Tools, Tools, Tools

Tools, Tools, Tools

As part of my business, I spend a good amount (too much?) time looking at the comments made by various companies about the need for business intelligence, and all the fantastic new products they have come up with: tools for dealing with 'unstructured data'; search-like query tools; semantic-layer tools... tools, tools, tools.

The thing that struck me is that these software tools are essentially just like the tools of a carpenter or plumber. Without the skill of someone trained to use them, they are at best inanimate lumps, and at worst, they're the keys to a misguided car, careening towards a cliff!!

So the point for today is that a tool is a tool. A wrench is a wrench, and software is software. It is the skill of the person using the tool that brings benefit to you.

(Oh, and don't call me to come fix your plumbing!)

SMBs need BI, too!

BI is not just for big companies!

Over the last six or seven years, I've been involved in providing and implementing Business Intelligence technologies to clients in small businesses. Sometimes, we didn't call it 'BI', but in most cases it really was.

In recent years, many vendors have come forward to talk about having BI 'solutions' (uuggh - I hate that term) for SMBs, but the problem is that they tend to forget the 'S' in SMB. What about the business that doesn't do $300M p.a. in sales?

The reality is that those (not so) small businesses, can definitely reap great benefits from a well thought-out BI implementation. The key is in finding a good place to create value.

Example #1: One of our clients is a distributor of Pet Foods to retailers across Eastern Canada. Their products are sold to independents, large chains, and to several buying groups. They have a team of salespeople, and seem to have order-entry staff working constantly.

The Problem: With such a diverse sales channel, how can you effectively monitor sales for allocation to the appropriate salesrep? Also, with a significant opportunity to receive Vendor rebates based on product and Geo performance, how can you create valid reports to support claims?

How did we solve this? Well, not suprisingly for a business of this size in this market, we didn't build a comprehensive Enterprise Data Warehouse. We didn't implement costly ETL technology platforms, nor did we develop a model requiring dedicated staff FTE resources.

Before recommending a large-scale project of dubious value and return, we took some time to understand both the client's business and the value that could be realized from automating this manual process - how much time was going into doing this manually? How many days per month? We worked with them to determine the repercussions of 'hiccups' in processing - what would be the implications downtime for the system? And we collaborated with them in finding the best balance between budget, timeliness, and fault-tolerance.

In the end, we implement a collection of easily maintained, highly reliable SQL transformation jobs, in conjunction with BusinessObjects Crystal Reports Server. Total cost to the client? Well, let's just say that over the past four years, they have saved the cost of implementing and maintaining this system several times over. They can consistently recover rebates from their vendors. And in addition, they now have a reliable sales information repository!!!

So how does this relate to my initial point, about BI for SMBs? Quite simply, it is not always a matter of considering a large scale project, spanning all aspects of a business, in order to achieve value from Business Intelligence. Implementing BI definitely has a cost, as does any technology. But the issue is to find appropriate ways to offset that cost by generating business value. At some later date, I will no doubt reference the intangible value of Business Intelligence. But for now, let's remember that it is quite possible to justify BI in any size of business.

You don't need to be a global giant to find an ROI.

What is the real pay-off from implementing Business Intelligence in a SME?

First, notice that I didn't say "Business Intelligence Solution." Too many companies (us included, sometimes) talk about providing solutions to their clients, as if to say, "Here, Mr. Smith. Take this - it's the solution to all your problems." The reality is that BI is a business approach; it's a mentality that says, there is value in all of that data I collect to help me pay taxes, and I'm going to start using it. To talk about a BI solution as if it is a comprehensive way of resolving all business issues is foolhardy.

So back to the original question - what's the value of implementing BI?

In my experience working with small and mid-sized businesses, I have become convinced that the real value of Business Intelligence lies not in the possibility of implementing a 'closed loop' automated decision making process; it is not (at least not always) in delivering personalized dashboards to all employees across the organization. The most significant benefit, whether we're dealing with operation reports, Balanced Scorecards, or something in between, lies in the fundamental ability to access information faster and easier, to support decision-making by people.

What does this mean? Well to me, it means that before going down the path of implementing any particular Business Intelligence technology, it is critical to have a sound grasp of what information is not readily available, and how that is impacting your business.

Let's look at an example - A salesperson is reviewing their client list, to determine how to focus efforts. Should the focus be on the clients that are high volume, profitable customers? Well, you should certainly make efforts to keep those clients happy, yes, but probably not too much action is required. How about the clients who purchase the occasional product, and cause no problems but also generate little profit. Probably not a candidate for much attention. But how about the client who purchases a modest amount of low margin product, and always seems to have delivery or other problems - how about them? That's definitely somewhere for the saleperson to focus. Why? Because we should be working on either a) Helping our customer understand the value and benefit of the other products; b) finding out the root cause of, and resolving, the delivery/service issues to make the client happy, or c) 'firing' the client, to focus efforts on better business relationships.

So here's the next question - could a software product automate the process of closing customer accounts? Well, yes, it is possible. But would you want it to? I can tell you that if I was ever on the end of an automated email saying my account was being closed, I might be a tad upset!!!

The software should help identify the accounts falling within a set of pre-defined conditions, to draw them to the attention of the salesperson. The salesperson then should have all of the appropriate information to connect with the customer, to see if the business relationship can be made more successful FOR BOTH PARTIES. Maybe the customer's concerns are valid, and this is an opportunity to improve service that helps all customers. Maybe the customer never realized the value offered by other products or services, and the salesperson can educate them. And maybe, sometimes, closing the account is just the right thing to do.

The point I'm trying to make here is that the Business Intelligence tool should provide purely objective information (sales, margin, errors, complaints) in a way that it can then be effectively used by the salesperson to make a subjective decision. Decision-making does not happen in a vacuum, and much to the chagrin of some of my peers, we need to recognize the intangible value of a human perspective. Putting blind faith into ANY technology systems without appropriate human monitoring is a recipe for disaster.

This from a guy who believes in the value of Business Intelligence for all businesses!!! :)

Questions, questions and more questions

Sometimes I think that writing this blog is just an opportunity for me to ask questions. But then again, if you don't ask questions, you don't get answers!

I've recently been pondering the potential of introducing an Open Source Business Intelligence offering into the solutions we provide to clients. Obviously there are pros and cons. It would definitely be a cheaper option for initial software outlay (at least I think so). But would it really be a good option?

As a partner with a large BI vendor, I'd say we get to see the cream of the crop when dealing with fantastically capable tools, with extremely rich functionality and visual appeal. We also have an opportunity to leverage brand recognition of our vendor when it comes to marketing and sales (though sometimes this can also be a hinderance).

So what to do? Introduce the low-cost albeit lower functioning Open Source alternative, or focus on the higher pricetag but very compelling offering from the big vendor? Well for the time being, I think we'll stick with the one vendor option. Though the cost up front is higher, in most cases clients like dealing with a name they at least recognize. I expect that will change as time goes by and companies become more comfortable with the concept of BI in their businesses. But for now, we'll continue to be a single-source provider. For now...

What this is about...

A lot of large software vendors are promoting themselves as providing Business Intelligence solutions appropriate for SMBs, but here's my issue - while the solutions are generally functionally and financially appropriate for the upper end of this market space, the reality is that they are not generally an affordable option at the lower end.

For clarification, I better share my definition of the market we're talking about.

Generally (and obviously with exceptions), when I think of mid-sized businesses, I'm thinking of those from about $25 million per annum revenue, and going up to about $350M in annual revenue. I realize that annual revenue is a fairly arbitrary defining characteristic, however people like having boundaries, so there you have it. Under $25 million, generally there is not the scope of business operations to warrant much in the way of sophisticated BI, and over $350M, realistically we're no longer dealing with a mid-sized business.

As the president of a consulting firm implementing BI solutions in the mid-market, I'm hoping I can use my experience to give some insight into viable BI for smaller businesses, and how to get value from appropriate solutions.

And yes, I'll also share my opinion about industry trends and changes for those who care to read them :)

Stay tuned!