“It takes something more than intelligence to act intelligently.”
― Fyodor Dostoyevsky, Crime and Punishment
If you are standing on the corner and suddenly realize you are $10 short, and curse yourself thinking:"I really need a BI tool to administer my cashflow." it may be slightly overkill. A coin in the shoe may be a better solution for sudden cash shortage.
However, if you are even a small company, it may be a good idea to implement some kind of Business Intelligence.
First of all, let us be clear on what BI is all about. When people ask me what I do for a living, I reply:
"I make comprehensible information out of incomprehensible data".
Now, as I described in my post about "Value chains", your business, no matter how small, can be regarded as a serie of processes. Processes which all cost something when they are "activated", but which also add value to the end product. Needless to say, the sum of processes should add more value than they cost, otherwise you go out of business.
Let us say you have a café. The customers are willing to pay more for a cup of coffee on a café than at home, due to the services added.
You make and serve the coffee for them on a nice table provided by you. All processes which add value to the coffee.
When you run a business, naturally, you want to get the most out of your efforts, i.e. make your business as profitable as possible. In other words, you want to focus your ressources where they matter. But how can you tell, whether you improve your business by making better coffee, use a larger cup or put cloth on the table?
This is where Business Intelligence comes in.
In almost all modern business today, activities are registered one way or the other, due to the fact that a growing number of tools are computerized.
Your coffee machine makes more than coffee, it register the number and type of coffee you make during the day. Your cashier register the time you sell the coffee, the price you take, and to which table you sell it. Your surveillance camera does not only tape the activity in the café, but also counts the number - and time - of people arriving/leaving the café. Just to name a few.
All these activities are registered somewhere as data. The aim with BI is to collect these data and see, if you can find some synergies in your working processes, which can inspire you to make improvements, that will lower your cost and/or increase revenue. In other words, make your business (more) intelligent.
It may very well be,
- you say:"Hey, who needs Business Intelligence! Everybody knows the best time of day is the lunch-break. The café is full. Just take a look!". But your Customer count reveals the number of people arriving and leaving empty-handed increases, at the same time.
In other words, The business may be running smoothly during lunchbreak, but it may make sense to hire extra people during lunch hour in order to satisfy the lack of capacity.
- You think:"Argh! I don't need some fancy tools to tell me that people sit in the back if there is room. Most of our time is spent serving people in the back!"
That may very well be, but the combination of the cashier and surveillance camera shows that a major part of small espressos are consumed at the bar by people on the move.
Maybe it is a good business case to move the espresso machine all the way out on the street for even easier access.
These examples are not fictitious, but results I have made for customers.
A very good salesperson who has spent a lot of time in his café, may have a gut feeling about these strategies and act accordingly. But the greatest power in BI is its potential in making a performance overview of vital activities and processes in the business, on which you can increase value or lower cost.
In short: No matter how big or small your business is, Business Intelligence helps you work smarter, not harder!
In the posts to come, I will go into detail with the various performance measures at hand and demonstrate how to analyse activities, so you can make excellent overviews of your business activities and manage them in an optimal way.