There was a time when true business intelligence was the unique preserve of an elite corps of workplace gurus – rare individuals with the natural knack of knowing what decisions to reach, when and why, to propel their ventures to ever greater achievements.
And today – just as the internet gives us all the tools we need to do just about anything in business – another sort of Business Intelligence (BI) is available at the click of a keyboard and the waft of a credit card.
At its simplest BI is a set of tools that helps businesses – and finance departments in particular – understand the data they generate by aggregating it, sorting it and then presenting it in easy-to-understand visualisations to enable immediate insight and understanding.
Increasingly, in the so-called era of “big data”, this is a vital resource as it enables organisations to unravel and then respond to the complex “story” that their data is telling them.
There was a time when good BI tools were pretty much the sole province of big business – many large companies today are on the fourth or fifth generation of BI systems. Now, however, SMEs are in on the BI act as well, and the market is awash with easier-to-use, less costly solutions that can easily be learned and successfully operated in small businesses.
However, having and understanding the data is one thing. Knowing then what to do with it is quite another. Increasingly, this is where the special position of the finance department – at what might be called the “information nexus” of the organisation – comes in.
It’s often part of the department’s role to collect and consolidate financial and non-financial data from across the organisation: sales and marketing, manufacturing and distribution, HR, planning and more. This is just as much the case in small businesses too, where some of these roles are often handled by a small number of people (or sometimes a single individual).
That key role potentially makes finance a powerful agent of change across organisations of any size, providing key information to support business managers in all their decision-making and enabling finance to lead the way to fulfilling strategic objectives. Ideally, the finance department should therefore be able to use the insight it gleans from the deployment of BI to achieve a number of major goals, such as cutting costs, boosting sales, improving profitability and understanding when best to buy new capital assets.
One of the most valuable ways it can help is by enabling the business to differentiate those individual customers, segments and markets that offer potential from those that do not. This typically involves working with the marketing function, to identify and analyse patterns in customers’ financial data that have a direct bearing on the types of customer most likely to buy a particular product or service.
Once the pattern has been spotted and analysed, it then becomes far easier to target more members of that marketplace or segment with the same or similar offers, and then to develop marketing strategies that not only reach the right targets but also stimulate a buying decision.
This sort of value-adding role is quite a departure from the backward-looking, reporting-obsessed finance department of the past.
In fact, I would like to pioneer a return to the old definition of business intelligence at the top of this blog, and re-apply it to the BI-empowered finance resource in any size of company: a place first of all where the secrets buried in your organisational data are revealed; next, where the true meaning of these secrets can be applied to improved business activities and correlated with better financial outcomes; and third, where predictive analysis enables the existing strengths of the business to be made even stronger and its weaknesses to be eradicated.
In other words, a highly intelligent internal source of high-value strategic advice and insight.
Of course, this ideal vision is often somewhat at odds with reality. To start with, many finance departments, particularly those in small companies, still don’t have the luxury of a BI resource. That makes coping with the sheer quantity of data pouring into the organisation the first major obstacle they face.
Fortunately, the availability of BI solutions has made it easier than ever before for the finance department to transform itself and then to continuously increase its corporate value. In my view, the three key BI features that do help to enable this transformation are: