The saying goes, “Past performance is the best indicator of future performance”. Investors will tell you to look at a 5-10 year performance of a stock or a mutual fund to determine whether or not you should invest. The same goes for your business. It is important to know where you have been as a company (sales data, expenses, revenues) to help plan for future growth and expansion of the business. Business Intelligence software will certainly help analyze the necessary data in a streamlined fashion.
In this guide you will find information on:
Business intelligence software is designed to gather the data, sort the data, create visuals, help you analyze and report. For most systems, it is easy to extract data and dump into a spreadsheet. However, it is what you do with that data that is important. For the most part, business intelligence software is geared toward higher levels of management. The idea is to give key decision makers the ability to make decisions based on relevant business data, rather than just instinct.
Business intelligence modules were initially designed for large companies. The focus was to take all the raw data locked up in financial and operations systems and turn it into useful business information. While this software has been readily available for many years for large companies, BI modules targeted toward small to mid-sized businesses are fairly new to the market.
What sets business intelligence software apart from standard reporting is the ability to report on financial and non-financial data alike. Not only do you want to see your profit margin on each widget you built, however, you also want to see the time it takes to produce each widget, parts and materials used to produce the widget, waste or scrap, how many were produced per hour by each employee, etc. This information will help management make decisions going forward such as: Do we hire more employees? Can we afford to take on a new customer that will double the output? Will a new machine speed up the processes and efficiencies of the manufacturing process?
Successful companies are always planning, analyzing and reporting on practical activities in order to top out your efficiency, lower expenses and gain greater market share. The following features can be a part of any BI tool and help your business achieve just that:
|Online analytical processing (OLAP)||Performs a multidimensional analysis of business data. Allows companies to conduct complex calculations, evaluate trends, and work with data modeling.|
|Data analysis||Inspect, cleanse, transform, and model data with the goal of discovering useful information, informing conclusions, and supporting decision-making.|
|Predictive analytics||Uses historical data to predict what will happen in the future. Examples in everyday business include identifying customers likely to upgrade or remove services and focusing marketing campaigns on the right targets|
|Big data||A large data set that can be analyzed via computers to reveal patterns, trends, and associations|
|Data mining||A practice of examining large databases in order to generate new information.|
|Data discovery||The process of collecting data from various databases and consolidating it into a single source that can be easily and instantly evaluated|
|Dashboard||A visualization tool that displays the current status of metrics and KPIs for your business, usually based on your preferences (what numbers to show, what metrics to display, etc.)|
|Key Performance Indicator (KPI)||Describes non-financial data that is still quantifiable information that is critical to gauging overall business performance. KPI’s help assess the present state of the business and its key activities.|
|Data visualization||Patterns, trends, and correlations that place data into a visual context to help people understand.|
|Financial modeling||The act of building an abstract representation of a financial situation|
|Data integration||The ability to import whatever data deemed necessary to analyze and create into visualizations, reports, or other forms of business intelligence|
Business intelligence software boosts efficiency, reduces costs, provides data integration and integrity, provides easy access to decision-making tools, allows for quicker recognition of critical information, gives managers the information needed to be more information, and provides the ability to predict events in the future based on historical analysis. Below are some of the best benefits of BI tools.
These are commonly used by organizations to evaluate the success of a particular activity in which it is engaged. These assessments often lead to the identification of potential improvements. It’s the inclusion of the modifier “key” that matters most when it comes to qualifying for KPI status. “Ultimately, a KPI is a business metric which has been deemed particularly useful in reflecting the achievement of an important business outcome. Because different employees have responsibility for different outcomes, different metrics will qualify for KPI status as a function of the strategic role of the dashboard user within the organization.”
As stated in the previously cited link, there are a few stages in identifying KPI’s including:
Companies often find using the SMART acronym will help with the key performance indicators.
Once the goals have been identified and you have solid key performance indicators, a business management system will help track those goals. Graphical reports and sorting/filtering capabilities keep managers updated as to the progress of those goals.
Financial indicators allow management to see where they stand for the day, month, quarter, and year. Through a business intelligence software, management will also have the ability to review the financial data for the year but also look at and compare the current year to previous years. In addition to looking at past data, the business intelligence software also creates projections based on the past performance showing potential outcomes.
There’s a lot of jargon thrown out there when it comes to Business Intelligence. What does one term mean in relation to another? Don’t some of these terms mean the same thing?
Business intelligence software is used in virtually every industry. Consulting firms need to track project information. They need to see productivity by employee along with statistical data about each project. Retailers need to track profitability by SKU, set goals of how many units to sell per hour to be profitable on a given day. Financial institutions set goals for their personal bankers as to how many accounts each banker opens during a month. Beyond just the number of accounts, what type of accounts and the amount of new money brought into the financial institution.
BI Tools used to be a privilege of big companies, as implementing analytics software required building data centers and hiring IT specialists. With the emergence of the cloud and more cost-effective methods become more available, BI has begun to rise in businesses of all sizes.
Nearly every accounting software available has reporting tools. Some solutions offer budgeting solutions integrated into their accounting software. There are many stand-alone solutions. Often times the financial reporting and budgeting modules are not integrated and often times gathering reports from these modules requires time-intensive data mining to obtain the necessary information.
Depending on the size of your business, you’ll likely need to focus and prioritize on different aspects:
BI360 (pictured above) is a CPM solution for mid-market enterprises. The solution has deep ERP integrations and can handle functionalities such as reporting, budgeting, provides dashboards, and offers data warehousing. The software is available both on-premise and online and has a number of integrations available with systems such as SAP, Acumatica, Microsoft Dynamics, NetSuite, QuickBooks, and more.
myFiO BI is a tool that partners with Logi Analytics for analyzing data and building KPI dashboards. Logi Info applications are fully customizable and easily embeddable to work alongside other applications its users may use each day.
QuickBooks does not have any built-in BI tools available. QuickBooks does have a number of recommendations for tools that integrate with their system, which will allow your data to be pulled and used in any evaluation. One of these solutions includes Tableau, that can visualize your data into shareable dashboards and prides itself on being an easy-to-learn solution (comparable to the learning curve of Excel). The solution starts at less than $50/month.
Other solutions such as Microsoft Power BI (pictured above) offer direct integrations with QuickBooks Online, as you can select the QuickBooks Online content pack and sign in with your credentials in order to get the data you desire. It helps create dashboards automatically based on the data that has been imported and can be adjusted to display whatever you desire.
Industry confusion. At times, much of the insight a business may be looking to gain from various BI tools may be very industry specific. The software option, or perhaps the vendor that implements it, may be unable to help a company achieve their full potential with the software.
Selecting the right visualizations. Half of the battle in reporting data is how you are presenting it to the individuals in your company. Your main goal should be to engage the viewer, clearly and quickly communicate data, and elicit appropriate responses from the target audience. This can be accomplished with many types of visuals. Choosing incorrectly could be the nail in the coffin that disengages your audience, and doesn’t allow you to spread the desired message.
Visual BI must provide the following core common capabilities:
Lack of mobile solutions available. Many businesses desire the ability to add storage capacity quickly. Others just look to have a wide user adoption at their company, which can be difficult for certain employees who are frequently on the go and don’t have access to a desktop computer during the day.