Business Intelligence

The SMB's BI Software Shopping Challenge
Business intelligence is an umbrella term that refers to a variety of software applications used to analyze an organization's raw data. Companies use BI to improve decision-making and identify new business opportunities. However, due to their high-growth and lean organizational structures, SMBs require a different approach to BI. It's important for these companies to approach their purchasing decision with a few critical questions in mind.
Even with a wide range of business intelligence (BI) solutions on the market, many don't fit the unique needs of small and medium-sized businesses. SMBs have tighter budgets, fewer technical resources and less time to spend on deploying and optimizing a business intelligence solution. For some SMBs, just getting started with a BI systems evaluation can be a challenge.

What follows are five criteria to keep in mind while evaluating BI options for your SMB -- but first, a BI primer.

What Is Business Intelligence and Why Would You Need It?
Business intelligence is an umbrella term that refers to a variety of software applications used to analyze an organization's raw data. These applications include data analysis, enterprise and operational reports, dashboards and data mining analytics.

Companies use BI to improve decision-making and identify new business opportunities. Why do SMBs need business intelligence? For the same reason large companies do: to learn more about their business performance and to better execute on their strategy.

However, due to their high-growth and lean organizational structures, SMBs require a different approach to BI. It's important for these companies to approach their purchasing decision with a few critical questions in mind.

5 BI Solution Criteria for SMBs to Evaluate
1. Software Costs: Price is often a key factor in software solution evaluations for SMBs, and some simply can't afford the high initial prices associated with many BI solutions on the market today.

When it comes to software license costs, there are typically two sets of charges to consider: up front perpetual license costs and ongoing support and maintenance costs. While most BI vendors charge for both, commercial open source can be licensed at a fraction of this cost, and Software as a Service (SaaS) BI companies offer subscription-based pricing, which does not require hefty up-front license costs.

In addition, the pricing metric varies among the different BI vendors. Depending on the vendor, you will typically see one of the following pricing models:
o User-based pricing
o Server-based pricing
o A combination of server- and user-based pricing
Under a user-based pricing model, companies are faced with additional charges every time they add new users to the BI user base. Since the success of a BI initiative is strongly dependent upon widespread adoption and use of dashboards, reports and analysis views, granting access to as many employees as possible can be critical. BI tools that utilize a user-based pricing model can inhibit the success of implementation and adoption. Hence, selecting the right tool with the right price metric is essential.
A server-based licensing model can be a better fit for BI, as it enables companies to grant access to more employees in a much more cost-effective manner. Using server-based pricing, companies are free to distribute BI to as many users as their servers can support, without incurring additional fees.

Your Buying Checklist:
4. Is there an up-front perpetual license cost?
5. How much are the annual maintenance and support costs? Does the maintenance cost go up from the second year onwards?
6. What is the pricing metric: server- or user-based?
Length of the ROI Cycle: SMBs typically need proof of investment quickly, oftentimes within a few weeks. Unfortunately, "plug-and-play" in BI is a myth. Any BI solution you choose will require some level of preparation before the data becomes actionable for business intelligence. This is just as true of on-demand solutions as it is of legacy solutions.
However, there's a wide spectrum of time-to-value tradeoffs in BI. Some solutions require building from scratch, while others offer components that you can leverage for a faster time-to-value.

For instance, although SaaS BI solutions claim instant productivity by providing necessary resources to host and manage the application internally, from a data perspective, this option is equally or more resource-intensive than traditional BI. Prior to the initial upload, the data must be pre-processed and cleansed. This process requires significant in-house work by someone who is familiar with the data.

Similarly, legacy BI solutions that are provided by mega vendors are built around complex data models and data warehousing practices that take months, even years to fully develop.

To properly evaluate the length of the ROI cycle for a BI solution, it's especially important to consider time-to-value and the technical expertise that is required.

Ability to Adjust to Business Changes Rapidly: BI projects are not one-time, one-off projects. As business dynamics change and new requirements emerge (which is especially true of SMBs), business users need the ability to add new key performance indicators (KPIs) and data sources, or to easily change the dimensions by which they measure their metrics.

o Growing sources of data: As BI requirements change -- because of mergers and acquisitions, for example -- so too do the underlying data sources. A business intelligence solution needs to remain open and agnostic to different sources of data in order to quickly adapt to change.
o Changes in data or metrics: Once data has been uploaded and built into analytics, reports or dashboards, it will not remain static. BI solutions that don't have an integrated ETL and BI development environment require a cumbersome and time-consuming change management process to incorporate data changes.

Your Buying Checklist:
2. Can you connect to existing data sources, or does the solution lock you into a specific databases or data warehouses?
3. How rapidly can you add a new data source?
4. How easily can you add new metrics and calculations?
Plan for User Growth: The success of a BI implementation is strongly dependent upon its widespread access and use. Historically, a small, technical group within a company performed all corporate reporting and data analysis. Today, this is less often the case. Successful BI environments expand to more and more people in the organization. To plan for more widespread adoption, one should consider:

o Incremental license costs: A per-user pricing and licensing model can inhibit user growth from a financial perspective. Unfortunately, the majority of BI solutions are licensed per user, with fees as high as US$1,000 to $2,000 per user. Because this is cost-prohibitive to many organizations, access to BI is often granted to only a small number of employees. The rest rely on canned reports that IT produces, which in turn creates an IT bottleneck and consequently forces users to make decisions irrespective of the data.

o Ease of use for end users: It can be strategic to have a BI implementation that's adopted by as many business decision makers as possible. Business people typically come from non-technical backgrounds, so having a BI solution that is easy to understand without excessive IT involvement can be crucial, especially at the SMB level.

Your Buying Checklist
2. Who needs access to BI? Do you need to expand the access in the future?
3. Do you have to pay extra for every additional BI user?
4. How much training is required for the end users to become self-sufficient?
5. How rapidly can the users adopt the solution once built?

Ease of Integration With Other Applications: When assessing your BI options, it is important to ensure that the vendor you choose provides the means for enhancing and extending the solution. Proprietary tools will require a lot of money and highly specialized consultants to build product integrations.

Having extensible APIs and a plug-in architecture ensures that your BI solution can be easily integrated with other software products to meet both current and future needs. For instance, BI that is built to report and analyze CRM data can be embedded into that application to provide a seamless user experience. An open and standards-based plug-in architecture ensures that this integration is easily done.

Your Buying Checklist
1.Do you need to integrate your business intelligence with other business applications?
2.What APIs does your BI solution provide out of the box?

In Summary

SMBs have a wide variety of BI options to choose from. A closer look at the different BI solutions available in the marketplace shows the benefits and drawbacks of each.

The right model depends on your organization's needs, skill levels and decision-making processes.
Exercise: Research one type of BI option for your business and discuss why it would be best for your business!