The following was written in collaboration with our affiliate, Wipfli LLP. With more than 2,000 associates across the United States and in India, Wipfli ranks among the top accounting and business consulting firms in the nation.
Business leaders increasingly are experiencing a huge and continual demand for data. Especially for companies that have multiple owners, such as those owned by private equity firms, there always seems to be investors, board members and other executives asking how the business is doing, if you are hitting your numbers or how many sales have you made in a given week. Even for small and medium-sized businesses, the demand for information never stops.
On top of that, the pace of change in business is accelerating, and it’s hard for leaders to make key decisions about the future of your company when they don’t have the business data to support those decisions. Meanwhile, competitors are investing in better reporting and data and surpassing your business in the market.
Many business leaders know they need to invest in business intelligence (BI) to be able to react faster and keep up with or surpass the competition. However, there are three big myths about BI that have stopped many leaders from moving forward or prevented their BI initiatives from reaching success.
Myth #1: Business intelligence is an IT function that’s all about getting the right technology tool in place.
BI is not about tools, algorithms and writing line after line of complicated code. It’s about figuring out the best way to acquire business data and what that data means so you can know things your competitors don’t know, make better decisions and grow your business.
Organizations that look at BI from a technology perspective will struggle to build BI into their culture and get a true return on investment (ROI). BI is a business function that takes more than simply going out and purchasing a BI tool. When you get the business data you need, who’s going to extract the key insights out of it? Who’s going to use it to drive performance improvements or evolve the goals and direction of your business?
In addition to your BI tool, you need data scientists and analysts. They understand how your business works, how to best utilize your BI tool, what the data you’re gathering means and how to turn that data into insights and actions. Your Vice President of Analytics should be just that: a fellow executive who gets a seat at the table and can help guide the strategic direction of your business. This makes it crucial that they report to an operations leader, not to your head of IT.
While experience with databases and coding is a nice-to-have, your analytics personnel should have a skillset based on critical thinking and statistics above any skill with technology.
Myth #2: In order to extract meaningful data, businesses have to invest a lot of time and money into building data warehouses.
One of the biggest myths about BI is that you have to be a large company and invest a lot of money to get a worthwhile or robust BI platform. This was true 15 years ago when only Fortune 500 companies had the time and resources to build data warehouses, make complex connections and manipulate data to gain insights. The tools they created couldn’t handle unstructured data and were time-consuming to manage, but the good news is that they laid the foundation for today’s BI tools.
Now, there is a wide variety of BI tools that are very accessible to and affordable for small to medium-sized companies, and they can handle more data and less clean data. A lot of tools also allow organizations to buy as they go, meaning you can start small with a BI tool and expand over time to further meet your needs, lessening the overall investment required upfront.
Myth #3: Companies that find their business intelligence tools and data analysts can sit back and watch the insights roll in.
The truth is, business intelligence is a mindset your organization needs to live in. You can’t sit back on it once you implement your BI tool and hire your VP of Analytics.
A good, evolving analytics strategy actually includes different tools and platforms. Your single BI tool will not — and should not — do everything. The biggest first step you can take is to put the data you’re collecting in a central location. This then becomes the source of business data for the tools you currently use as well as those you will use in the future, producing better BI overall.
Continue to be future-oriented when it comes to BI. Collect all the data you can, even data you don’t have a use for at the moment. When your business, from top to bottom, is convinced of the necessity of data, it will keep you expanding your data assets and building what you know about your customers, prospects, market, business climate, competitors and your own business. You must continually improve your internal systems to enhance the accuracy and volume of the data you collect because one day, that business data you aren’t using now will combine to help you strategically get a leg up on your competition and push forward, leaving them behind and gaining market share.
And don’t be afraid to give BI real stakes, either. Determine the crucial handful of metrics you’re measuring that everyone in the organization is connected to and can positively influence, and tie things like compensation to them. For example, if a sales person’s bonus eligibility is tied to the net promoter score of their clients, that’s not only going to give you better data about what your clients want but also boost their overall satisfaction and help retain them.
What Business Intelligence Tools Should You Invest In?
Narrow your search to BI tools that are web- or cloud-based and easily allow remote access. With this flexibility, you give executives the ability to access important charts, graphs and business data insights while traveling or working offsite. If they want to check company performance while they’re sitting at the airport waiting for their flight, they have the business data at their fingertips. It also helps if your main BI tool is built for the casual business user. You shouldn’t have to be a developer to figure out how to use it.
At Wipfli, we typically recommend either the Qlik or Microsoft’s Analytics platforms. Both are web-based, scalable platforms that can be built on over time so that organizations just getting started with BI can get the resources and flexibility they need. Which tool is right for you depends on how you plan to use business intelligence and analytics to improve key initiatives and drive strategy, as well as what your organization looks like and what other needs you have.
If you’d like to learn more about BI tools or about how Wipfli helps businesses implement BI solutions, contact us today.