April 20, 2014

Business Intelligence

Information Overload

New software programs help businesses manage their data.

Barbara Miracle | 9/1/2004
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Before you place a Priceline bid for a hotel room, airline ticket or rental car, do your homework by checking out BiddingForTravel.com. The site, which consists of a series of message boards, will give you personalized advice on bidding and information on successful bids by other travelers. It is particularly helpful for hotel bids because there are separate boards for each state and large metropolitan areas in the U.S., Canada and other international destinations.For most businesses today, there's no shortage of data on every aspect of the company's operations, from product sales to customer behavior to inventory turnover. The trick is finding ways to sort and present the information in ways that make it meaningful for management decision-making. That's where business intelligence comes in.

Business intelligence -- sophisticated software that sifts and sorts data -- began to attract attention at the start of the 21st century. In the late 1990s, concern over Y2K forced many businesses to upgrade their software to enterprise resource planning, or ERP, business solutions.

The most basic business intelligence, or BI, system compiles massive amounts of transactional data. It organizes the information in a logical sequence and then presents relationships among the data sets.

"The concept of business intelligence can be applied to any size company," says Kevin Reid, managing officer of enterprise performance management services for Miami-based Adjoined Consulting. But he adds that some of the more sophisticated BI tools are typically adopted by middle-market and large companies with revenue of $100 million and up. Costs to implement a BI system can range from several hundred thousand dollars to several million dollars. In addition, consulting firms such as Reid's charge $20,000 and up to analyze a company's needs.

The sophisticated BI tools that go beyond organizing the data are designed for tactical -- or targeted -- and strategic decision-making. A simple example of a tactical BI analysis might pull out "exceptions" showing particularly large sales transactions in certain ZIP codes.

The analysis might identify various characteristics of the sales, including the sales rep, time spent on the pitch, follow-up involved, revenue for the target company and many other details. Those exceptions could be used to plan sales campaigns.

Predicting behavior
Strategic BI goes a step further and consolidates a lot of transactional data into key metrics, similar to indexes, that can be easily used by executives. The latest twist is to use the data to predict behavior. For example, Reid says that a telecommunications company that offers DSL service found that customers who didn't log on in the first 10 days were more likely to cancel the service -- basically because they had not figured out how to set it up. So the company started calling the consumers who fit this profile and offered them technical support.

Reid says that despite the uptick in the overall economy, companies remain cautious in their information technology spending. But when IT spending is ranked, he says, business intelligence systems are near the top of the list.

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