Jounyx And Santa: A Case Study   

Hermey slammed into the oaken double-doors at full speed, barreling into Santa's office. "You cannot do this again, Kris," he nearly yelled, stopping a few feet from Santa's desk and glaring at the large man.

"Hermey." Santa said, nodding, as he leaned back in his chair. "You seem agitated. How are things in R&D?"

"You took away half of my team. How do you think things are?"

"Furby needed them," Santa shrugged dismissively, looking straight at Hermey to gauge his reaction, "and I do not want to hear any more about it. You two are just going to have to get along."

Hermey took a deep breath. This year was going to be different. In fact, he had repeated that to himself at least five thousand times on the way to confront Santa. This year was going to be different. This year he had numbers. This year was going to be different.

"Furby needs squat, Santa," Hermey barked. "He's an incompetent little has-been that hasn't had a good idea since 1998."

"Look, Hermey," Santa leaned back in his chair and stared at the ceiling. "The Furby is the single highest profit item the Pole has ever put out. If Furby needs more of a team to get it out the door, he gets it. End of story. You're just still mad that he named it after himself."

Hermey swallowed, trying to keep his twisting and jumping stomach from escaping. "What if I could prove to you that the Furby is not the highest selling item we have? What if I could prove that it is, in fact, now one of the biggest ongoing money losers we have?"

"How?" Santa asked disinterestedly, trying to visualize constellations from the cobwebs on the ceiling. He really was going to have to have someone dust his office soon.

"Let me show you," Hermey said quickly, pulling out his laptop and booting it quickly. "Remember when I asked you last year to buy that Timesheet product?"

"The one that kept crashing and that everyone hated," Santa quipped.

"No, that was the old one. I'm talking about the new one, the one from Journyx." Hermey began starting up a web browser. His laptop churned happily away, the hard drive crackling like a card in bicycle spokes. "That was the one Furby liked," he jibed maliciously. "We bought a new one that could actually scale to more than 100 elves without crashing everyday at five. One that integrates with our payroll."

Hermey's browser opened to North Pole, Inc's (a Delaware company) home page, and he keyed in the URL for NPI's Journyx Timesheet installation absently as he talked to Santa. "Once we got that rolled out, absolutely everyone has had to enter their time, or they don't get paid. Well, everyone except you, anyway. So, I've got over a year's worth of data, here, and let me show you something." Hermey turned his laptop so Santa could see the report he was running.

Santa peered at the screen for a moment, quietly digesting what he saw. Reaching down, he scrolled down the screen, looking at the numbers. "Very interesting," he nodded, stroking his beard.

"You have no idea what you're looking at, do you?"

"None whatsoever," Santa admitted unabashedly. He was, however, a little surprised that Hermey had caught him. Normally when he stroked his beard people just assumed he knew what he was talking about.

Hermey took a deep breath. "This is a project summary report, Kris. It tells you where people have been spending their time. Across the top there are the workers, and down the side there are the teams. Each team is set up as a "project." Now, take a look at the totals, here at the bottom. See that?"

"Most of the time is spent on 'Furby'?"

"Yeah, here. Take a look at the percentages."

Hermey changed the report to Cube Report format and clicked the Export to Excel button. Once Excel opened with the data, Hermey quickly added a calculated percentage column. Hermey pointed to the Furby percentage. Even the old man had to be stunned at this.

"65% of the time is spent on Team Furby?" Santa asked incredulously.

"Right," Hermey pressed his lips together in a tight smile. Now, he had him! Hermey was no longer going to be overlooked and resource-starved! He was about to pull off the biggest coup-de-whatchamacallit in the history of North Pole! "Now, take a look at this." Hermey launched PoleCountTM, the North Pole accounting package. "Here's the sales of Furby's since 1997."

Santa leaned forward unconsciously as Hermey's fingers flew over the keyboard.

"Now, you'll see that the sales of Furby's in 1997 are zero. Which makes sense, right, since they weren't on the shelves until Christmas of 1998. That's just a baseline for us. Now, take a look at the sales for 1998."

"Impressive," Santa murmured, his eyes glazing over.

"Yeah," Hermey admitted grudgingly. "Best sales, ever. 40 million units plus. The only problem is why. Look at 2000 and 2001."

"Furby sales are nothing," Santa said, startled.

"Well, they're still pretty strong," Hermey conceded, "but they're certainly not the number one spot." He brought his browser back to the forefront, bouncing into the custom professional services reports he had purchased just for this conversation.

"Do you know what capitalization is, Kris?" Hermey asked, finally relaxing. Things were going just as he planned.

"Let's assume I don't," Santa said, blushing faintly and glancing at his bookshelf. He could almost swear he had a book on running a business somewhere.

"Well, basically it's when you can make part of your company worth the value of something that you make. So, for example, the Furby cost us roughly a quarter million to develop and get to market. That cost increases the value of North Pole, Inc. The problem is that the tax boys say that we can only add value until the product is released. Right?"

"Ooookkkkkk," Santa drawled, the hairs on the back of his neck beginning to stand up. He definitely did not like the look on Hermey's face. It was too eager. Too knowing. Too much like his cat.

"Well, look at this," Hermey brought up the capitalization report on Furbies. "We've spent well over 10 times on team Furby since the release than we did developing it. That's money that you're losing. It could have been spent on developing other things."

"Like what?" Santa asked suspiciously.

Hermey smiled tightly. "Could have been anything. We'll never know, will we? All I'm saying is that if you think back to 2000, we had a shortage of Playstation 2 consoles in North America. Why? Well, there weren't enough elves to get them out the door, even with the Sony subcontract. Let me ask you this. What was the hot toy from last year?"

Santa frowned and thought for a moment. "I can't say any toy really had a big edge like it did with the Furby or Cabbage Patch or Elmo, actually. I don't think there was one."

"Let me show you why," Hermey snapped. Bringing back up the project report, he limited the output to 2001. "Look at the labor distribution on the teams. Furby's got 65% of your work force, remember? The other 35% is spread out among 14 different teams. You want to know why there was no hot seller, Kris? It's because our teams don't have the resources. You're giving them all to Furby!"

"This is just sad. Why didn't I know this before?" Where did you get all of this data?"

"This new timesheet program integrates with absolutely anything. It's just numbers, big guy. Once you've got them, I can stick 'em right into PoleCountTM and I can see project costing versus payroll as well as P and L for the products, etc. The only thing I can't tell is opportunity cost, but I can guess."

"Opportunity cost?"

"Think of it as the opportunities you're losing by giving all your manpower to certain prima donnas," Hermey supplied.

"Right." Santa sat back and sighed. "This is all very good information, Hermey. It's a lot to think about, but I can tell you one thing right now."

"What's that, Santa?"

"I need to see Furby right away."