Having access to an analytics tool can be a very powerful component of your BI plan
To distill the business intelligence (BI) discussion to its simplest terms, what businesses need most is the ability to find and extract key information that identifies their strengths and weaknesses and helps them makebetter decisions. They also want this information to be presented in a timely fashion and in a way that business people can understand.
Given this modest objective, SMB companies must filter through the hype emanating from manyBI application vendors who claim that they should invest in higher-priced, industrial-strength BIsolutions to achieve their goals. Below, we will attempt to dispel some of these myths and offersome guidance on how to make the right purchasing and implementation decisions for your business.
Myth #1 – You really need a “cube-based” OLAP BI solution
Many vendors want you to believe that in order to make the best possible business decisions; your small-to-midsized company needs a full-fledged cube-based OLAP (On-Line Analytical Processing) BI solution that delivers real-time, up-to-the-nanosecond data.
Sure, this makes sense if you are a Fortune 1000 company with numerous divisions and databases and highly complex reporting requirements. Oh, and you’ve got mega-bucks to spend on trying out different BI solutions that will take a long time to implement and much more time to learn and use. We know that a cube-based OLAP tool does enable end-users to slice and dice their data, perform multi-dimensional analysis, present information in graphs and charts, and more.
However, there is a high cost associated with maintaining these cube-based systems. For example, every time a new dimension is added to a multi-dimensional analysis, one has to make changes to all cubes that would use that dimension. Of course, one needs access to very high level programming skills to do that, not to mention the budget to support this approach.
On the other side of the equation are reporting tools such as Crystal Reports, FRx, and F9, which fall into the category of transaction system reporting. If you want to know your current inventory levels or the balance of a receivable account or even a comparison of these indicators over a specific period, these tools are fine. But if you’re looking for actionable intelligence that will add considerable value to the decision-making process, you need more than simple reporting tools.
The best approach to BI for SMB companies lies somewhere between these two approaches.
The optimal position is one of information balance, existing between formal cube-based systemsand simple report writers. The right tool must be able to deliver multi-dimensional analysis, graphing, charting, and more, for a fraction of the cost of an expensive OLAP solution. Moreover, the tool should be modifiable by a user without requiring extensive programming skills.
Myth #2 – You really need expensive, industrial-strength analytics to make informedbusiness decisions
Make no mistake-having access to an analytics tool can be a very powerful component of your BI plan. Analytics enable end-users to transform data into information, and then get that information into the right hands and in the correct format to facilitate timely decision-making. This can help companies increase customer satisfaction, decrease costs, and increase revenues. However, there is a misconception that SMB companies must invest a small fortune inindustrial-strength analytics. In reality, these companies are more interested in the macro viewof their business (which BI can deliver), rather than getting so close to the actual transactionsthat you lose the departmental or company-wide perspective (needed for smarter decision making).
For these companies, it’s usually quite sufficient to perform data analysis covering predetermined periods of time-say, months, quarters, or years. Typically, you are examining trends or comparisons of results between periods, meaning that you really don’t need to payfor overly expensive applications that deliver high-powered analytics.
We contend that the level of investment required for an expensive analytics solution is more the province of the larger company than the SMB market.
Myth #3 – You need to toss out all your spreadsheets
With all the high-priced applications now available in the fragmented BI marketplace, it’s easyto see why many vendors would scoff at the idea that your basic Microsoft Office Suite is quite adequate as a key component of your BI solution. They don’t want you to know that the most widely used BI tool today is an Excel spreadsheet. Almost everyone in the corporate world is familiar with Excel, its minimal learning curve, and the fact that the application leverages a company’s existing software solutions. Excel is often used to track expenses, create budgets and forecasts, and create reports from that data. Plus, Excel tools offer many useful features such as graphing, charting, and pivoting, which assist decision-making.
Since many of today’s more affordable BI solutions integrate seamlessly with Excel, there is absolutely no reason to abandon this trusty tool that you have relied on for so long. As long as you can access the right data that can help you measure your company’s operational performance, the spreadsheet is still the way to go. Of course, if you are accessing data from disparate databases whose information is out of sync, then it won’t matter what BI solution you use; you’re not going to get accurate results.
Myth #4 – You really need to invest in a BI solution to achieve airtight compliance withSarbanes-Oxley.
The Public Company Accounting Reform and Investor Protection Act of 2002(also known as the Sarbanes-Oxley Act of 2002) was passed by U.S. lawmakers to reinforce honest and transparent corporate practices in the wake of various public accounting scandals and corporate failures. As with any far reaching legislation of this magnitude, there is plenty of hype that has emerged in connection with this law. Let’s clear up the picture as it relates to BI software and compliance with Sarbanes-Oxley.
For starters, here are two facts to consider: 1) The Act applies only to U.S. public companies and, 2) There is no software application certification provided under the Act. This means that you can’t achieve compliance with this Act by simply buying some BI tool. If you are concernedwith Sarbanes-Oxley compliance or want to tighten your internal controls as a result of renewed focus on this area, there are software tools that you can utilize in concert with propermanagement of your internal processes, for reporting, auditing, and disclosure. In general, well thought-out applications can help you in your compliance efforts by making information more accessible and more transparent, and by highlighting anomalies.
A combination of accounting and BI related reporting tools can serve as a vital part of your overall internal control compliance strategy. As you determine how to respond to the new challenges imposed by Sarbanes-Oxley, there is little doubt that much of your attention will befocused on managing, protecting, and reporting on the data that at some point passed through your accounting system.
One BI tool that can serve this process admirably is an “Alerts” solution that integrates withyour accounting system. Using alerts and special triggers, your organization can automaticallygenerate e-mails, launch reports, or generate system warnings without the need for humanintervention.
While no software application alone will make you compliant, the right mix of accounting and BI applications can work in conjunction with your internal policies, compliance programs,and other technology investments to increase the transparency of financial events, ensure distribution of critical information in a timely manner, and provide the peace of mind you need on matters of security and access.