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Do You Need Business Intelligence (BI) Tools?

Financial planning, budgeting, and forecasting used to be relatively predictable gather-and-post events. The calculations in forecasting were once rather straightforward – they were mostly a matter of extending existing plans and expenditures forward over a period of many years. Even reconciling numbers was usually less eventful than tedious.

Market volatility, a swarm of business disruptors, political uncertainties, a rash of mergers and acquisitions, and not to mention the Great Recession have changed all that. The business of business has become much more complex, making the confidence CFOs feel toward the accuracy of their forecasts weaker by the day.

If you don’t have the right tools and the right information, your visibility is blurred. After all, your forecasts are only as good as the data you have on hand. Are your predictions based on clean data? Can you find what you’re looking for? And once you find what you need, do you know how to make the information useful so that you have a basis for making changes within your business, such as a new pricing strategy or a shift in inventory?

Enter business intelligence (BI), the ubiquitous term used by software vendors to describe both the discipline and the variety of applications that turn your company’s raw data into actionable reports. BI tools automate pulling raw data from any number of other business software into a central reporting venue that business leaders then use to identify problems and opportunities and make decisions. Finance organizations can lead the charge as most BI tools today enable users to access data and pull reports without IT’s help, and the finance organization is most frequently charged with corporate measurement and providing actionable information into the enterprise.

It is highly likely you could employ BI at your company if you are drowning in information and struggle to convert the mountains of data into actionable information.

Take, for example, a video-on-demand company renting movies online to its customers. If it is a company with meaningful rental volume such as hundreds or thousands of rentals daily, there is a lot of information they want to gather. Every movie comes with a host of related data, such as genre, rating, time of day rented, cost of rental, HD vs. SD, and much more. This data adds up quickly.

Collecting this data for a few months and trying to sort through it with conventional spreadsheets can become untenable or even impossible. Well, BI systems excel at this sort of thing. They are built to collect data from multiple, frequently disparate systems, and help you run reports against that data and make sense of it. Since they are typically directly connected to your enterprise systems (e.g. ERP or operational systems, such as your movie rental database in this example), you don’t need to be manually exporting data and re-running your analyses. Once you find reports you like, you can typically set them up to run automatically and port the results to automated reports and dashboards.

In other words, BI helps you tame the data beast. This example with movie rentals could just as easily be point-of-sale data for a retailer or defect data for a manufacturer and so on. The applications are endless, but they tend to have one thing in common: the need to make sense of lots and lots of data. If this is your problem, you probably need BI.

Ask these questions to determine if you should begin the process of looking at BI vendors:

  • Do you feel like your company’s visibility into operations or profitability is hampered?
  • Does your company have a treasure trove of customer information, but no one knows what to do with it?
  • Does one department horde information because no one seems to know how to share the data?
  • Has your company continuously made bad calls on product or operational decisions?

If you answered yes to any of the above, a new BI tool may be what your company needs, to improve collaboration between departments, enhance decision-making, and increase the likelihood that the finance department will make sound calls based on accurate data.