By REDW Principal Adam H. Smith, CPA | This article was published in the G2E Show Issue of Indian Gaming Magazine, shared with permission.
Operating in an industry that is largely dependent on disposable income creates inherent challenges and poses difficulty performing financial forecasts that align with stakeholder expectations. Historically, operations have either excelled during economic expansion or fallen short during a recession – essentially riding the ebb and flow of market conditions and therefore creating a constant evolution of any gaming professional.
To a certain extent, this is true for any industry as consumers are influenced by their financial situations, and as a result, companies rise and fall in correlation. Allowing ebbs and flows of outside market conditions to dictate a casino’s success, or lack thereof, is a significant problem. In gaming and hospitality, beating market conditions has largely been considered unfeasible based on the nature of the business; however, allowing this mindset to permeate creates a reactive versus proactive management style. In today’s market, there is more access to management tools than ever before and the most significant to enter the industry are business intelligence (BI) resources.
BI is changing everything we know about conducting business and how gaming professionals manage stakeholder expectations. At the convergence of data and information systems is BI, and using this information to spontaneously make management decisions can keep a casino three steps ahead of competition. In line with evolving business decision-making, casinos should consider the role BI is playing in restructuring organizations. Breaking down entity structure with the help of BI can revolutionize gaming operations and therefore better position a facility to be proactive in how it is managed and organized.
Organizational Structure
Working in department silos is a common business problem but varies in impact – in a service industry such as gaming, it is a major dilemma. The common organizational structure often inhibits creativity and collaboration but is successful in more mundane tasks. Since the days of Henry Ford’s assembly line production methodology, we have accepted this process of operational management as the standard, and for decades it has been successful given the lack of technology. Creating individual departments with managers is a great way to keep people from straying away from a linear production mentality. While this structure may still be ideal for building automobiles or producing a single product repetitively, it falls short in a service industry. Consider the following:
- Software enhancement and creation can align with individual departments, for example, different applications for player’s club, slot system, table games, and accounting. Management often reaches out to each department individually to seek operational information for a particular purpose.
- In the gaming industry, if individual thought is avoided for a repetitive process, employee morale may be low.
BI enables department convergence where individual silos are eliminated enhancing team member involvement and participation towards strategic goals. We often blame a general manager or chief executive officer when the innate problems of a manager/assembly line organization fails, but this is largely misguided. It is hard to evaluate internal system failures, so allowing a continual ebb and flow with the market is easier but can result in negative performance. BI software and techniques are changing how organizations are structured by putting the team in a single department with common goals, shared interests, and applications. Every team member has access to the casino’s BI environment that pulls all information into customized dashboards or viewports. A facility may still have a leader of a particular activity, but they are not represented by individual departments. The days of having individual departments for each business activity are numbered and being replaced with BI that enhances the organization’s decision-making as a collective group.
Marketing and Business Intelligence
Marketing strategies and player development is at the core of the gaming industry. Every decision follows a consistent progress path using a centralized hub of data to support the patron development decision-making. Those familiar with the Bank Secrecy Act Title 31 compliance requirements understand “know your customer” or KYC. It is an important concept outside of compliance, influencing the decisions made by organizational leaders. With BI, casinos can follow the activity of patrons on the gaming floor, anticipating and offering relevant experiences and promotions to them. Many casinos have the same tiered player incentive program where more free play is provided to those who gamble the most. This is great and likely increases revenue opportunities for a facility, but a question exists in whether it fully uses all information available to successfully promote and enhance a patron’s experience.
Another question to consider is whether a facility’s top players really care about more free play, or do they want a genuine and customized experience when they enter the casino’s doors. BI takes all casino resources and data and puts them into one application – one software environment that is readily available. Finding out how a particular bank of machines is doing, what food was ordered, what gaming machines individual patrons like in real-time is merely a tab on a hand-held device. If a facility can break down the barriers that averts readily available information vital for successful and spontaneous decision-making, then an organization can move into managing an experience for their patrons versus simply hoping the economic market conditions allow for revenue growth.
Consider a visit to a restaurant in which a service or item was provided prior to asking, or a visit to a hotel in which the room includes items that are customized to the experiences sought by specific individuals. These are examples of an organization’s ability to capture data through business intelligence that drives decision-making. A one-size fits all approach to player or patron development is a recipe for failure, especially during uncertain economic times.
Creating loyal patrons starts at breaking down information system barriers within a facility and using BI and big data to drive organizational structure and decisions.
Fostering team member creativity and workplace enjoyment leads to better service for patrons. Give team members business intelligence and a facility will thrive in its ability to promote, attract, and achieve successful patron development and growth. A gaming facility that is managed proactively provides the best service to new and loyal patrons.
Adam H. Smith, CPA, is a Principal at REDW, LLC. He can be reached using the form below.
