The ability to react quickly to new market opportunities is one of the biggest advantages a midsized organization has. However, such an organization has limited resources and cannot afford to move quickly in the wrong direction. Putting agility to work requires executives to have clear visibility so that what is working well can be capitalized upon and what is not working well can be rapidly undone.
Compared to large enterprises, midsized organizations usually sell a narrower range of products and services. This focus comes with a price – there is little room for placing wrong bets. Maintaining a high batting average requires that executives stay close to their customers, products and the market. Continued success lies in getting everyone within the organization on the same page, using the same set of assumptions and seeing the same version of the truth.
Executives of midsized companies need a way to leverage their advantages in speed and agility while ensuring profitable and sustained growth. Otherwise, they risk their organization either being made irrelevant by competitors or being swallowed by someone larger. Profitable growth is a balancing act of multiple levers that executives have at their disposal. Pulling the right levers on a consistent basis requires clear insights into the business so leaders can prioritize their most important issues and then make diligent and informed decisions to proactively address them.
Information needed to make such decisions is typically buried under all the data within an organization’s enterprise business systems. Most midsized companies use manual methods to gain insights – such as gathering data from their system using reports and extracts, massaging this data manually in spreadsheets, and then emailing handmade spreadsheets around the company. These spreadsheet-based reports serve as the nerve center of what is happening across the business at various levels of detail. As status reports, they also serve as either a starting point or an update for all budgeting and planning activities that are also managed via multiple spreadsheets.
Soon the entire organization is drowning in spreadsheets. Multiple spreadsheets floating in email systems and on personal desktops/laptops create possible version control issues. In addition, spreadsheets do not have checks and balances when entering or updating data, so errors can easily creep in, creating a potential accuracy issue. As a result, midsized organizations find their planning, budgeting and reporting processes to be chaotic and error prone. Delays in updating manually created spreadsheets leave organizations without access to the most current operational performance metrics. And due to the architecture of spreadsheets, they find it very difficult to drill into the data to get to the root of the matter. As a result, they can’t put their finger on the pulse of the operations quickly enough to make data-driven decisions or course corrections. Very often, data-driven decision-making processes revert back to gut instinct-driven choices.
BI Addresses Spreadsheet Chaos
Business intelligence addresses all the issues we’ve mentioned for midsized companies. BI helps turn data from financial, manufacturing and sales systems into useful and meaningful information to be distributed to those that need it, when they need it, so every manager within the company can make timely and better-informed decisions. It enables midsized companies to leverage their speed by succinctly surfacing what is working and what is not on an ongoing basis, showing the impact on the business and allowing them to correctly prioritize and rapidly act/react. It enables focus by providing every manager within the organization the same version of truth, so there is alignment between strategy and operations and any disconnects are eliminated. Finally, it acts as an enabler for profitable growth by providing managers with an in-depth analysis of their business, as well as a single set of budgets and plans, so everyone is on the same page, has a finger on the pulse of their operations and can make decisions based on facts rather than instincts.
So what are the capabilities of a BI system? At its core are capabilities such as ad hoc query, reporting, dashboards, scorecards and analysis, as well as planning and budgeting. BI systems create high-volume, high-resolution reports that are run on a regular basis. An example might be a sales manager’s report showing monthly sales and associated sales commissions sorted by salesperson and then by customer. Dashboards can help users quickly visualize and understand the trends and issues within their environment using elements such as charts, gauges and red/yellow/green light statuses. Ad hoc queries can access an organization’s data to ask, for example, “What were total sales to a specific customer last December?” or “How much of a specific part do we have in inventory?” Advanced analysis allows users to view data across multiple classifications or dimensions such as product, customer, region, time period, etc. and slice-and-dice the data to look at various combinations, such as the sales in each region for December or which products each customer purchased last year. Scorecards monitor business metrics and key performance indicators that might include customer satisfaction, profitability and sales per employee. Budgeting and planning allows you to create top-down and bottom-up plans by cost centers/general ledger codes, collaboratively finalize them and publish them to the team to monitor, manage and track ongoing performance against such plans.
However, with limited IT resources and budgets and the inability for the operational and executive staff to take on multiple new initiatives simultaneously, midsized organizations need a comprehensive plan to deploy such a solution.
Roadmap for BI
I recommend midsized organizations implement BI in phases so they can successfully deploy and realize the benefits under limited budgets and resources. It ensures that midsized projects can start with small steps and achieve success to be built upon. Such an approach provides for organizational learning on small budgets, where mistakes are not expensive. It also ensures that the lessons learned from initial BI deployment can be reused to build a roadmap for broader, company-wide BI implementation, which prioritizes high-impact areas and incorporates potential change management issues.
One preferred approach uses a three-phase roadmap for BI deployment:
Phase 1 (Crawl): The objective in this phase is for organizations to become comfortable with BI technology. Implementers should focus on deploying those aspects of BI that can have an immediate impact on daily decision-making, while providing the basis for organizational learning. In this phase, midsized organizations should deploy executive dashboards and simple operational reports using the BI technology. Examples of use cases include:
- The VP of sales begins to get weekly pipeline reports for various sales regions and channels.
- The VP of finance can access weekly revenue from current and new customers, receivables and payables report. Dashboard visibility is created for budgeted versus actuals for revenue and expenses in various levels of detail.
- The CEO and his staff have access to executive dashboards, such as sales pipeline and week-over-week pipeline changes, total revenue for the week/quarter by geographies and channels, and repeat revenue from the top 50 customers.
Phase 2 (Walk): The objective in this phase is to build upon the success in phase 1 and expand the scope of BI such that the organization becomes comfortable with using various facts and insights from the BI system for decision-making across various functions. In this phase, midsized organizations should implement operational reporting, operational dashboards, ad hoc search query and ad hoc analysis, as well as budgeting and planning.
Examples of use cases include:
- The VP of operations and his staff are delivered operational dashboards and reports that provide up-to-date information on inventory turns and gaps between demand and supply for key customers.
- The finance organization gains access to reports and dashboards for margin analysis, cash flow projections and performance of various departments (versus budgets at various levels of detail).
- Executives can do search-based ad hoc analysis by entering a few keywords, such as “sales of fusion refrigerator” in a search box, and the BI system finds and presents the most relevant search results in an automatically generated chart that best represents the information.
- The finance organization creates a streamlined and accurate budgeting and planning process, where department managers and the finance organization work collaboratively to create and finalize the budget.
Phase 3 (Run): The objective of this phase is to achieve pervasive use of BI – so all decisions are based on facts rather than intuition. In this phase, midsized organizations can extend BI to mobile devices and roll out ad hoc query and analysis to all department business analysts.
Develop a use case such as the following:
- While in a meeting with a customer, a VP of sales can run a series of queries on her smartphone to see how much additional revenue the team needs to make their numbers, how loyal the customer is in terms of repeat purchases and how profitable the product line is. From this information she could decide to offer another 15 percent discount to the customer for signing the purchase order before the end of the quarter.
A BI solution enables midsized organizations to address spreadsheet chaos. It provides deep and clear insights into their company to help them proactively identify, prioritize and address issues, improve organizational alignment and enhance resource utilization. With better insights and an effective planning and budgeting solution, midsized organizations can more effectively leverage their core strengths of speed and focus. The roadmap provided in this article will help you start small, get key learning and successes under your belt and then build upon it to make fact-based decision-making pervasive within your company.
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