Despite sounding like an oxymoron, business intelligence (BI) combines processes, tools and technologies to help turn data into information, information into knowledge, and knowledge into plans that drive actions for improved business performance.
During the past decade, analysing business performance has become much easier, largely thanks to the widespread availability of business intelligence (BI) solutions.
BI works by extracting data from multiple transactional and operational systems (such as orders, service, sales and shipments) and combining the data into a single dedicated database or repository. An array of BI tools then make it possible to mine, query and report on data, helping identify trends, patterns and exceptions. Unlike two-dimensional files such as Microsoft Excel, BI databases offer the ability to analyse data across numerous dimensions.
As a result businesses are no longer restricted to simple reporting (such as What happened?) and can more easily engage in analysis (such as Why did it happen?). BI also opens the way to more sophisticated considerations such as predictive analysis (What will happen tomorrow?) and monitoring (What just happened?). It is a technology that is transforming organisations by creating a better understanding of business performance and trends. It empowers organisations to make decisions on the best available information rather than on gut feel alone.
Big business and government bodies were the first groups to embrace BI, using it to bring together information from different applications and systems across the enterprise to create a ‘single version of the truth’, as the catchphrase goes.
The problem with manual analysis
Although the scale of operations may differ, the information needs of SMEs remain similar to those of larger enterprises. Yes SMEs have been slow to adopt BI technologies. Instead, they typically rely on operational and transactional systems that are efficient for running business on a day-to-day basis but which lack any detailed analysis on reporting capabilities. Managers supplement these systems with manual, time-consuming and costly processes to obtain the information they need.
It is common to have staff across the business extracting data from the multiple sources and then manipulating it in Microsoft Excel, Microsoft Access or by using third party report writers. All of this takes time and demands a level of technical expertise that can be in scarce supply within a smaller organisation.
Such an intensive approach will eventually deliver results but it is inflexible. It fails because it cannot provide a simple, easy way for all business users to get the information they’re looking for. The last thing you want is for your management team to spend time trying to develop and manipulate spreadsheets or learning to use a report writer.
Intensive manual processes are also prone to error. As there is no standard way to create or share information and no common place from which to retrieve it, mistakes easily creep in. If the Sales department corrects a figure, it is possible for Finance and Logistics to remain totally oblivious of the amendment.
Perhaps most importantly, this manual approach to reporting and analysis provides a single point of failure. It not only increases the workload of the person or team responsible for producing the reports, it also removes focus from other more critical business activities. The result is a reporting process that doesn’t recognise the need for a ‘self service’ approach to information gathering.
Businesses make do with existing and standard reports, even though they may be outdated or based on incomplete details. This can be a lost opportunity to your business.
BI tricks to help get started
With both the cost and complexity of BI technologies decreasing in recent years, there are important gains to be made by those SMEs willing to consider a BI capability. Accurate information, agility in the face of a changing business environment, and more informed decision making are just three of the benefits.
There is considerable scope for most SMEs to uncover new opportunities or gaps in the business by simply going beyond traditional two dimensional column and row style reports – to being able to review and analyse information in a completely flexible way across multiple dimensions.
Analytical tools give users the choice as to whether they view a report as a static document, filter it according to specific criteria or drill down, up or across for more detail. For example, analysis could include sales by customers, by channel, by sales rep, by time of day and ultimately by location. Dashboards and scorecards provide exception-driven reports to highlight how a company, department or person is performing compared to plan, show results against predetermined key performance indicators.
According to a leading industry analyst, IDC1, Australian SMEs looking to use BI to enhance their competitiveness should aim to:
- Provide fast, consistent access to company data to employees throughout the enterprise;
- Deliver a ‘single version of the truth’ streamlined from the various disparate systems within the company;
- Give decision-makers the data they need so that they can ‘aim before they shoot’;
- Focus on productivity by deploying applications that facilitate company-wide business processes. These should also be fast to set up and workable within weeks, not months.
- Focus on integration between BI platforms and existing enterprise systems, and skill sets;
- Capitalise on their ability to be adaptive in the market to outsmart competitors;
- Look for a low total cost of ownership in all technology choices that enable them to create an advantage over their closest competitors.
Quickly determining one material opportunity or gap in the business can by itself provide a massive financial benefit to a company using BI effectively. The key is to keep information analysis simple enough to be used by all.
The benefits of BI accrue in proportion to the number of people using the system, so the more broadly the BI system is used, the more benefits it will deliver.
As experience builds up, the organisation as a whole will evolve to become capable of greater levels of analytic sophistication and more complex requirements can be met. It is this process of evolution that will ensure you achieve the greatest possible value from your BI investment.
1 - Australian SME Software Adoption, 2005, IDC January 2005.