The Real Reason for BI: Lost In Gobbledygook, Speeds And Feeds

In the introduction to the revised edition of his edgy eBook “TheGobbldeygook Manifesto,” David Meerman Scott declared:

Oh jeez, not another flexible, scalable, groundbreaking, industry-standard, cutting-edge product from a market-leading, well positioned company! Ugh. I think I’m gonna puke!

David told me himself he was thinking of the Business Intelligence industry.

Just kidding.

I’ve never spoken to David Meerman Scott before, but I do follow him on Twitter.

But in the constant discussion of dashboards, pre-canned and customized reports, regression analysis, slice and dice, drill-ups, drill-downs, predictive analysis, etc., it seems we are caught up in our own industry gobbldeygook.

The real reason for the use of Business Intelligence tools has gotten lost in the shuffle.

As Tony Politano said in his prescient May 2007 article for Information Management:

Our industry often makes the midsized organization feel like they are at the kids’ table.

Tony was referring to the propensity for BI vendors to create expensive and unwieldy enterprise applicatons that run into the six or seven figures in software, hardware and implementation costs.

With the advent of instant BI via a saas model, that part has largely been resolved.

However, small organizations are still being kept “at the kids’ table” because the adult conversation going on at the grown-ups table is largely gobbledygook to them.

And the real users of BI tools, the front-line employees who make the real, everyday decisions, have not been properly identified and empowered.

BI 101: A Refresher

The benefit of BI is based on the axiom: “What cannot be measured cannot be improved.”

Imagine a runner training for the olympics. He can’t possibly improve his time without a stop-watch and a coach to start and stop it.

The same with a company and it’s corporate performance.

Business Intelligence is about making better and more timely decisions based on facts and numbers, instead of on gut instinct, in order to keep a company on track with it’s goals.

These are decisions to reduce expenses, increasing profitability, improve customer relations, manage inventory, or any number of things.

Who Are The Decision Makers?

Conventional wisdom has it that decision-makers are C and VP-level executives within an organization.

While this is true, it’s not the only truth.

The types of measurements determine who the decision-makers are. Business performance indicators are the strategic, 30,000 view of the company and where it’s going in the medium and long-run.

Operational and business process indicators measure the short-term performance of a company on a weekly, daily and even hourly basis.

These indicators measure individual performance, departmental or cost-center productivity,

Your front-line managers, supervisors and operational folks are in charge of performance in these areas. If your employees or departments achieve their goals as measured by these indicators, the company as a whole reaches its objectives.

The company can now perfectly align individual, departmental and corporate goals.

For this to happen, these same front-line employees need access to Business Intelligence.

Real World Examples: Inventory Reduction And Profitability

A purchasing agent is the perfect example of this new breed of BI user.

A manufacturing company that averages a 10% profit margin can double it’s profitability by reducing it’s costs by 5% or doubling it’s sales. It’s much easier for a purchasing agent to reduce expenses by 5% with the right tools, than for the sales department to double sales. Not to mention that the increase in sales would probably not add to profitability due to the cost of the sales effort.

An interesting dichotomy.

This actually happened with one of my manufacturing customers.

We provided their purchasing people with a smart buying module that made suggestions on what articles to buy, the ideal price to pay, and who to buy it from.

That result was a 30% cost reduction in their parts purchases the first year after they implemented the system. They also reduced their inventory by 30%.

Their standing inventory went from $10 million to $7 million and they were able to put $3 million in the bank.

Front-Line Employees Given Short Shrift

The same kind of results can be achieved throughout an organization. Functions such as paying vendors, invoicing customers, selling, producing, are all areas where improvement can have a positive global impact on the organization.

But the personnel directly responsible for those areas have never traditionally been identified as “decision-makers.” They have never been armed with BI tools to help them make the right decisions.

The idea that Business Intelligence tools should only be for the C-suite guys has got to change. Small companies and their employees on the shop floor, warehouse, purchasing department, or call center need access to the same powerful tools of their larger counterparts.

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