Business Intelligence: What Every Executive Needs for Success

Just in Time: Information for the Distribution Executive (IDA Management Journal), November/December 2001

By Neil Jaffe

We live in the Information Age, where technology allows businesses to collect and store vast amounts of data on their customers, sales, vendors, purchases, items, invoices, shipments, and more. What companies do with that data can mean the difference between success and needless failure. Intelligently looking at business information enables people to quickly spot trends and changes, giving time to respond effectively. The most successful companies will use business intelligence to thrive.

Business intelligence, also known as BI, is the art of turning data into useful information. There are a host of tools available today to help distributors gain a better understanding of the information they collect, so that they can make better decisions in a shorter amount of time. Using BI, distributors can accurately measure the results of their decisions, and fine-tune them as needed.

Business intelligence tools often come in the form of software that can interact with databases to perform a variety of functions. These tools include the following:

Report writers are typically pre-formatted and can be viewed either on paper or online. Generally, reports writers allow readers to select report criteria and drill-down into layers of detail. A drawback of using report writers is that once a report is designed it's not very easy to change its focus.

End-user queries allow users to create their own ad-hoc queries and design reports in a user-friendly manner. End-user queries enable users to gain quick access to information and are great for novice users.

Executive alerts enable users to create "triggers" to monitor business conditions and send electronic alerts to "push" information out in response to changes. For example, if sales for a customer, a product, or an item fall below a given target, the user would be alerted electronically and sent a report detailing the pertinent data. When incorporated in a Digital Dashboard (see below), emerging trends can trigger alerts.

Online analytical processing (OLAP) tools construct multi-dimensional data "cubes" to provide high speed access to both summarized and detailed views of business information.

Some examples of summary data are transaction counts, number of units, total dollars, etc. Cube summaries make it easy to show trends, such as year-to-year, quarter-to-quarter, or month-to-month comparisons. Cube details make it easy to "slice and dice" data, so that information can be viewed and analyzed in a variety of ways, for example by order, by salesman, by customer, by product group, by item, etc. OLAP tools provide the foundation for comprehensive business decision analysis.

Digital dashboards provide a dynamic presentation layer for information. Data can be presented in a graphic, intuitive framework, making it easier to spot trends and hone in on both problems and successes. Some of the features digital dashboards can provide include:

Scorecards, which give a quick, graphical look at key performance indicators such as profit, inventory, open A/R, and open A/P. Scorecards enable executives to spot trends quickly and easily.
Measuring performance over time and analyzing the results.
Interface to OLAP cubes to provide the ability to drill down, drill up, change parameters, add lines, add columns, and change views.
Analysis by exception.
Customized displays, allowing creation of individual portals for each end-user, including the option of including personal calendar, email, task files, etc.
Access to internal and external information.
Flexible graphics, such as bar charts, pie charts, donuts, bubbles, pivot tables, etc.
Import/Export capability with other software tools.

Increasingly, BI tools must interface with the Web in order to communicate key information to the largest number of people, anytime and anywhere, with the least amount of effort and cost. Distributors can use the Web to reach employees on the road or working from home, share order status, invoice, and other data with customers for increased service.

Information that isn't used or overwhelms you is of no use to anyone, so look for tools that allow you to see information quickly and easily. For added flexibility, insist on tools that integrate with a variety of applications, such as reports and spreadsheets. Also, know that your information requirements will likely change over time, and look for tools that are flexible, and can grow with you.

In summary, business intelligence tools are available to help distribution executives respond to changes, spot trends, measure the effectiveness of decisions, communicate anytime and anywhere, cut costs, improve efficiency, and improve profits. Without them, business system becomes nothing more than a data warehouse of unused information. And, while we all want to keep our warehouses stocked and up to date, the real profit comes in moving the stock to where it can be put to good use.

Neil Jaffe is widely respected as an expert in technology for distributors. One of the founding developers of Prophet 21 enterprise software solutions, Jaffe continues to make the company a leader in providing durable goods distributors with innovative, adaptive enterprise technology solutions and services essential for running their businesses and reducing transaction costs to maximize profit and growth.

Industrial Distribution Association