Business Intelligence (or BI) is a way to turn data as raw material into useful information. BI relies on a set of proven processes, tools, skills and roles that easily work together to extract (sometimes also mine) valuable information. BI solves how to put existing information in one place and access it quickly and easily. This data can be edited or computed as needed. The information allows managers and business people to manage, change or direct the operation of the organisation. Simply put, it is used to select and implement the most appropriate strategic actions for the business.
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What is Business Intelligence good for?
- It gives an overall view of your business, customers, goods and possible future developments.
- Based on the data, it is possible to make decisions that make sense, are effective and move your company in the desired direction.
- It makes day-to-day operational work more efficient.
- Provides order in the bottom line and gives important and reliable information to the people who require it (KPIs).
- Allows you to predict the future situation.
- Builds a good basis for personalization and marketing segmentation of customers or goods.
- Maintains focus on target.
In short, BI provides a data-driven view of your business or parts of it.
Who should/should not deal with Business Intelligence?
BI should be handled by large enough companies that need to know information about sales, inventory, costs and everything related to the running of the company and put this data in “one” place. Not that smaller companies don’t need to know this information, but it should be their daily operations and the cost of creating their own BI for small companies often outweighs the benefit. For these smaller companies, it’s often beneficial to choose a more unified solution that doesn’t solve 100% of the problems, but at least solves enough of them.
When considering the purchase or creation of a BI solution, it’s a good idea to be guided by the question “How much does it cost me what I don’t know?”. This is quite a challenging question to answer, as everyone views it differently.
For example, in the case of inventory management. If a clothing store doesn’t stock winter clothing before the winter season, it can be a serious problem. Here again, the different complexities of the companies come into play. Where for one company stocking is a matter of a few days, for another it can be months (especially with the current state of the supply/customer chain). Therefore, this information can be crucial to the operation of the entire company.
BI is not a tool that management should hide behind. Whether for inventory or marketing spend, someone is always responsible and must have visibility, whether they have BI reporting or not, and they must know where to get that information if necessary.
We can also approach BI in two extremes:
- If you have perfect employees who work perfectly and independently on all systems, you don’t need BI. In other words, BI is made up of your employees. But on the other hand, you have to consider whether these employees would be useful elsewhere than in all the systems and excel spreadsheets to research and retrieve information on a daily basis about the amount of products sold this year, last year, how market trends are moving, or predictions of future purchases, etc.
- You may have BI but its users still make decisions based on hunches instead of data. While hunches and experience play an important role, they are meant to lead to questions, not unconfirmed conclusions. This experience is almost non-transferable and can lead to big problems in any personnel change.
What can all be addressed?
In the context of data acquisition and evaluation, we often encounter the question “What is and is not possible?”.
The answers you may encounter are quite contradictory and divide the community into two groups. Either everything is possible or almost nothing is possible. This is because of the wrong question – the ideal question is “What is worth solving?”.
Because most articles and podcasts tend to come from larger companies. Big players like Alza or Mall.cz are looking at BI from a high level. Hiring a few senior people is not that much of an expense for them, hence the basic stuff around BI is relatively cheap and easy for them today. It’s just important to understand what cheap means in their context (for readers from foreign countries like the USA the difference is even more pronounced here).
The most common shortcomings of Business Intelligence
In case of poor data quality, BI may contain errors (garbage in, garbage out). This can be either duplicate or missing data or a mix of data that does not belong together.
Inconsistent naming methodology – I have a set of reports that contain a margin metric and each calculates differently and gives a different result.
Human error – e.g. judgement based on filtered data.
Causes of deficiencies
Pressure on speed or price on delivery. Lack of knowledge when creating or using BI.
Possible solutions
Critical thinking, if you don’t like something take a few extra minutes to reflect on its accuracy.
At ARCHETIX we can help you with such ambiguities. Start applying the benefits of Business Intelligence to your company. Get advice from professionals and find out if Business Intelligence would benefit you.
