What is Business Intelligence, and Why Should You Care?

By Laurie McCabe | Posted July 30, 2010

What is Business Intelligence?

Business intelligence (BI) is an umbrella term used to encompass the processes, methods, measurements and systems businesses use to more easily view, analyze and understand information relevant to the history, current performance or future projections for a business.  Other terms that people often use to describe BI include business analytics, decision support and executive decision support.

The goal of BI is to help decision-makers make more informed and better decisions to guide the business. Business intelligence software and software-as-a-service (SaaS) solutions accomplish this by making it simpler to aggregate, see, and slice-and-dice the data. In turn, this makes it easier to identify trends and issues, uncover new insights, and fine-tune operations to meet business goals.

BI solutions can be very comprehensive, or they can focus on specific functions, such as corporate performance management, spend analysis, sales pipeline analysis and sales compensation analysis.

Why Should You Care?

Results from the SMB Group’s recently released survey, 2010 SMB Routes to Market Study reveal that SMBs view “getting better insights out of the data they already have” as their top technology challenge. BI solutions can solve this problem by providing a framework and tools to measure and manage business goals and conduct “what-if” scenarios to evaluate different courses of action.

In very small companies, spreadsheets and other ad hoc tools are often enough to get the job done. But as companies grow, the amount of data decision makers need to understand grows: new products and services, new markets and opportunities, investments in operations, sales, marketing and other systems to support growth.

As a result, more people have to be part of the data collection and analysis process, and different people in the organization (sales, marketing, finance, etc.) need to look at data in different ways. Typical problems with the spreadsheet approach include:  

  • Time consuming and labor intensive to set up and maintain. Establishing a company-wide model, creating organizational plans, distributing and collecting information from different managers, consolidating multiple spreadsheets, and debugging broken macros and formulas becomes unwieldy.
  • Insufficient collaboration and feedback capabilities. Desktop spreadsheets are siloed, and don’t enable real-time data sharing and updating. Getting a unified, accurate view becomes difficult.
  • Error prone. Research shows that 20 to 40 percent of all spreadsheets contain errors, and as they become more complex, error rates multiply. Without an audit trail, changes and mistakes can go undetected and businesses make decisions based on bad information.
  • Inadequate analysis and reporting. Collecting information and cobbling it together via spreadsheets is cumbersome. The detailed information that decision-makers need can be hard to get or not even available.

Business intelligence solutions give businesses a way to streamline and unify the data collection, analysis and reporting process. BI solutions are built on a unified database, so everyone involved in the process gets a single, real-time view of the data. Many BI solutions feature self-service dashboards and reporting tools that make it easier and less time consuming to contribute to and manage the process.

What to Consider

Until recently, BI solutions have typically been too expensive and complicated for many SMBs to use and manage. But more recently, vendors have made strides to make BI solutions more tailored, accessible and affordable. For example:

  • Function-specific BI solutions. Many vendors have introduced software designed to focus on the analytical needs specific to a particular department or process. By focusing on a specific need, they can offer solutions that are simpler to use and more cost-effective. For example, vendors such as Adaptive Planning and Host Analytics focus exclusively on corporate performance management; Cloud9 Analytics concentrates on helping companies manage sales performance; Xactly focuses on sales compensation analytics; and Rosslyn Analytics addresses spend management and analysis.
  • Pre-packaged solutions within a broader BI suite. Companies that offer broad, comprehensive suites that include BI, data warehousing and analytics capabilities have been re-packaging their solutions to focus on specific needs. For instance, SAP Business Objects Edge offers modules for planning and consolidation and for strategy management and score carding; and Birst offers pre-packaged solutions for sales, marketing and financials.
  • ERP and CRM companies providing pre-integrated BI solutions. Many ERP and CRM vendors now offer pre-integration with BI solutions to reduce the time, difficulty and expense of deploying BI to work with an existing system. Examples include NetSuite, which partners with Adaptive Planning and MyDials and Salesforce.com with Xactly for sales compensation management.
  • On demand, software-as-a-service (SaaS) BI solutions. The SaaS model removes IT infrastructure costs from the BI equation, and it can dramatically reduce or eliminate upfront capital costs. Many of the vendors mentioned above -- and others -- deliver their BI solutions via a SaaS model.

Today, there are more BI choices geared for SMB needs and budgets than ever. However, vendors characterize and target the SMB market differently, and these differences are reflected in pricing, solution capabilities and complexity. Start with a thorough assessment of our internal needs, and then carefully investigate and evaluate how different offerings map to your organizational requirements and constraints.

Many vendors provide access to free trials, pilots, demonstrations, etc. to help you get a better idea of whether a specific solution will fit your needs. By taking more time upfront to assess, evaluate and compare your alternatives, you’ll greatly increase the odds of selecting a solution that will meet, but not exceed your needs and budget.


Laurie McCabe explains more technology trends and buzzwords in our Small Business In-Depth series, Tech Trends You Need To Care About.


Did this help you understand Business Intelligence more clearly? Let me know, and send me any additional questions you have on this topic. Also, please send your suggestions for other technology terms and areas that you'd like explained in upcoming columns. Email me at laurie.mccabe@smb-gr.com, tweet me at lauriemccabe on Twitter or read my blog.

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