Business intelligence is a nebulous term, long regarded as an enterprise luxury. Find out what holds true for BI in the SMB market, and how it can boost business efficiency.
By Jean Huy By
The term “Business Intelligence” and its acronym “BI” are pervasive in today’s data-intensive lexicon. If you add in all the new trendy terminology such as business process management (BPM), data mining, data warehousing, business process automation, decision support systems, query and reporting systems, enterprise performance management, executive information systems (EIS), business activity monitoring (BAM), modeling and visualization, and so forth, your head can start spinning.
Here is an excerpted definition of BI, provided in a Technology Evaluation Centers article by Mukhles Zaman: “BI is an umbrella term that combines architectures, applications, and databases. BI helps businesses by analyzing past and present business situations and performances. By giving this valuable insight, BI helps decision-makers make more informed decisions and supplies end-users with critical business information on their customers or partners, including information on behaviors and trends.”
To put it in simpler terms, BI makes the right information available in the right format to the right person at the right time. Given that virtually all SMBs crave better information, the real question is how much of this technology constitutes a good investment of time and energy? Most of the industrial-strength, BI-related tools cater more to the larger enterprises whose business structures are highly complex and whose budgets can accommodate the lofty implementation expenditures. While many of these vendors would like you to think that their pricey, high-end solutions are absolutely necessary for the SMB sector as well, our research indicates otherwise.
Based on the size of your company and budgetary constraints, your goal is to determine what BI tools are really needed to drill down and extract the key performance data that will make the company more efficient and profitable.
To start, we recommend leveraging existing technology and finding cost-effective, easy-to-use BI solutions that integrate with Microsoft Office Suite. That should be quite sufficient to get the intelligence needed to significantly boost bottom lines.
Cutting Through BI Mythology and Hype
To distill the BI discussion to its simplest terms, what businesses need most is the ability to find and extract key information that identifies their strengths and weaknesses and helps them make better decisions. They also want this information to be presented in a timely fashion and in a way that business people can understand.
Given this modest objective, SMB companies must filter through the hype emanating from many BI application vendors who claim that they should invest in higher-priced, industrial-strength BI solutions to achieve their goals.
Myth #1 – You really need a “cube-based” OLAP BI solution
Sure, this makes sense if you are a Fortune 1000 company with numerous divisions and databases and highly complex reporting requirements. Oh, and you’ve got mega-bucks to spend on trying out different BI solutions that will take a long time to implement and much more time to learn and use. We know that a cube-based OLAP tool does enable end-users to slice and dice their data, perform multi-dimensional analysis, present information in graphs and charts, and more.
However, there is a high cost associated with maintaining these cube-based systems. For example, every time a new dimension is added to a multi-dimensional analysis, one has to make changes to all cubes that would use that dimension. One needs access to very high level programming skills to do that, not to mention the budget.
On the other side of the equation are reporting tools such as Crystal Reports, FRx, and F9, which fall into the category of transaction system reporting. If companies want to know current inventory levels or the balance of a receivable account or even a comparison of these indicators, these tools are fine. But if looking for actionable intelligence that will add considerable value to the decision-making process, more is needed than simple reporting tools.
The best approach to BI for SMB companies lies somewhere between these two approaches. The optimal position is one of information balance, existing between formal cube-based systems and simple report writers. The right tool must be able to deliver multi-dimensional analysis, graphing, charting, and more, for a fraction of the cost of an expensive OLAP solution. The tool should be modifiable by a user without requiring extensive programming skills.
Make no mistake—having access to an analytics tool can be a very powerful component of your BI plan. Analytics enable end-users to transform data into information, and then get that information into the right hands and in the correct format to facilitate timely decision-making. However, there is a misconception that SMB companies must invest a small fortune in industrial-strength analytics. In reality, these companies are more interested in the macro view of their business (which BI can deliver), rather than getting so close to the actual transactions that you lose the departmental or company-wide perspective (needed for smarter decision making).
For these companies, it’s usually quite sufficient to perform data analysis covering predetermined periods of time— months, quarters, or years. Typically, you are examining trends or comparisons of results between periods, meaning that you really don’t need to pay for overly expensive applications that deliver high-powered analytics.
Myth #3 – You need to toss out all your spreadsheets
With all the high-priced applications now available in the fragmented BI marketplace, it’s easy to see why many vendors would scoff at the idea that your basic Microsoft Office Suite is quite adequate as a key component of your BI solution. They don’t want you to know that the most widely used BI tool today is an Excel spreadsheet.
Almost everyone in the corporate world is familiar with Excel, its minimal learning curve, and the fact that the application leverages a company’s existing software solutions. Excel is often used to track expenses, create budgets and forecasts, and create reports from that data. Plus, Excel tools offer many useful features such as graphing, charting, and pivoting, which assist decision-making.
Since many of today’s more affordable BI solutions integrate seamlessly with Excel, there is absolutely no reason to abandon this trusty tool that you have relied on for so long. As long as you can access the right data that can help you measure your company’s operational performance, the spreadsheet is still the way to go. Of course, if you are accessing data from disparate databases whose information is out of sync, then it won’t matter what BI solution you use – you’re not going to get accurate results.
Myth #4 – You need to invest in a BI solution to achieve compliance with Sarbanes-Oxley
The Public Company Accounting Reform and Investor Protection Act of 2002 (also known as the Sarbanes-Oxley Act of 2002) was passed by U.S. lawmakers to reinforce honest and transparent corporate practices in the wake of various public accounting scandals and corporate failures. As with any legislation of this magnitude, there is plenty of hype that has emerged in connection with this law.
Here are two facts to consider: 1) The Act applies only to U.S. public companies and, 2) There is no software application certification provided under the Act. This means that you can’t achieve compliance with this Act by simply buying some BI tool. If you are concerned with Sarbanes-Oxley compliance or want to tighten your internal controls as a result of renewed focus on this area, there are software tools that you can utilize in concert with proper management of your internal processes, for reporting, auditing, and disclosure. In general, well thought-out applications can help you in your compliance efforts by making information more accessible and more transparent, and by highlighting anomalies.
A combination of accounting and BI-related reporting tools can serve as a vital part of your overall internal control compliance strategy. As SMBs determine how to respond to the new challenges imposed by Sarbanes-Oxley, there is little doubt that most attention will be focused on managing, protecting, and reporting on the data that at some point passed through the accounting system.
One BI tool that can serve this process admirably is an “Alerts” solution that integrates with the accounting system. Using alerts and special triggers, the organization can automatically generate e-mails, launch reports, or generate system warnings without the need for human intervention.
While no software application alone will make a company compliant, the right mix of accounting and BI applications can work in conjunction with internal policies, compliance programs, and other technology investments to increase the transparency of financial events, ensure distribution of critical information in a timely manner, and provide the peace of mind needed on matters of security and access.
JEAN HUY is the senior director of product marketing for Sage ERP.