Business intelligence (BI) and analytics technologies have long been key contributors in enabling corporate behemoths to sift through mountains of data in an effort to uncover insights into customer buying patterns, internal costs, revenue and profitability trends, and other critical business issues. It hasn't been the same story in the midmarket, though: Many small and medium-sized businesses (SMBs) have stayed out of the BI game due primarily to concerns about the complexity and high cost of deploying and managing BI systems.
Increasingly, however, SMBs are no longer content to sit on the BI sidelines, according to IT industry analysts as well as recent surveys. Why the growing interest in pursuing business intelligence strategies? It turns out that some of the same business drivers steering large companies to take advantage of BI and analytics are also affecting smaller organizations, giving them good reasons to take action on
Just like their bigger brethren, midmarket companies are facing a volatile and highly competitive business climate that demands rapid decision making and an ever-sharper focus on revenue growth and corporate performance. With their futures on the line, many SMBs are casting a less skeptical eye toward BI projects, drawn in as well by new technologies that may be able to help them effectively harness core business data for BI uses without breaking their budgets.
For example, there now are a variety of flavors of BI and analytics technology that can be easier for SMBs to digest. That includes Software as a Service (SaaS) BI offerings available on a subscription basis; BI appliances that bundle together the necessary hardware and software in preconfigured packages; and new versions of traditional BI tools that have been re-architected with improved user interfaces, embedded analytics capabilities and support for self-service BI.
Improved ease of use helps pave the way for midmarket BI strategies
"BI tools are increasingly becoming quicker to deploy – you can give them to business users without too much IT handholding," said James Kobielus, a senior analyst at Forrester Research Inc. Leveraging user-interface enhancements such as wizards and drag-and-drop capabilities, "users can build reports themselves with minimal training and not have to write a line of code," he added. "They no longer have to hand something off to a BI specialist. To the extent you can limit the specialist role, all the better."
But while BI is becoming more palatable for the midmarket audience, there are still hurdles that make creating and implementing business intelligence strategies harder for midmarket companies compared with larger organizations. Budget and resource constraints are typically the biggest inhibitor: In general, SMBs have tighter IT budgets and fewer resources to throw at BI projects, even if company officials are sold on the business intelligence business case.
"A smaller company with a smaller IT department has a limited set of skills, and they may not want to necessarily expand their workforce to hire on extra resources to manage [a BI project]," said Lyndsay Wise, president of WiseAnalytics, a Toronto-based consulting firm that focuses on midmarket BI issues. Wise added that many SMBs want, or need, to apply existing skills and resources to BI deployments to help keep costs down – but doing so may not always be feasible.
Having the internal skills as well as the required software to address data quality issues is another common challenge for smaller companies looking to implement a BI project plan. Simply pulling data from financial systems and other business applications into a data warehouse or data mart for analysis and reporting isn't enough, according to analysts – they said that even small companies need to have a systematic program for cleansing and normalizing data in order to gain valid findings from it.
A possible roadblock on business intelligence strategies: Excel use
Excel's longstanding reign as an all-purpose BI tool is another potential inhibitor that can prevent SMBs from orchestrating effective BI and analytics programs.
Excel is such a big part of the BI landscape, but it can be an obstacle to BI rather than an enabler.
David Menninger, Ventana Research
"Excel is such a big part of the BI landscape, especially within SMBs, but it can be an obstacle to BI rather than an enabler," said David Menninger, a vice president and research director at San Ramon, Calif.-based Ventana Research Inc. "Many companies that have Excel think they're doing BI adequately, but there are numerous issues around data quality." For example, letting end users pull BI data into Excel for analysis can result in inconsistent information if effective spreadsheet management processes aren't put in place.
Getting SMB executives to see the value of investing in a standalone BI system can also be difficult, especially if companies already have ERP, CRM or other enterprise applications that provide a level of BI reporting and querying capabilities. For some midmarket companies, the built-in tools might suffice; for others, there's a case to be made for a dedicated BI platform.
"The question is, at what point do you cross the threshold?" Kobielus said. "When you have a heterogeneous application environment and many data sources need to be integrated, it probably makes sense to create a data analytics infrastructure that presents a unified view to top brass."
Beth Stackpole is a freelance writer who has been covering the intersection of technology and business for 25-plus years for a variety of trade and business publications and websites.