ARE YOU READY FOR BUSINESS INTELLIGENCE?
It is safe to say most organizations require and use Business Intelligence at some level. When companies are founded, they normally do not have complex ERP systems and do not have very many daily transactions. But very soon, business owners begin to evaluate their businesses with questions such as “What is my average revenue per month and what can I expect if this trend continues?” or “Where am I spending most in day to day operations and if I were more frugal in this area what would my bottom line look like?” and so on. Businesses with lengthy sales cycles would most definitely want to know what their sales pipeline looks like and anticipate potential revenue. The point is that even the smallest of companies functioning mainly on Excel still need some form of data analysis. Albeit the analysis is usually manual in the form of multiple paper based reports and mentally evaluated.
Small to medium companies need Business Intelligence for the very same reasons as do large enterprises. To be more competitive in an already saturated market, BI is essential to understand business performance, identify cost guzzlers, gain insight into market trends and seek potential new markets.
There is indeed a very high possibility that every small to medium enterprise is already using some form of Business Intelligence, whether aware or not. The most common tool used for BI is of course Microsoft Excel. However, there are serious limitations with that approach though. Excel is not exactly a central data repository (data warehouse) for multiple levels of information. Valuable business data is usually found distributed across multiple spreadsheets in multiple locations. When reporting and analysis needs are critical, it is often required to gather multiple spreadsheets together, study to make sense of each of them and consolidate them to arrive at some logical conclusion. This process is time consuming, error prone and mostly inaccurate. A data warehouse would resolve this problem.
A data warehouse is typically a central data repository for information from multiple silo data sources. Eg: ERP, CRM, Payroll, POS, etc. Once the data warehouse is cleverly set up, it provides a single data source for in-depth analysis of business performance through any BI tool such as Microsoft Power BI or Solvers BI360. In most small to medium enterprises “without” BI, employees in different departments serve the purpose of a data warehouse, except they are not a single repository of data. On the contrary, they are distributed across multiple locations and multiple departments and therefore across multiple Excel spreadsheets. There is little to no collaboration amongst them and therefore reports result in multiple versions of a single truth. It only takes a CFO, one simple question to determine this. “What is the revenue forecast for the next 6 months and the expected gross margin thereof?” The CFO will most probably get three to four different answers and it will very likely take a couple of days to get a mostly “unreliable” answer. Why?
It’s usually because data is distributed across the organisation. They reside in multiple spread sheets across different departments and is rarely real time. An Excel extract from the source system one hour ago will probably not be the same as the exact extract 20 minutes ago. By the time all figures are consolidated across the various departments and handed down to the CFO, the information is history and no longer current anymore. Almost always, the CFO gets the information a bit too late, well past the hour of making strategic decisions and past the hour of event.
These business problems can be resolved with defining KPIs for the business, implementing a data warehouse with a BI tool and defining reliable data quality measures.
4 SIGNS YOU NEED BUSINESS INTELLIGENCE
- Delayed Reports: If your IT department has been delegated the responsibility for all company data, getting key management reports may have started to become cumbersome. You have a perception that the use of Business Intelligence software, creating dashboards and reports are too technical and therefore need reliance on IT experts and programmers. At the lowest level, you have a strong reliance on someone who is an Excel guru.
When you need to repeatedly rely on your IT team or that one Excel guru to tweak and edit reports or get a snapshot of business performance, it is just a matter of time before they become a bottleneck to getting real work done. This is a clear sign to empower non-technical people in the organisation with access to data they need to better meet business goals. Most BI tools today are intuitive, easy to use and will allow business users to build their own reports, analyse their own data as well as create their own snapshot dashboards.
- EXCEL is your BI: If Excel is your BI, you need real BI. Microsoft Excel is probably the lifeblood of your organisation when it comes to reporting and analysing data. Am sure you already know that Excel can become very sluggish when it is fed with more data than it was designed to handle. Even well managed companies end up with multiple Excel spreadsheets that are not real time and are distributed across various departments and across various employees. It almost always takes a few days to consolidate information and still leaves you wondering if the information is correct. Thanks to Sharepoint and Google Apps, it is now possible to share documents and collaborate with other users. However, the online versions have limitations too. You have accumulated business data far beyond Excels capacity to handle and the reports generated out of Excel has almost always become historical information. The complications owing to consolidation of information in Excel is contributing to further delay of reports. This is another indication you are ready for BI.
Getting a unified and accurate view with a BI tool can easily resolve this concern. A BI tool can speedily mash up data from multiple silo data sources and help you with fast on the spot adhoc reporting. Basic tasks such as collecting data from different department heads, consolidating multiple spreadsheets, debugging broken formulas and macros will suddenly seem a breeze. Creating a snapshot dashboard of critical reports that matter can be easily accessed on your mobile devices.
- You have data, but no information: Information is not the same as data. Most businesses collect data. Nothing needs to be done to collect data. Just the day to day business will result in collecting data. But information is data that has been converted into meaningful insights. A report displaying Period, Product Description, Quantity, Price and Totals might give you sales figures for the week, but getting insights such as top selling products, the reasons thereof, the lowest selling products, the highest margin per product and slowest moving products requires conversion of data into information. This is obviously just an example. There could be many other areas in your business where you are seeking insightful information.
If you are lacking information from your data, it is a sign to consider investing in a BI tool. A good BI tool helps you identify business trends and bottle necks. It helps you discover new insights and take corrective measures to help you meet your business goals. This was the very reason you started collecting data and using Excel, isn’t it? A BI tool can help you use your data and convert it into valuable information.
- Non-existent Dashboard: Imagine driving a car without a dashboard. You wouldn’t know how far you have gone. You wouldn’t know your oil levels or the battery levels. You wouldn’t know your engine RPMs and if the temperature is at safe levels. You would have no idea what speed you are travelling at. Worse still, you wouldn’t be able to guess the speed of other cars (competition) travelling in the same direction. Now imagine if you had to print out reports every time you wanted to know any of the above. It would be considered nonsensical, especially in a moving car. Well, businesses are on the move, all the time. If you do not have a dashboard with key performance indicators, it is a sign you are ready for a BI tool.
A dashboard gives you the ability to display core metrics that will guide your day to day business decisions. Your current data needs to be converted into intelligent information and give you instant insight on the areas of your business is doing well as opposed to those that are not. If you have concluded that the little Excel based pie chart doesn’t cut it anymore, then you are ready for a BI tool.
Every business in today’s highly competitive world needs some form of BI to help transit from running business on gut feel to running it with some intelligence. If you can relate to any of the above pain points, it is time to investigate how business intelligence can help you. Business Intelligence is the very tool that will help small businesses accomplish their vision and business goals. Business Intelligence is the GPS or the navigation system that will take small businesses through paths they didn’t know existed. A nail can be hammered into a wall using a spanner or a pair of pliers or a rock or something heavy. They all do the job, but it is most efficient and effective when done with a hammer. So also, with BI.
Santosh Chandran is the Business Development Manager for Business Intelligence at Olympic Software. He regularly blogs about business intelligence and corporate performance management. You can follow him on Twitter or on LinkedIn. Please contact him directly if you would like to find out how BI can improve your business results through better decision making, phone 09 980 3964 or email: firstname.lastname@example.org.