There are two ‘new’ words in the small-business vocabulary — business intelligence. It’s all about using data to make decisions. Business intelligence is the latest incarnation of MIS (Management Information Systems), ERP (that would be Enterprise Resource Planning), DSS (Decision Support Systems) and other similar systems and approaches. The field is at least 50 years old. Today’s large corporate providers include Oracle, SAP and Microsoft.
‘New’? GE and IBM started using these systems in the 1960s. The systems are huge. They’re complicated and expensive: they integrate finance, manufacturing, procurement, customer service and other business functions to reduce redundancy and improve accuracy and efficiency. I worked at Pitney Bowes during the transition to SAP and it took years to accomplish.
Here’s the work flow: gather data, make a decision based on the data, measure the effect of the decision and then use the results to make a better decision the next time. This work flow requires planning, measuring activities, gathering data from multiple sources and reducing that data to useful information.
So, what’s ‘new’ about business intelligence? Measuring performance is not new but the supporting technology is. First, it’s cheaper. A transition to SAP can cost millions and that’s way out of reach for nearly all small businesses. Desktop software is in our price range but most of these products have a single function. The exception is Microsoft Office and it’s everywhere.
The first measurement for a small business is profit, the bottom line of an income statement. Am I making any money? We all make money on the margins – that’s the money left over after everyone else gets paid. Wal-Mart, one of the world’s largest companies, has a 3% margin. This level of precision requires a very sophisticated business intelligence infrastructure.
Bookkeeping software is a logical starting point for gathering business intelligence. Intuit is qualifying value-added vendors that support/use financial information out of QuickBooks. The technology is called SaaS, Software as a Service. Much of the functionality is ‘in the cloud’, that is, it’s web-based. Examples include file hosting/access, planning tools, shopping carts (an E-commerce store front), inventory management (for retail or manufacturing), CRM (Customer Relationship Management) and many other services.
These products are affordable. QuickBooks prices begin at $150 – $200 with most people renewing every 2 – 3 years. Cloud products have usage fees starting at around $25/month. The costs increase based on usage profiles (numbers of users and connect time) for hosting/access, planning tools, CRM and so forth. Yearly fees start around $200/year for shopping carts. Inventory management system prices vary based on volume (number of items) and complexity.
Change is risky if you do it and change is risky if you don’t do it. One step at a time minimizes the risk. We are all learning — I don’t sell anything I don’t use in my business. I started with QuickBooks, of course. The next addition was Method, a CRM system, because we business owners have a huge juggling act. I track my finances with QuickBooks; sales pipeline and lead/closure ratio with Method; build budgets in Excel while measure progress with QuickBooks (sounds clumsy, and it is!); and document and track customer requests with Method. Both QuickBooks and Method have ‘Dashboards’, that is, graphics that summarize details behind the key metrics. Real information is there when I at a glance. I don’t always like the answer but there is a system in place to measure and to improve. afaaafj