What is business intelligence? BI enables your organization to track, understand, and manage your business in order to maximize enterprise performance. With BI, organizations are able to improve operational efficiency, build profitable customer relationships, and develop differentiated product offerings.
In enterprise networks, BI provides employees with information to make better business decisions, and can be used in environments ranging from workgroups of 20 users to enterprise deployments exceeding 20,000. In an extranet environment, BI is deployed in applications that allow organizations to deliver new services and build stronger relationships with customers, partners, and suppliers via the internet.
Because of the wide applicability of BI in both enterprise and extranet deployments, the business benefits are numerous. These benefits can be grouped into three main categories: lowering costs, increasing revenue, and improving customer satisfaction. And this list is far from exhaustive, since empowered users continue to find new ways to implement BI.
1) Lowering Costs
- Improve operational efficiency
By giving internal or external customers access to real-time data over the web, customers can track their own accounts and answer their own questions. As a result, customer satisfaction is improved while reducing support costs. A significant, added benefit to real-time data access is that data becomes much cleaner. By reviewing the data themselves, customers can spot errors, and help improve the quality of the information in the data warehouse.
- Eliminate report backlog and delays
Business intelligence allows business users to design their own queries and reports, allowing organizations to redeploy the programmers who formerly performed this task. This can generate significant cost savings in human resources, since sought-after staff can be reallocated to projects that add more value to the organization.
Do 20% of your products account for 80% of your sales? If you don't know, business intelligence can give you the answer.
- Negotiate better contracts with suppliers and customers
A solid grasp of facts and figures is invaluable when it comes to negotiating contracts with suppliers and customers. For instance, by analyzing supplier performance—on-time delivery trends, percentage of rejects, and price changes—you are in an excellent position to discuss all aspects of the contract as well as possibly negotiate volume discounts. And identifying a customer's spending patterns could qualify him or her for a particular packaged deal.
2) Increasing Revenue
- Sell information to customers, partners, and suppliers:
Leading organizations are using BI to differentiate their product and service offerings from competitors through value added, web-based services. In the past, many departments generated zero revenue, but now with BI extranets, they create a recurring revenue stream by selling information to customers, partners, and suppliers.
- Improve strategies with better marketing analysis:
With easy access to ordering, accounting, production, shipping, customer service, and even external databases, marketers can find answers to the most detailed of questions such as, “What was the success rate of my direct mail campaign?” or “What was the incremental revenue generated from the new TV ads we just ran?”
or “Which ten items were most popular across our 50 stores during the past couple of weeks?”
Departments within an organization that have led the deployment of BI extranets have found themselves
switching from being a cost center to becoming a profit center.
- Empower your sales force:
Better results from your sales force can be achieved by analyzing its selling patterns: compare results to targets, to figures from previous years, to other sales staff results, and suggest improvements. Encourage the sales force to focus on high profitability customers and products. The sales force can also use BI to analyze data on brands, clients, and distributors.
3) Improving Customer Satisfaction
- Give users the means to make better decisions:
With access to information, users can make better decisions faster, without having to escalate standard problems up the management hierarchy. This guarantees pragmatic and effective solutions since the people directly involved in the operations make decisions. In addition, users have the increased satisfaction of controlling their own process.
- Provide quick answers to user questions:
One of the primary benefits of BI is that you can dramatically reduce the time it takes for internal and external users to get answers to their questions. With fewer delays and faster response time, users are empowered to act quickly, based on the information they receive.
- Challenge assumptions with factual information:
Almost all businesses rely on assumptions and rule of thumb. However, it is worthwhile to challenge these hunches through detailed analysis of operational data, because assumptions and rule of thumb are frequently incorrect.
By now, the benefits of BI—lowering costs, increasing revenue, and improving customer satisfaction—have been explained, and you can see why BI is a prerequisite to making better decisions.
About the Author
As Senior Vice President, Simon Dale is responsible for driving strategy, regional business development, and sales of integrated solutions for the business user, comprising business intelligence solutions from SAP Business Objects, as well as enterprise information management and performance optimization applications. Simon's teams are focused on delivering the platform for accelerated business innovation to increase flexibility and agility for our customers as well as managing and governing an organization at all levels.