Using Business Intelligence for Competitive Advantage

Business intelligence has proven to be extremely advantageous to those who have integrated it into their technical infrastructure.

This article originally appeared on the BeyeNETWORK.

We are all aware of how beneficial technology can be to any company that is willing and able to implement a solution. What we might not know is how specific technologies can help us make both short-term daily and long-term strategic decisions. One technology some might not have considered, which has proven extremely advantageous to those who have integrated the strategy into their technical infrastructure, is business intelligence. Business intelligence, or BI as it is known in the technical community, is simply defined as a means of collecting and analyzing your company’s data. Basically, any data your company produces or collects can be stored and analyzed to help get an advantage over the competition. Four areas where this competitive advantage can be gained include, but certainly are not limited to, distribution, promotion, product and price. Let’s take a look at how these advantages can be achieved.

Distribution
When we first develop our distribution process, everything flows perfectly. Orders come in, they are documented, payment is filed, product is shipped and the customer is happy. This process works well manually or with the assistance of an experienced Excel user – for a while. With time, the orders accumulate, payments don’t arrive as planned, product is out of stock and the customer is not happy. What a business intelligence solution won’t do for you is guarantee payment – but a good solution can clean up the process and assure a much smoother workflow. Custom Web applications can gather customer information for easier reporting and segmentation. A structured and secure data warehouse can store sensitive information so that it can only be accessed by those with permissions. Finally, a dependable reporting and alerting system can direct orders to the distribution center, resulting in faster and more reliable product delivery. This same reporting system can also alert managers when a product or part is out of stock, when a product is on order, the expected delivery date of a product and/or the quantity that is backlogged. By taking a look at “what-if” scenarios available through the use of these solutions, managers will be better prepared for incoming orders and also be able to quickly react to unforeseen problems.

Promotion
How much time and effort is put in to promoting your company’s product? What is the best means of promotion: the Internet, trade shows, radio, television, direct mail or so on? What products do the best with what kind of advertising? What age group spends the most money on your products? You might already know the answers to these questions, but a great business intelligence solution can automate the process of receiving this information and allow you to dig down through your results until you are satisfied with the information you have received. For example, you get numbers every week from the sales department indicating who bought the product during the previous week. You also get information on where and why they bought the product, allowing you to re-market to those folks for cross-sells and upsells. A business intelligence solution can take all these aggregates and analytically mold them into graphical representations that can easily be viewed by the people that need to make the decisions. This can be accomplished through, for example, dashboards, graphs and charts, and analytical reporting. Figure 1 is an example of a management dashboard for a marketing manager who wants to know how the amount of activity has affected sales for the month.



Figure 1:
 Management Dashboard Example

Product
Suppose you have a great product that can climb walls, cleanly dispose of trash and paint your fence – all at the same time. It is selling like pet rocks did in the ‘70s, when suddenly sales plunge. Would this catch you by surprise? Your answer would most likely be no if you had a business intelligence solution in place to analyze product trends. You would have seen that eight other manufacturers had placed similar products on the market, and you could have analyzed the marketing war that developed. From that point, you could have made the important decision of whether to compete or change your product line. The business intelligence solution could guide you though all of this by helping you manage, understand and track the data your company collects every day – enabling you to be one step ahead of your competitors.

Price
Pricing should be easy – your product costs $2.50 to make in Gary, Indiana, is distributed to you for $2.75 and then you sell it to the consumer for $3.00. Everyone is happy, everyone makes a profit and the consumer gets a wonderful product. What happens when gas prices skyrocket? With the magical trickledown effect, production costs and distribution costs start to teeter; prices are up one week and down the next. At the end of all of this, you are trying to maintain reasonable prices for your customers while also trying to maintain your business. A business intelligence solution can help you to view industry trends and take into account “what-if” scenarios so you can make smart pricing decisions to assure profit and customer satisfaction in an unstable marketplace. By having all the information you need, you are much more likely to make the right choice when faced with a business decision. One of the byproducts of a business intelligence solution is an increased efficiency in the decision-making process because of the up-to-date information that is being reported to management.

This article discussed four areas where your company might be able to gain competitive advantage from a solid business intelligence solution: distribution, promotion, product and price. However, these examples only scratch the surface of what a business intelligence solution can do for you. The uses of a business intelligence solution are truly endless, and all areas of a business should be examined to see how they can benefit from a strong and well developed business intelligence solution.

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