford make a mistake.”
“Optimization has helped us with the utilization of people and resources,” says Hull.
So, what is optimization? For one thing, it’s an overused term (4,100 books and counting on Amazon use the word “optimize” in the title), but true optimization is a rarity. As SAS expert Larry Mosiman explained to reporters, true optimization means looking at every single possible combination of factors and determining the absolute best of all possible solutions.
“It’s pretty simple to think about one customer, the type of offers you might make to that person, and the return you could expect from those offers,” said Mosiman. “But what if you have a hundred million customers, thousands of offers with all those combinations resulting in different returns? It’s mind-boggling and there’s no way for humans to figure out the best offers for the best customers for the best return without optimization software.”
Mosiman pointed out that many companies will use optimization or forms of optimizations that aren’t necessarily “optimal.” They have a rules-based system or different selection criteria for how to make their offers, but that isn’t really getting at true optimization.
True optimization looks at everything, explained Mosiman, going mathematically through every possible combination, and through each customer one-by-one and to decide, for example, which customer matches best to each campaign.
The bottom line? The best of all possible outcomes = optimization.
Want the full story? Watch the full video of the Optimization Panel and visit the online press kit to see all Media Day activities.
