Get Smarter with Business Intelligence

Over the last decade, the vast majority of small and midsized businesses (SMBs) have implemented one or more generations of business software systems to help manage their day-to-day businesses. During this time we have seen three distinct waves of business software implementations:

• In the first wave, most SMBs were content to simply have the means to get their data (e.g., customer files, time estimates, costs, etc.) into the system correctly.

• With the second wave, the objective progressed into making sure the data reflected an accurate likeness of how things actually transpired (forecasts, planning parameters, shipping alternatives, budgeted vs. actual expenses, etc.).

• Recently, we entered a third wave of ERP implementations, characterized by a demand for access to and analysis of key information from the system in order to make better business decisions—Business Intelligence (BI). No longer the domain of Fortune 500 companies, a growing number of small to midsize businesses, including manufacturers and distributors, want to be able to drill down into their data in a timely fashion and extract information that they can use to measure internal performance strengths and weaknesses. They can then utilize BI to help identify areas of improvement to lower costs and increase revenues.

What is BI?
Business Intelligence (BI) is an umbrella term that describes the process of gathering, manipulating, and analyzing data from past and present sources, and providing intelligent reports that enable you to make informed business decisions. It provides interactive, real-time, business-critical information on behaviors and trends of your business and market.

No longer a luxury---BI is a top priority
Meridith Levinson in her January 15, 2006 cio.com article entitled Business Intelligence: Not Just for Bosses Anymore, says “Companies that use BI to uncover flawed business processes are in a much better position to successfully compete than those companies that use BI merely to monitor what’s happening.”

According to Betsy Burton and Mark McDonald in their May 01, 2006 article entitled Smarter Use Of Business Intelligence (courtesy of optimizemag.com), a January 2006 Gartner Executive Programs survey of 1,400 CIOs indicated that “BI applications are CIOs’ top technology priority in 2006—and, for the second consecutive year, business-process improvement is their No. 1 business concern.”

The need for easily accessible business intelligence is even more relevant for manufacturers and distributors than other segments. With ever-increasing price pressures coming from overseas competitors, the need for manufacturers and distributors to extract and analyze key actionable data is more critical then ever before. Add recent legislative changes and regulatory compliance issues to the mix, and the case for BI is just too strong to ignore.

Are you ready for BI?
Keep in mind—companies currently using older ERP systems might face considerable challenges extracting relevant BI data. There are expensive add-on BI tools available, such as Cognos, that may work with older ERP systems, but keep in mind that older systems were never designed to take advantage of BI. The good news is that affordable ERP systems with integrated BI add-ons are available right now. Manufacturers and distributors who want to stay competitive in this highly complex, global marketplace will be well served to explore the potential advantages of a BI solution (if they haven’t done so already) and determine whether their current system is sufficient enough to play ball with their competitors who have made the leap to a BI-bolstered ERP solution.

What BI tools do you need?
At a minimum, we recommend that you leverage your existing technology investment and find cost-effective, easy-to-use BI solutions that integrate with your Microsoft Office Suite. However, more advanced BI tools can now deliver multi-dimensional analysis, graphing, charting, and more, for a fraction of the cost of an expensive Online Analytical Processing (OLAP) solution. Moreover, these tools should be modifiable by a user without requiring extensive programming skills. A familiar and easy-to-use ERP interface helps new users come up to speed quickly on BI tools.

Having access to an analytics tool can be a very powerful component of your BI plan. Analytics enable you to transform data into information, and then get that data into the right hands, at the right time, and in the correct format to facilitate timely decision-making. This, in turn, can help your company increase customer satisfaction, decrease costs, and increase revenues.

BI helps ensure compliance
A combination of accounting and BI-related reporting tools can also serve as a vital part of your overall internal control compliance strategy, including the new challenges imposed by Sarbanes-Oxley. While no software application will make you completely compliant, one BI tool that can serve this process admirably is an “Alerts” solution that integrates with your software system. Using alerts and special triggers, your organization can automatically generate e-mails, launch reports, or generate system warnings without the need for monitoring

Only use easy to understand BI solutions

Conversely, if your proposed BI solution is hard to grasp, it likely won’t contribute much to your objective of locating and analyzing key, actionable data that can help your business run smarter. Whatever solution you choose, make sure you and your staff can figure out how to get the most out of it without needing a PhD.

Key Components of Your BI Solution
As you contemplate a cost-effective BI solution for company, you should make sure that the integrated software delivers most, if not all, of the functions listed below at a price point that fits your company’s budget:

• Alerts – Alerts provide crucial monitoring, proactive notification, and automation capabilities that help your company adapt to changing conditions and avoid alarming scenarios pertaining to payables, receivables, budgets, sales, and inventory. With alerts functionality in place, you can pre-set a wide variety of benchmarks in all of these areas and protect yourself from missing key time- or date-sensitive events or failing to respond to deviations from acceptable levels.

• Inquiry – Having an easy-to-use inquiry tool enables you to drill down into a specific area and quickly extract data that is essential to your business. For example, examine sales trends by region over the last 12 months, identify the top 5 customers for the quarter, or locate the top 10 best-selling items for the last month.

• Analysis tool – Businesses want the ability to bring in data from multiple locations and still be able to see a unified big picture view. Analysis software should provide a quick snapshot of your business and enabling you to drill down into sales and purchasing trends, as well as perform budget analysis. Some of these solutions offer “scorecards” that provide a quick view of the overall health of your business. Make sure to insist on a multi-dimensional analysis tool that fully utilizes Excel’s capabilities, including pivot tables and charts.

• Dashboards – The term “dashboard” has become omnipresent in the ever-expanding BI lexicon. An effective dashboard should provide a graphical snapshot of your business’s health that is easy to understand. Some common categories of data feeding the dashboard are: revenues by period, product sales by category, actual vs. budgeted financial indicators, and expenses by category, just to name a few.

• Quick KPI’s – Whether analyzing business performance vs. another company or between divisions within your company, quick access to key performance indicators enables you to see how your business is measuring up at any moment in time. This type of solution should possess the capability to compare financial models and actual performance vs. budget and forecast numbers for different time periods. In addition, it should enable you to quickly establish benchmarking of results vs. competitors over varying time periods. Finally, you should be able to export any KPI report or model to Microsoft Excel or Word.

• Graphical Presentations of data – Viewing data in graphical format makes the process of analyzing performance so much quicker and easier. Make sure that your BI solution incorporates customizable graphical views of your data in grid, pivot table, and interactive chart formats. This should be standard feature, not an accessory.

• Flexible reporting capabilities – The ability to create and generate reports (including exception reports) that accurately reflect your company’s key performance data is crucial as is the ability to customize these reports and display them graphically, if needed. In addition, you should be able to export these reports to an Excel worksheet or include Excel spreadsheet data in these reports.

• Remote access – Most decision-makers conduct a significant portion of their business while out of the office. Thus, it is essential that they have remote access to a wide range of their company’s vital business data any time they want via the Internet. Make sure your BI solution enables you to access your KPI’s such as sales, product, and customer analyses, income and balance sheets, and inventory reports whenever you are out of the office.

• Report automation – In order to stay ahead of the competition, most SMBs can’t afford to sit back and wait for their IT or accounting departments to provide the information they need to make informed decisions. They must be proactive in automating their entire reporting process-–from the creation to generation to distribution of reports across the entire enterprise. Armed with streamlined, high-volume reporting, these companies are equipped to respond to ever-changing market conditions and make the best possible decisions that impact the health of their business.

Achieve Your Goals
CompuData understands that competitive advantage is derived from knowledge. Faster access to better information results in smarter decisions. CompuData offers several options for generating and delivering this business-critical information to the decision-makers.