MT Expert - IT: BI is a bare necessity for SMEs

Business Intelligence (BI) is still seen as an expensive luxury for big corporates. But it can work wonders for SMEs too.

by
Last Updated: 31 Aug 2010

Some large organisations, such as Tesco and Sainsbury’s, have built their success on knowing their customers: what are the ‘bare necessities’ that draw them into the store and then how can they be persuaded to buy a little bit more?  Others such as Morrisons see it as monkeying around and seem to collect and use very little data on their customers. For SMEs, BI was irrelevant for a long time. It cost too much to implement and needed too many specialist staff. However, with the growth of the Internet there is an explosion of potentially useful data available. In addition, BI is now available as a service: a much simpler, cheaper way to use it.  Is it now time for SMEs to consider whether this is their route to being king of the jungle?

Many SMEs still feel that BI is overkill. For example, Sainsbury’s can use BI to decide where to place products on the shelves to gain the most sales, whereas the corner shop could argue it just needs an observant manager to work this out. However, hand over your data and BI number crunchers can tell you anything from how many staff you need at certain times of the day, to which are your most profitable premises. There are infinite answers; all you need to do is come up with the question. This type of analysis could take even the most competent manager days, which he or she just doesn’t have. It also levels the playing field between global and local businesses. In the current economy, this level field is vital to stay competitive.

The recession may be over, yet recent announcements by the government have proved that we’re not out of the woods yet: VAT is set to rise, jobs and wages will be slashed and large business opportunities look increasingly thin on the ground. As a result, businesses need to do everything they can to identify their most successful products and loyal customers and cling onto them by all means. From a more ruthless point of view, businesses must also identify exactly where any cuts need to be made. In this process, they will need to wring every last drop of value out of every scrap of information they possess. For small and medium enterprises, this becomes even more urgent, as there is little margin for error when dealing with costs and balances.

Traditionally, the costs of BI, and the effort needed to make it run correctly, have meant that even wealthy organisations think twice before splashing out. In a Vanson Bourne survey last year, over 25% of respondents admitted to spending over £1 million on BI, while the majority reported slow, unsatisfactory results. This is a problem for large businesses: for smaller organisations, it would be fatal. What is needed is a way to test the waters, gaining as many of the advantages of BI as possible without the enormous up-front and ongoing costs.

The best way to do this is to employ BI as an on-demand service, in the same way you might rent a flat or a video. This way, the high initial costs of obtaining a BI system are sidestepped. Ongoing costs will also be strictly defined by the contract, meaning that the system can be budgeted accurately and simply. Systems are quick to set up, meaning results can be seen from the off. The organisation won’t need in-house analysts to interpret information, so the first people to touch BI at the business can be those on the front line who actually need to use it. Such a service is easily scalable: businesses can make their initial commitment whatever size they desire, and then ensure that it grows as and when expansion is justified. And organisations can even just request one-off enquiries at a fraction of the cost of a full BI system.

As a result of these factors, it becomes far easier for a business to justify trying a service-based BI system. SMEs’ opinion on BI might previously have been that they could live without it, and go along not thinking about it. By trying BI as a service and making sure that any intelligence is at hand to those who actually need it, these businesses can ensure that, when they reach the top, they won’t have to stop, and can instead continue to delve deeper and deeper into their information to unlock its full value.

For the smallest of small businesses, many may feel that they’re not quite ready for BI yet. But for large numbers of SMEs, service-based BI offers big company analysis at very low risk.

Roger Llewellyn, CEO, Kognitio

Find this article useful?

Get more great articles like this in your inbox every lunchtime

Upcoming Events

Subscribe

Get your essential reading delivered. Subscribe to Management Today