One of the most common issues clients come to me with relate to limits. I posted a comment here about limits and how I believe anyone that believes in infinite growth is setting up for failure. Sure not everyone will agree with me however based on my experience I strongly believe ignoring limits in a finite world, we are putting ourselves at risk.
We have limits even if you don't want to see them. Company executives are always talking about growth and how they can increase sales. While seeing the news that share prices have increased for XYZ company due to an increase in sales may frustrate you as your sales have declined, don't believe what you see in the media.
I have worked in business intelligence for some large companies in Australia and there are tricks that make profitability look better than the previous year, even if sales remained the same. In some cases they just make changes to the valuation or change cost allocations.
Clients come to me and ask if I can help them grow and expect an overnight result. In reality before you can grow you need to make sure you are working efficiently and within your limits.
Yes, that word again, Limits!
Truth is, limits control business! you have a limit on the number of customers/clients vs employees for example. And that limit can be the most restrictive. So what can you do about limits? just increase them as you get closer. For example, if you limit on customers vs employees has reached its peak, look at refining your workflow so you can increase the limit.
When large companies talk about growth, they are not just pushing a magic button and increasing sales. They are reviewing and refining their entire process to make it possible to increase sales. Large companies are well aware of limits, their entire company is built around them. And I believe that is one of the biggest struggles smaller companies are faced with. They spend so much time focusing on increasing sales and forget about their own limits and start to fall into a rut. That rut is basically working long hours for little return.
Large companies invest big money on reporting software, while a lot of large companies still don't understand the power of reporting and just flood themselves to historical reporting. The successful companies focus on predictive modelling.
Let's have a closer look at the different stages of business intelligence:
This will show you what happened in the past. For example, how many sales you made last month or yesterday. This is a good start to analytics and will help you with forecasting.
Volume, frequency and location. That is basically what you get from adhoc reporting. You can use it to identify productivity vs profit, areas that need improvement and if you are in the retail industry stock movement.
Query and drill down reporting:
Where is the problem: A query and drill down report lets you do just that. You can view the report from a higher level and drill right down to the problem. For example, you can see from a high level view how many sales you made for the year, then drill down and look at sales by department, state, product type even product colour. This helps you see where your making and losing money.
Where action is required: Alerts are commonly based on historical data, for example. For retail. If stock level is less than 10 then alert.
The alert could drive an automated ordering process from your suppliers. You can also use alerts to identify when employees are accessing the building, how many calls they make and how many files they work per day. There are so many ways alerts can be used to help your business.
Now we are starting to get into the big league, this is the start of more advanced analytics:
While the previous reporting methods focus on historical data, now we are looking at live data, what is happening NOW. Using statistical analysis you can look at what has happened in the past and why it happened, identify trends and really dig into how your business is working.
By now you should know how critical forecasting is to your business. However you shouldn't stop development on your forecasting models. You should always look at ways to improve. Sure at the moment you can forecast that next month you should reach X number of sales however what if you start playing with the variables used in your model? Do your projects increase, what happens to cost if you start playing with variables???
What will/could happen is what predictive modelling is all about. Probability is what it comes down to, improving the probability rate comes down to playing with variables. If you get to an 80% probability then your model is worth using. Predictive models are used in just about every large business. I used to build predictive models for the debt collection industry.
If the company wanted to buy some debt from a bank they would run some sample data of the files they were looking to buy through the predictive model to predict how many of the customers would pay and produce a recommended price they should pay for that debt.
Once you have worked your way up the business intelligence chain you will reach the optimization stage. By this stage you have a very clear understanding and control over your business. Optimization isn't possible without a complete understanding of how your business and industry operates and sadly a large number of companies are a long way from this point.
If you combined all these stages together you have a very clear picture of what your business is doing. The results can help you develop better databases. CRM, workflow, KPI's, targets, bonus structure, pricing models and most importantly growth plan.
The best part of this is you don't need to spend a heap of money to get started, you don't even need to invest a big chuck of revenue to maintain it. There are plenty of free and cheap options available that can help you work your way through the business intelligence stages.
So the big question a lot of clients ask me once they understand this is "where do I start?"
The answer depends on the type of business you are in. In general, if you have a portfolio of accounts,! organize them! apply status codes and segment the portfolio into meaning full segments.
Every industry requires a different starting point however it generally comes down to segmenting and workflow review.
There is no need to be scared about business intelligence and there is no need to worry about keeping up with terminology that keeps changing. Just worry about your business and looking deeper into your own data.
All too often I get clients call me asking if they should worry about the latest trend. Like for example a client called me and said "I was just reading about "Data lakes", do I need one?"
They already had one, they just didn't know the "current" name applied to it. When it comes to the data industry, it is always good to read about advancements however at the end of the day just because someone applies a new name to an old method doesn't mean you should freak out.
In most cases, these "new methods" have been around for years, it is just private companies have kept them secrete for years because they don't want their competitors to know how they handle data.
The title of this post is " Getting the most out of your business". The short answer to this is, ask questions! Questions like, why did I make X number of sales last month? Where are my customers coming from? What are my highest costs? How can I reduce them? What will happen if I do X?
The more questions you ask, the more answers you will have. The more answers you have the more solutions you have.