Business Intelligence (BI) is going to evolve into a critical asset for businesses in the coming months as companies begin to hunker down and trim the fat while we all ride out this recession. Now more than ever we require business intelligence.
Many businesses fail to understand or are able to justify the value of an implementation of BI software. Instead, decisions are based off of “gut feel,” advertising and marketing decisions are made based on “how we’ve always done it,” and at the foundation of it all: inadequate intelligence.
Want to see Business Intelligence (BI) in action? Visit a hospital.
After spending 5 hours at the hospital this week for a “false alarm” (my wife is pregnant), I was fascinated by the uterine contraction machine that the hospital staff had hooked up to my wife’s stomach. Through a series of sensors, this machine was hooked up to a PC and displayed a real-time readout of fetal heart rate and contractions both on the monitor and via a continuous printout on paper.
As my wife would wince with the pain that each contraction brought with it, the machine readout was right-on. Occasionally, I would see the contraction monitor start moving up (indicating a contraction was building) before she would feel it. Furthermore, over time we could see the frequency in which contractions were happening which enabled the doctors to see important trends with the contractions. As we began to recognize the trends, we could predict the next contraction for my wife within a 20-second range.
At no point were we left wondering whether the contractions were consistent or not, or how long they were lasting. It made me realize that if this was not a hospital room and if we were at any random business, chances are we’d be making decisions based on little or no data.
The three pillars of Business Intelligence execution
Our hospital visit showed “business intelligence” at its finest. In this particular case, this was a basic implementation of intelligence gathering, but essentially BI breaks down into the following:
- Establish Key Performance Indicators (KPIs) — in this case when we were at the hospital, there were 2: fetal heart rate & contractions
- Implement a method of collecting data — the monitoring machine
- Implement a reporting tool so you can analyze the data to base your decisions off of — by evaluating the printed graphs from the machine, the doctor could identify trends with the contractions and determine if she was progressing with labor (in our case, it was a false alarm)
Do you have KPIs set for your business, department, website, advertising, or social media initiatives?
If you haven’t identified KPIs for running your business, then collecting data and reporting against it do very little if you can’t convert the data to insights. For example, consider the following scenarios when viewed in isolation, they may sound like accomplishments. Often times, quantity/volume or completion is used as a universal KPI:
- You just sold 100,000 units of XYZ widget!
- What if XYZ widget has a Gross Margin (GM) of only 5%? 10,000 units sold at 50% margin (at the same price) is just as profitable. Volume can often times be misleading because the effort that goes into selling 100,000 units can be far greater than 10,000 units.
- Your department just completed a critical project on time!
- Great, the deadline has been met. Does that mean success? Not necessarily. If each member of your department has just spent the last 6 weeks working 80-hour weeks, this is not success — it’s burnout.
- Your website had 100,000 unique visitors to your website yesterday!
- Unique visitors to your website mean nothing if you’re not measuring the “next step” in the conversion funnel of your site. What does your website exist to accomplish? Generate leads? Sell products? Provide product support? Unique visits that don’t convert to sales or brand advocates are just a waste of bandwidth.
- Your TV ad ran during the SuperBowl!
- How much did you spend on the ad and how many sales can be attributed to the ad? Don’t know? Then running an ad during the SuperBowl is not a success.
- Your social media campaign generated 5,000,000 impressions!
- Like your TV ad that ran during the SuperBowl, how much was invested in this campaign and what time frame are you using to measure the return on the impressions generated from the campaign? Impressions are NOT a KPI for social media unless you can equate an impression to revenue or another unit of measure that is of value to your organization.
Business Intelligence tools
This this is by no means comprehensive but is a start to discovering what’s available in the industry for business intelligence solutions (based on the “top of mind” companies). Rarely will you find a “one size fits all” approach — often times you’ll find yourself utilizing several niche tools, particularly as you get into advertising and marketing campaigns.
Pillar #1: KPI Tools
There’s no software that can tell you what your KPIs should be for your business. KPIs vary widely by industry, type of business, department, and ultimately boil down to what you’re being measured to produce.
Pillar #2: Data Warehousing Tools
This is an important pillar, and there are many options available for data warehousing. A simple Google search for the topic produces many vendors who play in this space. Visit the Wikipedia entry for this subject and check out these vendor offerings:
Pillar #3: Reporting & Analysis Tools
Once the data is collected, you must have the tools to report and analyze the data. It’s one thing to see your KPIs, but the real skill behind Business Intelligence is the ability to correlate this data, mine the data, and discover information and trends you otherwise might have never known.
