Can Small Business Benefit From Business Intelligence Software?
People have been looking at data to bolster business since the beginning of, well, business. Go way, way back and a Roman sandal-clad street merchant 2,000 years ago might have noticed over time that he gets about a dozen more customers buying his wares on the days when he puts a canopy over his wagon as a shield from the hot midday sun. As a result, he goes to the trouble of putting the bothersome thing up every day and his business benefits.
That’s just smart, or as we’d say today, he was using Business Intelligence (BI), which, at its most simplistic level, is just looking at data to make better business decisions.
While in days past modus operandi may have been determined using gut feel and intuition coupled with simple observational data, today companies have unimaginable amounts of information available to guide business moves.
And big business has been trying to harness that animal since the early 90s when the term “data warehousing” started becoming in vogue. Basically, enterprises began trying to figure out how to get data out of their operating systems and into the hands of decision makers without bogging them—the systems and the people—down. And in the last two decades they’ve made terrific progress in doing so.
The General Mills and IBMs of the world now are using complicated—and expensive—Business Intelligence (BI) systems that can pull data together from a multitude of operating systems and generate sophisticated reports that reflect not only what has happened and what is happening, but also what will probably happen.
According to Wayne Eckerson, principal consultant with BI Leader Consulting in Hingham, Massachussetts, companies are using BI tools today to do things like calculate the profitability of millions of individual customers daily, track the navigation path of every visitor to a Web site, identify fraudulent activity for thousands of transactions in real time, and provide service reps a 360-degree view of customer activity in near real time.
He holds up the automotive valuation company Kelley Blue Book as a good example of a company using BI. “[It] sources, consolidates, normalizes, and analyzes millions of automobile transactions every week to offer the most accurate and timely car valuations in the marketplace,” he says.
Another example: GE Capital Rail Services, a provider of railcar and intermodal fleet management services, leverages historic and near real-time data to optimize railcar repairs, improving customer service and satisfaction and dramatically reducing operational costs.
BI also lets companies look into the future.
“When Amazon recommends what other books you might like, that’s predictive analytics. They’re basically looking at historical data and applying some mathematical models to it and then running them against your records and they come up with nice cross cell recommendations,” says Eckerson.
But what if you’re a David, not a Goliath? Can an SMB get its hands on some of that weaponry? And should they? Are there some small businesses that should forget about investing in BI software?
I asked those questions to a group of BI experts on the Focus network who engaged in lively debate on the subject of bringing BI to SMBs. Here’s some of what they said:
It can help a small business compete with larger shops or increase market share. “When done properly, the analytics can provide insights into trend analysis that otherwise can't be seen. BI can also provide insights in to the cost-of-acquiring new customers over time, and how those costs are related to ‘customer gain or loss,’” writes Dan Linstedt, president of Empowered Holdings in Saint Albans, Vermont.
Vendors are getting better at making software that’s easy to use and affordable. “This has not always been the case with BI tools, but things have evolved rapidly and…Newer technologies such as open source, cloud, in-memory technology, Web 2.0 interfaces, and new visualization technology are making BI tools much more friendly to SMBs,” wrote BI Leader Consulting’s Eckerson. Tableau is an interactive visualization tool that is very easy to get up and running. At about $10,000, iDashboards is a Flash-based visualization or dashboarding tool for small work groups or departments.
BI vendors are starting to cater to a younger crowd. “Newer generations of BI are showing real promise in terms of usability…collaborative decision-making, visualization, gamification and iterative scenario analysis. The ‘users’ of these tools are increasingly people who are one or even two generations younger than those of us who started this party. They will not tolerate the quality of the legacy tools. Their experience is not in enterprise software, it's the consumer WEB, where things are engaging and actually work without a three-day training class,” wrote Neil Raden, analyst and consultant with Hired Brains in Santa Fe, New Mexico.
The cloud now puts non-IT users in the driver’s seat. “Any BI solution that requires a lot of IT intervention is not feasible [for a small business]. There are self-serve analytics solutions coming along which might be good fits for ‘SMB’ – these solutions are frequently based on SaaS [or] Cloud services,” says Julie Hunt, Software Strategy Consultant and Analyst with Julie Hunt Consulting in San Marcos, Texas. Cloud vendors GoodData and Indicee are good options to check out. SageWorks offers a free version of its cloud-based financial analysis software.
Before investing in BI tools, it’s important to think about what answers you’re looking for. “Implementing BI takes the desire to answer a question, not fancy software…[Implementing] a BI system without knowing the questions you want answers to is a prime example of BS [or business stupidity],” quipped David van Toor, principal with Irvine, California-based No Plan B.
Forget about using BI software if you don’t have access to quality operational data. “There has to be enough data available so it can't be readily understood without assistance. There's no point in implementing a BI if the data volumes are so small a person can look at the data and reach accurate conclusions,” states Paul Massie, senior director of operations and IT for YouSendIt.
Excel isn’t your only option. “Excel is often the default and de facto BI tool in many SMBs - simply because it's there, it's familiar and has a lot of basic function to allow users to play with data. A newer class of BI tools with more analytical and visualization function and the ability to handle larger data sets, such as QlikView, Tableau and Lyza, has been gaining traction recently,” writes Barry Devlin, founder and principal with 9sight Consulting in Cape Town, South Africa. As another option, BI Leader Consulting’s Wayne Eckerson says Microsoft PowerPivot is “like Excel on steroids.”
BI is increasingly going mobile. “For some SMBs, this might be a more prevalent and practical platform than traditional desktop or laptop computers. If the workforce is mobile or certain parts are mobile, then the SMB needs to make sure the BI vendor includes mobility at no extra cost with no extra setup,” says Eckerson.
I also heard from SMBs are using BI tools today.
"Using Pentaho and our data warehouse we can break down a metric and do specific analysis to identify under-performing partners in just 20 minutes. In the past the same query would take all night using an Excel grid," says Greg Allen, business analyst at the micro-lending site Kiva.org.
“The most powerful tool in our arsenal for BI and reporting…would have to be [SAP] Crystal Reports. They use a customer relationship management program that is based on MS-SQL. [Along with] some occasional SQL programming [it] allows us to fold, spindle and mutilate the data in nearly any way possible,” says Eric Horbinski, IT Director at Rapport Leadership International in Las Vegas.
Bob Shirilla created Keepsakes-etc.com and Simply-bags.com about five years ago after working for 20 years at a Fortune 200 IT company that used high-quality data mining and statistical analysis programs. “[My e-commerce sites] are doing very well in a very competitive product space. I attribute their success to the business decisions made by using the Google Analytical tools,” he says, referring to Google Analytics, Google AdWords, and Webmaster Tools.
BI Leader Consulting’s Eckerson says there are BI packages focused on specific applications that are commonly used by SMBs, such as JDEdwards, NetSuite, Microsoft Dynamics and Intuit QuickBooks. “There are also industry packages. Just make sure the package doesn’t lock you in to one way of looking at your data and makes it easy to export the data into a data warehouse so when you want to integrate all your data down the road you can do it,” he say, adding that since there are so many BI solutions on the market SMBs at a loss for how to begin using one might do well to get help from an expert.
Have you used a BI tool for your business? Let me know in the comments how it worked for you.