March 23, 2006
 

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Posted: 04.01.05

NY Lottery & Cole Systems

When it came to choosing a solution, Hoosier Lottery wasn’t taking any chances.
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By Alex French




Cha-ching! Hoosier Lottery—the Indianapolis-based
lottery that generates approximately $735 million in
revenues for the state of Indiana with scratch-off and pull-tab tickets and draw games like Powerball—is one in a handful of lottery companies around the nation that has recently hit the jackpot.

Hoosier works with thousands of retailers, and each of Hoosier’s 87 mobile sales reps is responsible for
managing between 75 and 120 of those retailers. That entails a hefty list of responsibilities. About every two weeks the reps visit their retail clients to make sure lottery revenues are being maximized and customers are being satisfactorily servered. However, the transactional nature of Hoosier’s business and the sensitivity of the data it keeps stored in its back-office systems made it difficult to get information such as sales numbers and inventory data to mobile sales reps in the field in a timely manner and an easy-to-use format.

“Our processes and financials have continued to improve over the last five years, but a more modern and advanced way of servicing retailers and route management was needed to take the next jump forward,” says Andrew Hendricks, Hoosier Lottery director of sales. “The lottery was still used to doing everything by fax and paper. For example, all inventory management was done longhand in the field by the sales reps.”

Looking for a solution, Hoosier assembled an evaluation committee made up of representatives from the IT department, members of the sales staff and several executives to carry out an RFP evaluation process. The hardware they selected: the Toshiba M200. The sales reps can carry the convertible tablet like a clipboard, and it has digital ink and ink-to-text recognition, which is easier to use than the digital graffiti required on a PDA. After investigating solutions presented by a number of vendors, Hoosier settled on OrderPad Enterprise, a tablet PC-optimized mobile sales force automation application developed a few years ago by Cole Systems, a privately held company based in New York City’s TriBeCa neighborhood. The hope was that with the implementation of the new tablets and software the lottery would be able to turn limitations into profit.

But how does that happen? According to Adam Perlow, Cole Systems VP of technology, OrderPad is designed to offer immediate access to sales figures and itemized inventory information with a synchronization engine that allows sales reps to refresh their local database with up-to-date information from the lottery’s back-office system. It also allows data entry from the field to be immediately uploaded to the lottery’s back-office systems. This allows reps to place orders for point-of-sale materials and instant tickets directly within OrderPad.

Striking It Rich

Consider the big picture, though, a scenario of what Hoosier Lottery stood to gain by integrating this new technology into its business practice: Retailers have dispensers for selling lottery games, usually located next to or above the cash register or in a display on the sales counter. The number of dispensers varies by retailer, but the typical retailer has, on average, 16 to 20 dispensers. Lottery sales representatives, tasked with maximizing revenue, must make good decisions about how to best use these dispensers. Optimizing the mix of games and ensuring the retailer has a sufficient inventory of games (in order to avoid empty bins) can increase revenue dramatically. Using an extremely conservative example, if optimizing the inventory at a retailer increases that retailer’s sales by just two $5 tickets each day, statewide revenue would increase by over $36,000,000 per year in a state with 10,000 retailers.

Using the detailed information OrderPad provides, sales reps are able to make those decisions based on facts, not just instinct. It displays key information such as accurate and up-to-date sales rates of how each game is selling at that particular retailer. This information allows them to adjust a retailer’s inventory and ensure that it is carrying an optimal selection of scratch-off games. With a “Suggested Order” function, OrderPad Enterprise uses this information to determine an optimal mix of games for each specific retailer based on its sales history.

The purchase was approved by the director of the lottery and, according to Hendricks, “The lottery staff anticipated the arrival of the technology with bated breath. The idea that they would be equipped with an easy-to-use application displaying store-specific information was a long-awaited reward.” An implementation team, with representation from all of the major stakeholder groups involved in the process—particularly sales and IT—was assembled. The technology arrived, and upon the conclusion of a successful pilot group, each mobile user and field manager underwent a three-day training curriculum. After the three-day sessions, which were conducted in groups of approximately 8 to 12 users, the sales representatives were turned loose on the streets with the new hardware and application.

All in all, the implementation was painless; the process didn’t really call for changes in any other internal operations such as development, production or accounting, due to the fact that the lottery has mature procedures and systems in place and because the purpose of the project was limited to allowing sales reps to better interact with those already-existing systems. According to Hendricks, “For the most part, systems were already in place to interface with the product. We did redefine our sales force by changing the face of our field personnel in anticipation of the project
coming to fruition. These personnel changes took place over 18 months before settling on a vendor for an automation solution. We also took advantage of the new technology as a way to upgrade our communication systems within the office and with our satellite regional offices.”

In the end the goal was simple: raise revenues and profits for the state of Indiana by developing a more efficient sales force and sales processes. To measure the effectiveness of the new system the Lottery will track sales by product type and even to the game level and monitor a number of other statistical categories such as retailer call rate to see how the sales representatives are adapting to the new technology. It’s still too early for Hoosier Lottery to determine a return on investment, but according to Hendricks, “In determining needs and wants concerning the procurement of a field automation solution, the Lottery felt
the Cole product could most easily help us meet our financial goals. For perspective purposes, the Lottery anticipates that a $4 to $5 revenue return for every $1 in associated costs is an attainable short-term goal with a more lucrative outlook going forward.”
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