What Is Business Intelligence and What Does It Mean for the SMB?

There are lots of definitions of Business Intelligence. Perhaps my favorite is the one that says: “Business Intelligence is like Military Intelligence – an oxymoron.” The reason I like this is that it makes two points: (1) Like Military Intelligence, Business Intelligence is about going beyond the routine ways of running the business in order to gain an advantage over competitors; and (2) Unless you are an intelligent user (a “data miner”) and pick the right targets (insights that deliver value-add to the business), BI software gains you nothing. Experience has shown that those who use BI to quickly achieve a deeper understanding of their customers, their prospects, and their performance, and take actions accordingly, have a big ongoing advantage in follow-on revenues, spend efficiency and effectiveness, and flexibility over those who don’t.

But the aim of the SMB should be more modest, because an SMB simply does not have access to the data mining experts and massive amounts of operational data that a large enterprise does. Analysis will be shallower, and use historical data less. To counteract this, the SMB must use more “agile” BI, and create a tighter link between the data analysis and the high-level decision-maker.

The actual task of Business Intelligence (BI) is business data analysis. The typical operation is a query on a massive database of business data, usually fed from existing operational systems like order entry or sales, manufacturing or production, and distribution or delivery. For the SMB, this means that existing systems must add ETL (extract, transform, load) links to a central database that is strictly for data analysis. This deployment can take place pretty quickly, but typically, even in the SMB case, it will take a month or more to really start using BI.

The key question here is whether you anticipate growing into a large enterprise soon or not. If not, a SaaS solution or one that is pre-packaged and easy to query with is the best option. If you do anticipate being a large enterprise (say, more than 500 employees) in the next couple of years, take the extra time and do either open-source (if you have tech-savvy IT) or global BI.

Almost all businesses, SMB or not, have a wish list of things that they would like to find out about their customers, their operations, and their suppliers, beyond what their existing reports tell them. The SMB should take this wish list, prioritize it, and be ready to hit the ground running when the BI system has enough data in it to be useable. Again, the key is to be flexible: the initial answers you get may not be what you expect, and you will need to formulate follow-on questions quickly. Once beyond the initial shock, however, BI becomes quite routine.

One final point: as with other products, there must be high-level business buy-in. Unlike other products, that means not only that you deliver routine reports but also that you deliver periodic warnings and unexpected findings, and that the high-level business executive pays attention to these.

The key word today is flexibility: this economic environment is marked by more dangerous, more frequent, more profound changes than in the past, and BI software automates and institutionalizes more rapid corporate responses to these changes. As a result, BI can help not only large enterprises that appreciate the ability to respond better, but are necessarily slow to change, but also SMBs that are easy to change but are now more likely to be blindsided by a catastrophe.

Unfortunately, SMB BI is too immature to give the kind of you-can-count-on-it value-add that a vendor like Progress Software brought to databases. However, in a couple of years, I anticipate that SMB BI vendors will give you better simplicity and more options that will make acquiring BI a slam-dunk. Alas, if I were an SMB I would feel I couldn’t wait. I would suggest hands-on use of any product before buying, and then do the best you can with SLAs and take the risk. All that you lose is the investment; what you may gain is differentiation.