Does business intelligence make sense for (really) small businesses?

In general when companies want to gain more visibility into what they are doing and become more proactive in relation to business planning and increasing profits, then size becomes irrelevant when looking at the value of BI. This being said, obviously the availability of solutions will differ based on BI's purpose and budget, but this doesn't lessen the value it can provide.

For very small companies (and I'm purposely excluding Excel) looking at hosted solutions or applications that are niche and address a specific need vs. full-scale BI offerings are the way to go because of ease of use, quick times to implement, and price.

If you should answer this question negative, you in fact are saying that small organizations do not have a need to make the right decisions.

As with a lot of accounting questions the answer is "It Depends."

Business intelligence software is at the top of the accounting pyramid. If your foundation is solid and your accounting systems are current and accurate than it will be worthwhile to explore business intelligence solutions.

However, if your bookkeeping and financial reporting systems are lagging far behind and contain numerous errors, mistakes and misclassifications than your focus should be to get your accounting and reporting current and accurate. Using business intelligence software with an underlying database filled with errors and omissions will do more harm than good.

Also, the largest small business accounting software applications like QuickBooks and Peachtree contain tools to provide the small business owner with a snapshot and/or dashboard that are customizable. Before spending money on a BI solution review your current software - it might have the answer.

For all the QuickBooks users Intuit is launching a campaign on January 18th promoting business analysis and reporting apps that seamlessly work your QuickBooks data. Here is a link for more information:

http://workplace.intuit.com/appcenter/promos/proadvisorgreatyear/home.aspx?ut...

I say absolutely. It doesn't have to be a full bore solution that a large national corporation may have but a business needs to know what is going on. If you define base BI as basic operational reporting then a business needs BI to put a stake in the ground and know how the business deviates, positive or negative, from that stake and why. It also is critical to track financial metrics to know understand cash flow, working capital, expense management, etc. Regardless of size if a business doens't have proper cash flow there can be major problems. Any business needs to understand their business to be successful and to be able to purposely handle the cycles in any market conditions. Without some BI it becomes management "by the seat of the pants" and that often leads to poor decision making at best and disaster in the worst case. Obviously cost and sophistication of solution come into play but there are tools and means of maintaining BI while keeping costs acceptable.

I would say definitely "yes" it has it's place in businesses of all sizes. The biggest issue generally is what barriers (technical ability, software availability etc) are there for the business (owner). As Doug has mentioned earlier, many systems providers are already attempting to include some level of BI capability in their core products which definitely assist in removing, or at least decreasing, these barriers to entry by the smaller business.

re: Douglas' other point
"However, if your bookkeeping and financial reporting systems are lagging far behind and contain numerous errors, mistakes and misclassifications than your focus should be to get your accounting and reporting current and accurate. Using business intelligence software with an underlying database filled with errors and omissions will do more harm than good."
I would argue that BI will often assist in the identification (and then QA of rectification) of these issues. There is nothing like showing someone the potential of what they *could* be doing with the data they have and letting them realize that if *they* placed more control and emphasis on solid data collection, they could have so much more information with which to work.

Some of the SAAS based ones are more practical for smaller businesses such as Zoho Reporter, or Indicee (from the original developers of Crystal). They are easier to implement and more economical. This is assuming that your current ERP doesn't have one. An integrated solution is usually preferable.

Even in the case of an extremely small business, a good deployment of Business Intelligence / Analytics software can have a major impact on the strategic growth and profitability of the company.

Having a clear view of the profitable customers, products, and market segments is fundamental to understand the causes and expand upon present the successes. Equally important is to find those customers, brands, markets and competitors responsible for draining cash and quickly stop the bleeding.

While one can see sales revenue growing, the question is: Is it really growing profitably? Can we quickly say whether the growth trend is just over last month, quarter, same quarter last year or year to date?

How about the profit growth of the last 52 weeks compared to the previous 52 weeks? How is the profit growth versus budget or business plan? And most importantly WHY.

Being able to understand and correct these issues faster than the competition provides the company a competitive advantage regardless of how small the business is.

Regards, Bill

As soon as it is a business (and not a hobby) BI is relevant as Benjamin points out. And truth be told, most businesses already do BI at some level though they may be associating it with 'common sense' or 'what we do and how we do it' or plain reporting.

Moving up from micro to SME the scope for 'traditional' BI increases. But, as Douglas points out, before you can really get there you need to harvest/clean/massage your processes and data.

+1 @Gertjan, great point!

As stated by others in this forum, business intelligence solutions are always a good practice. One of the things which tends to occur when a BI solutions is implemented is that the information sources get cleaned by necessity, implementing improved operating procedures. This will mean that as time goes on, and the business grows, the company will have a much better handle on the data, if more advanced BI solutions are chosen. Data quality is one of the biggest challenges in a successful BI solution.

Regards, Steve

Many small businesses are behind the curve when it comes to processing data through their accounting/ERP system. This may be due to volume of transactions combined with a lag of resources. Under these circumstances BI will be neglected even if it can be produced by the systems being used - purely because "nobody has the time".
If a businesses can apply resources to be on the curve or even ahead of the curve, they can apply BI on a meaningful basis. Doing so should produce commercial advantages over competitiors. Knowing the old management consultancy rule of 80:20 in respect of products, product lines, customers and suppliers - can do wonders for the bottom line of a business. Even if it just focuses attention on those 20% of products/customers that produce 80% of the profit.

Having an accounting/ERP system that incorporates BI into its modules is highly advantageous. As the cost of linking existing systems to an external BI system can be prohibitive for a small business.

"Information is king" is an old adage that many small businesses would do well to apply to their own data!

I think you over simplify. All, small and big, would love to take the right decisions. But they will have to settle for (at best) the best possible. At the same time all marginal economic laws apply. So that best may or may not encompass BI.