About six months ago, I had the honor to write a short article for the business magazine SUCCEED which is distributed via Austrian Airlines. Succeed is actually one of the frequent flier magazines that I love reading. There is a ton of valuable business content in there. The purpose of the bilingual post (German & English) was to explain what Business Analytics is all about. (There is a download link at the bottom of this post)
New Rules of the Game – English version
Business intelligence: Simply relying on gut feeling and limited information is dangerous. Successful businesses today work differently.
Think back 15 years ago: many of us had just gotten our first email account. Fewer people had mobile phones and the internet was just taking off. Many companies knew their competition pretty well and change usually happened slowly. Decision making was often slow due to a lack of information systems and we had to rely on intuition. Fast forward to 2011: Competition is intense, volatility is at an all-time high and constant change has become the new normal. Stakeholders, governments and customers are more demanding. To survive and thrive in this environment, different rules apply. Simply relying on gut feeling and limited information is dangerous. Successful businesses today work differently!
Information changes the game
Modern IT allows us to collect vast amounts of data. We are able to track almost anything: customer history, inventory movements, payment behavior, etc.. There is also unstructured information such as customers talking about our products on social networks like Facebook or Twitter. Hidden in this data is a lot of valuable information such as customer preferences, early warning signs or trends. The information allows us to assess, reinvent and adjust our business. In other words: we are able to make better decisions and become more successful.
Easier said than done? Data volumes are growing significantly and businesses get more complex. But despite this trend, many companies leverage an ancient tool to help them analyze data and to plan their future path of action: Spreadsheets. This personal productivity tool has been around since the early 1980s. Since then we have continuously upgraded technology in almost every area of our lives. But we still use spreadsheets to perform critical tasks. This is dangerous. Surveys have shown that nearly 95% of them contain material errors. Analysts across the globe spend up to 75% of their time on developing and maintaining their massive worksheets. This considerably slows down response time and it also leaves little time for value-added work such as the actual analysis.
Business Analytics improves decision making
What is the alternative? Business Analytics software. Mundane spreadsheets are replaced with modern dashboards, scorecards, online reports and powerful modeling tools. This helps organizations answer three powerful questions about their business:
- How are we doing?
- Why is that so?
- What should we be doing?
Imagine you are a sales manager for the CEE region. It’s Monday morning and you need to find out how your business is doing. You open up a dashboard on your mobile device (e.g. iPad, Blackberry). You can immediately find out answers to the first question: How are sales? Are expenses and margins on track? You might find out that there is a disturbing revenue trend: sales are declining. That raises the next question: Why is that so? You perform further analysis by looking at the issue from other angles: what are our customers saying about us on social media, what is causing so many product returns? Analytical reports help you find the answers: You might find out that a plant has had some quality issues and this is causing customers to shift their business elsewhere. This insight itself is worth a lot but one question remains: What should we be doing? You sit down and run through a set of what-if scenarios: What if we procured the faulty parts from another vendor? Powerful planning models that are connected to your data sources allow you to evaluate the best course of action. Equipped with this information we are now prepared to make a solid business decision.
Business Analytics Software
Business Analytics software helps organizations increase their performance. IBM, for example, supplies a proven platform called IBM Cognos 10. Cognos 10 allows managers to report and analyze their data through interactive dashboards, scorecards and reports. This works on your laptop, you favorite smartphone or tablet device. Cognos 10 also allows you to develop powerful what-if scenarios, plans and forecasts.
Are Business Analytics worthwhile? Yes, a 2010 study conducted by the MIT Sloan Management Review and the IBM Institute of Business Value showed that analytical companies are more likely to outperform their competition (see chart). But not only that: think about the amount of time you can save by not having to manipulate and fix your spreadsheets. Conducting analysis actually becomes fun and we have the ability to enjoy higher personal success as well. To succeed in today’s business environment, we should not just rely on intuition. Try Business Analytics, instead.
Click on the link below to download a pdf copy of the SUCCEED magazine article.