Turning masses of data into actionable information is a constant challenge for companies of all sizes, but when you're a small business in a highly competitive marketplace, it's even more critical to keep on top of trends.
You can struggle with spreadsheets and go with your gut feel, but to get maximum information businesses are increasingly turning to tools such as business intelligence (BI) and analytics software.
Wikipedia defines BI as “computer-based techniques used in spotting, digging-out, and analyzing business data, such as sales revenue by products or departments or associated costs and incomes. BI technologies provide historical, current, and predictive views of business operations.”
BI software gives you the ability to dive into data and find trends and relationships you may not have considered, or to find the cause of anomalies you've noticed. It lets you produce high-level reports, then drill down, often to the individual record level, to dig into an issue. As you move up the food chain into analytics, it lets you generate forecasts so you can adjust to changing market conditions.
Say you offer 10 products, and you notice that sales of one of them are way down. By clicking on that line in the report, BI software lets you look at lower-level information – model or colour – and find that a certain item is not selling. Another click may show you that one salesperson's volume, or lack thereof, is the problem, or it may indicate that you didn't have sufficient inventory and couldn't sell more.
That might send you off to have a chat with the salesperson or the employees in charge of inventory.
Mark Anthony Brands (MAB), a privately owned importer and distributor of fine wine, premium beer, and specialty beverages including Mike's Hard Lemonade, Mission Hill Wines and Hell's Gate beers, may not be a mega-corp, but its product portfolio includes more than 2,000 stock-keeping units in various genres. Its four offices serve both the United States and Canada, and to stay on top of its complex marketplace, it buys data – lots of it – and uses it to determine its product mix and make sure it supplies its customers with the right products at the right time to maximize sales.
Mike Der, MAB's manager of business intelligence systems, says the company purchases raw data on sales of its products and those of its competitors, sold both at retail and in the hospitality space, from places such as the Liquor Control Board of Ontario. It imports the information into its data warehouse and uses IBM Cognos tools to analyze what types of beverages are purchased, and when and where they are purchased, often down to the individual store level.
This is invaluable to the sales force.
“We have true, fact-based selling,” he says. “We know what consumers buy, and can match it with our products.”
Last year in the slow economy, for example, MAB's BI reports showed that many customers were no longer purchasing a bottle or two of expensive wine, but they were moving to more, lower-priced offerings, and it was able to quickly adjust to accommodate the change.
Customers walk past cases of Mike's Hard Lemonade at the LCBO.
Gareth Doherty, senior research analyst at London, Ont.-based Info-Tech Research Group, says small and medium-sized businesses (SMBs) actually have much greater value to gain from the technology in many cases than large enterprises. “If you look at the market environment in which the standard SMB operates, it's pretty defensive, and they don't have the deep pockets large enterprises have,” he notes. “Every decision is pretty critical to the survival of the company. Any advantage you can gain into understanding consumer behaviour or behaviour of your competitors, or visibility into market forces to anticipate where the market is going allows you to drive revenue or manage costs.”
In fact, Mr. Der says, “(BI) is the minimum price of admission in this market.”
Mary-Jane Jarvis, senior consultant of business intelligence at Xenex Enterprises Inc., agrees.
“The key is having the right information at the right time in the right hands. When this happens, costs can be saved from such things as reduced inventory, reduced markdowns, reduced churn, more productive, effective, efficient processes. Increased revenue comes from increased market share, speed to market in advance of the competition. Increased profitability can result from one or both of the previous two, or as a result of new offerings or innovations. And all three will only happen if good business decisions are made based on good facts and in a timely fashion.”
