Imagine this scenario. You’re on your way to work. You’re late, but you need your daily jolt of java. One of the big-brand coffeehouses is right in your path, but you swerve onto a side street and over a couple of blocks because you know that your favorite indie coffeehouse will have your double-latte-soy-no-foam drink hot and waiting on the counter. All you had to do was turn the corner of their street. They knew you were on your way, and fired up the machine.
This is actually not that far off. Think of all the connections now being put into place: smart homes (they know when you’ve left for work), smart cars (they know your favorite places), and smart location systems (they know where you are in the world), among other innovations. What’s needed to pull all this together: business intelligence (BI) systems to make use of all this incoming data by predicting and personalizing customer experiences like yours.
In this article, we’ll explore why—and how—medium-size businesses (SMBs) in particular will benefit from BI solutions.
SMBs jumping into the Business Intelligence fray
Until recently, BI was almost exclusively the domain of enterprise organizations with deep pockets and extensive data-analysis capabilities—capabilities well beyond the reach of most SMBs.
Yet, arguably, SMBs need BI just as much—if not more—than their larger enterprise cousins. Here are just a few of the reasons why:
- Inventory Tracking: It can take days to collect important numbers, such as how many size 10 women’s Levi’s comfort-fit jeans were sold in a given hour, day, or week. Because it takes so long to get actionable data, you make purchasing decisions based on intuition, not facts.
- Seeing the “Big Picture”: Excel is a great tool, but you could be overly dependent on it. And since people are working off their own spreadsheets, it’s hard to consolidate to get the Big Picture of what’s really going on in your business. Strategic direction is difficult to set.
- Decision Making: Precisely because you lack visibility into the business, it’s hard to make decisions that immediately impact the bottom line, such as: Where can you cut costs? Where are revenue opportunities? Much less move onto more advanced possibilities, like predicting future trends.
- Delivering on Customer Expectations: You might be losing valued customers to big-box chain stores because you’re not tracking their purchases, or even browsing behavior closely enough to give them what they want, when they want it, at a price they’re willing to pay. In short: You’re not delivering the personalized customer experience that people demand today.
For these reasons and more, SMBs with up to 500 employees have the most “aggressive” plans to deploy BI in the one-, two-, and three-year timeframes, according to Dresner Advisory Services’ 2017 Small and Mid-Sized Enterprise Business Intelligence Market Study. Indeed, SMBs of that size are three times as likely as large enterprises to report the highest rates of BI implementations.
The Business Intelligence journey: Where are you?
The BI journey is a multi-step one. In fact, experts recommend a “crawl, walk, run” approach to BI because the technology can be a complex one. Here are the basic phases you can expect to go through:
- Descriptive: You have metrics that describe what your business is doing. These give you insight into the past. Because of that, the closer to real time that you can access the numbers, the more effective your BI system will be. You find, for example, that sales of alcoholic beverages have dropped in the last month but sales of foods from your “comfort menu” have increased.
- Diagnostic: Once you know what is going on, it’s time to ask You find that the demographics of your clientele have changed. Suddenly you have more families coming in than mature couples or groups of adults. Families naturally order less alcoholic drinks. But with good BI analytics, you can dig even deeper with diagnostics: Why are more families coming in? A preschool just opened in the neighborhood, and your restaurant is viewed as a good meeting point for play dates and family socializing. This in turn is driving away your adult clientele.
- Predictive: The next stage of BI is to predict. It is a look into the future: What could happen? In this particular scenario you might be told by your BI system that now you should probably prepare for much higher sales volumes of foods like mac and cheese and fries, with lesser volumes of beer and wine. As the Internet of Things (IoT) becomes mainstream, and unstructured data like social media and emails are entered into the mix of data to be analyzed, you can even begin to personalize the customer experience by predicting when certain customers are likely to drop in for a meal, and what they are likely to order.
- Prescriptive: With this highest kind of BI—typically powered by machine learning or some other form of artificial intelligence (AI)—the system will actually tell you what you should The more sophisticated kinds of AI-powered BI might, for example, tell you to expand and raise prices on your kiddie menu to make up for the loss of margin on reduced alcoholic beverage sales, or even to introduce different menus for different times of the day.
How enterprise Business Intelligence tools differ from SMB ones
As you can see from these different stages, BI is all about transforming data into actionable insight. This insight can boost sales, minimize waste, and identify opportunities for growth. In other words, BI is good for when you want to make business decisions based on solid facts rather than guesses, intuition, or surmises.
This is the same whether you are a business with 10 or 10,000 employees.
Indeed, the foundational BI technologies are identical whether a BI system is built for a large or small company. You have a database that holds the data. You typically have an in-memory analytics engine to analyze the data. And then you have a user interface consisting of reports, scorecards, drill-down visualizations, dashboards, or some combination of the above.
However, some differences between enterprise and SMB systems are important and need to be noted:
- Size, complexity, and cost: BI systems designed for enterprises have much larger databases (actually, data warehouses) to handle a larger volume of data. The supporting hardware also needs to be larger and more powerful, and is more complicated because of all the discrete parts required, like web servers, database servers, and analytics servers. On the other hand, BI systems for SMBs are typically sold as packages, and include all components in an all-in-one product that runs on a single machine—either a physical one, or a virtual one in the cloud.
- Customization and integration: Enterprise-class BI systems are much more difficult to set up because they are generally custom-designed. This requires the enterprise to have BI expertise on hand—either in-house or from external consultants. Also, expertise is required because most enterprises want their BI systems integrated into multiple other in-house systems using application programming interfaces (APIs) provided by the vendors. SMBs generally can’t afford to hire or rent this kind of expertise, so they depend on plug-and-play, predesigned BI systems
- Time to value: Because of all this, enterprise systems can take many months—if not years—to become operational. SMBs can often be up and running in a week or less.
- Ease of use: Enterprise BI can require significant amounts of training, including getting specialized certifications, learning languages like SQL, and having hands-on experience with data analyses. A SMB BI system, on the other hand, usually has an intuitive graphical interface that gives business users the ability to collect, prepare, and analyze even complex data sets without needing support from data scientists.
What you’ll get from an SMB Business Intelligence solution
If deployed properly, a SMB BI solution will give you visibility into your business with intuitive drill-down capabilities into individual metrics, without needing to design, customize, or code. Drag-and-drop interfaces eliminate the need to be an expert in data science or analytics. You’ll be automatically alerted when something out of the ordinary happens, or when you need to pay attention to something in particular. You’ll be told what underlying metrics are the most important to your business. And best of all, you can engage employees throughout your business to gain insights and take action on important matter.