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How Can Business Intelligence Benefit Small to Medium Businesses?

Written By: Lyndsay Wise
Published On: June 4 2008

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Originally published July 11, 2007

Hi, and welcome to TEC Radio. My name is Lyndsay Wise. With me today is Todd Rowe. Todd Rowe is the vice president and general manager for the worldwide mid-market division at Business Objects. With Todd, we will be discussing what business intelligence [BI] is, and how and why it can benefit small and midsized companies.

Lyndsay Wise: Hi Todd, welcome to the show.

Todd Rowe: Thank you.

LW: What is business intelligence, and how can it benefit small and midsized companies specifically?

TR: Good question. So, what is business intelligence overall? It's taking the various disparate pieces of data that small and midsized companies produce, and trying to provide some type of insight or ability to determine what is the most important data to make intelligent decisions on. What business intelligence does is, it'll interact with different business applications, and by virtue of different tools like reports or dashboards or scorecards, be able to help guide an executive through all the morass of different data to the data that's most important, so that he or she can make more intelligent, more effective decisions on a daily basis that help build and run their businesses.

Small or midsized companies pride themselves on being much more agile, much quicker to make decisions than their big company counterparts. So, not only more effective decisions, but time to decisions is important in terms of differentiating small companies to work more quickly and [to be] more agile against their large enterprise counterparts.

What we find, according to Gartner, is that in this recent survey of one thousand [chief information officers] CIOs from midsized companies, that the top technology segment that they planned on purchasing in the coming year was business intelligence. That was the same from the previous year as well. So business intelligence is becoming a hot technology for small and midsized companies, precisely because it gives them an ability to differentiate themselves from their competition given the greater insight into the data, and making more effective decisions.

LW: Todd, what do you feel has changed in the market to explain why business intelligence is becoming so hot for small and midsized companies?

TR: Well, the last three or four or five years, you've seen small and midsized companies purchasing and implementing some type of business application. It could be an [enterprise resource planning] ERP system [or] a [customer relationship management] CRM [system]; it could be supply-chain, something that helps them in terms of just the transactional aspects of their business. Those business applications are producing a significant amount of data, and now the [chief executive officer] CEO, the VP of sales, or head of marketing, is left with determining, of all this information, “What is most important for me, and how do I get a pulse of my company's business on a daily or weekly basis here?”

... Why business intelligence has become important for small or midsized companies is [because of] three reasons: Number one, business intelligence will interact with and be integrated with applications like ERP or CRM easily, so it's a low-cost way of integrating into existing IT infrastructure for that small or midsized company CIO's responsibility. Secondly, business intelligence provides that insight into the company's business that other business applications don't. So ERP or CRM can tell you transactional elements or who the customers are, but it doesn't yet tell you about who are the most important customers, how do you segment those, and how do you create marketing campaigns. The third reason why business intelligence has become important to small or midsized companies is finally, with the advent of mid-market–specific products that companies like Business Objects have launched, you now have product that is much more accessible in terms of pricing and ease of use, so that you no longer have to be an expert in business intelligence.

Even small or midsized companies that are migrating from simple spreadsheets now can use business intelligence. The great thing about this is we've now seen a democratization of business intelligence. It's no longer just the domain of the privileged few enterprise companies; now small and midsized companies can use that to build and run their businesses.

LW: And what are some of your customers' biggest pain points in terms of business intelligence and issues that they help them resolve?

TR: The customer's biggest pain points are twofold. Number one is, “Help me with my blind-spots. Tell me what I don't know. What are the things that are going to come back and bite me so that I can be better prepared for that?”

Second big pain point is, “Don't tell me just historically what's happened in the past; I don't need business intelligence to just be a rearview mirror perspective. What I need is business intelligence to help be a dashboard, a view into the future that, if I do these things, here are the implications. If I do these different initiatives, here's the potential positive impact it could have on my business.”

So business intelligence will help identify either trends or areas where it can provide an alert to executives about what their potential blind spots could be. Now, they could be negative blind spots, like hey, certain suppliers are no longer supplying you with your inventory; you've got stockouts, and you're losing revenue here. Or they could be positive blind spots, like, you've had a significant uptick in the acceptance of marketing campaigns or of a new product, and if you sold more of these things, you'd have greater top-line revenue.

The other aspect of how business intelligence helps is, it's not only just a historian telling you what's happened in the past. With things like dashboards or scorecards, it allows a company to look more into the future and take a proactive look, with planning and budgeting of technology that allows a company to say, “Over the coming year, if I launch this product, or if I go into this new market, what is the potential upside revenue? What's the impact upon my profit margin? How would I compete relative to others there?” It helps them build and run their business in the future.

So we cannot only be a historian and looking at the past. What the CEOs care about as well is, “Use business intelligence as a tool to build my business here for the next two or three years as well.” And that's partly why you're seeing such a surge of interest and use of business intelligence in small and midsized companies.

LW: And when should small or midsized customers take advantage of the business intelligence offerings?

TR: In the past, the dirty secret is that most business intelligence vendors had sold their large, complex enterprise products to mid-market customers. Same level of complexity, they simply applied a greater discount to it and slapped on a label of mid-market and said, "Shazam! This is our mid-market product offering!" Well, we realized that wasn't very effective, and so, perhaps in the past, small or midsized companies maybe would have been better advised to wait into the future.

We believe that now is the time that small and midsized companies can take advantage of business intelligence. Partly the reason why is [that] there are now products out there that are specifically developed for the mid-market that do three things: Number one, they're much easier to use, so if you could simply use spreadsheets, you could now migrate and use business intelligence. Number two, what products are integrated, so instead of 40 or 50 modules that you have to select from, you can now have one single integrated product that gives you everything that you need. Number three—perhaps most importantly—pricing is much more accessible to small and midsized companies' budgets, so that it's now tens of thousands instead of hundreds of thousands of dollars for this. The great message for small and midsized companies is [that] they no longer have to wait for a train coming, so to speak, in the next year or two from now.

LW: Can you give me one or two examples of small or midsized companies who have used your products, and what type of benefits have they experienced?

TR: Yeah, I'll give you two examples here from different industries. One is from a health care provider, another one from an insurance vendor.

The health care provider, so that we can share the details with you, is a company that acquired 200 additional locations—everything from small hospitals to outpatient branches there. Their biggest challenge was to aggregate all the patient data and history so that if a patient comes in, the doctor has all the information about the patient's conditions, previous medications, [and] reactions to [them]. One of the things that they said is that now that they have armed the physician with all the informational ammunition, they're now able to not only provide greater quality of patient care, but what they've said is [that] business intelligence literally helps save the lives of patients.

Now the question is, how do you measure the type of [return on investment] ROI of saving more patients' lives? But that's a real-world example of how a midsized health care provider can use business intelligence to provide immediate human benefit.

Another example would be an insurance company, based out of the midwest of the US, where they have a number of different field agents that do claims and [that] need to provide the updates on a daily basis back to corporate headquarters. What business intelligence allows them to be able to do is to track the different claims; identify where those claims are coming from; and that would help not only in speeding [up] the type of service and the number of field agents that they need to help provide greater customer service out there in the field, but also [to] determine the type of policies that they need to write to not only provide full coverage to their customers, but also make sure that they're profitable policies. And as a result of this insurance company using Business Objects' mid-market offering, they're now able to see a 10 percent increase in [the] number of policies, and the average profitability per policy has increased about 5 percent. That may not be a big number on a percentage basis, but with literally thousands of policies, you see a significant impact to the company's bottom line.

LW: Thank you, Todd, for your insights about business intelligence for the small to midsized market.

TR: My pleasure, and thanks for the time.

LW: For more information about business intelligence, Technology Evaluation Centers, or the topics discussed in this podcast, please visit www.technologyevaluation.com or click on the associated link in this podcast.

 
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