PowerUp BI Consulting - What is Business Itnelligence?
What is Business Intelligence?
Companies have goals and strategies to achieve them.
To be a winner, a company must be able to implement adequate processes to execute it's strategies and support related opeartional needs. It also has the need of monitor them and drive their evolution over time.
BI can help in this process, by bringing clarity and supporting fact based decisions (as opposed to gut-feeling / instinc based decisions).
This can impact a company at any level, from the top management down to the operational structure that acts by taking daily decisions.
BI is meant to support decisional processes
If no decision is involved, than no BI is involved either.
Most companies have reports that show sales trend and their comparison versus targets.
This is indeed good, but not enough.
Imagine the following scenario :
Grassopher Nature Inc is a fictional company that produces and sells high quality material for agriculture.
Josh P. is a successful regional sales manager, the best in the company, this is how he climbed his way up to the head of the most important region company, sitting on about 35% of the overall company business.
His success did not happen by chance, as he always achieved his quarter targets... up to now.
But Josh made his way to that position because he always managed to take appropriate and informed decisions, so he knows how those questions should be answered.
The first thing he will do is to investigate where the loss happened.
This will involve understanding in which products the unexpected bad performance was registered.
He has analyses that quickly help him in understanding that a company's blockbuster product, a fertilizer, reduced greately the sales in the last month, going virtually to zero.
This reduction happened in most of the territories belonging to his region.
That specific product was in the spotlight in many management discussions recently since a competitor just entered in the marked with a much cheaper alternative.
Authorities in his region approved the usage (and therefore sales) of the new competitor product slightly ahead of Grassopher's estimations.
Already in the first month of the quarter, when this information became available, the company reacted by reviewing it's pricing policiy for fertilizers in the region.
Josh has another analysis that clearly shows that at the beginning of the quarter there was a minor loss in volume, but a clear reduction in amounts as a consequence of the price cut.
Starting from the second month, despite the new more attractive price, also the volume reduced greately, gradually down to merely the 20% of the normal business.
It's easy for him to get more insight into this issue, as he can get the information on how this product is sold and to which customers.
This is how he finds out that about 80% of the volume in the region goes to two big wholesalers, two global players that cancelled orders for those two months.
Grassopher Nature Inc. believes in sharing internally information, so Josh can check how the product is doing in other regions.
He then discovers that sales in the region where the competitor product is produced increased dramatically.
What actually happened is that in that region the competitor product was already being sold since some time and they already had to lower the prices.
The two wholesalers that dropped orders in his region ordered in the other region istead and then imported the fertilizer.
They correctly guessed the reaction time of the authorities in Josh's region and did not know that Grassopher Nature Inc would have lowered the prices immediately, still they had orders from their customers in the pipeline for Grassopher's fertilizer.
He now knows that this information should be escdalated, shared with tech-ops / logistics as they will be impacted by this new market dynamic.
A new strategy should be implemented to minimize the loss, the marketing departement should definitely be aware
There is enough data and intelligence to learn a new lesson from what happened, and Josh's company has now several informed decisions to make.
The imaginary scenario we described is an example of Business Intelligence.
It much more than simply having a set of reports and analyses, it's about knowing how to use them and act responding to the information they provide.
It involves the whole company, across different functions (Josh had to timely inform the tech-ops function so that they could plan accordingly for the needed changes for production and logistics) and across gepgraphy (To have the full picture of what was happening, data from another region proved to be key).
It also involves internal transparency, clarity and uniformity of language, this is the way different teams, departements, functions in the company can leverage from intelligence generated in other units and making the resulting understanding an asset for the whole company.
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