While the concept of Business Intelligence (BI) has been around for a while, advances in Big Data have driven a number of new solution providers into the market. This variety is good news for mid-market companies because BI has long been considered an expensive and complicated tool that could only be afforded by larger enterprises. Increased competition, however, is quickly driving prices down, features up, and expanding deployment options to meet a number of business models. And while mid-market companies stand to benefit from all these new providers, the influx of solutions has created a very noisy marketplace. This article will help mid-market companies cut through the clutter by providing cost-saving advice for choosing supply chain BI solutions.
Step 1: Know how and what you need to measure now and in the future. Like any system that drives decision-making and is heavily data dependent, incorrectly implemented BI can produce misleading reports and encourage decisions based on inaccurate information.
- Existing KPI measurements. If you already have formalized KPI measurements such as a balanced scorecard, you know that even compiling that information requires a good deal of manual data gathering and chart building. Before looking at new BI solutions, evaluate your current KPIs. Determine if your current reports are sufficient and cost efficient. Do you have future enhancements to the reports planned? Those should also be evaluated. Then determine the scope of the reports you would like covered in the BI tool. If other areas of the company – such as finance, sales or customer service – also use a balanced scorecard, you may be able to combine requirements by implementing a more centralized solution.
- Informal KPIs. If you operate with more informal KPIs, it might be time to formalize your measurement system and implement some disciplined data collection and evaluation processes around your critical indicators. Formalization doesn’t have to be overly time consuming and complicated; it can be a simple, standard process that states the indicator, how often it is measured, thresholds, why it is important, the source data, the calculations required, and the department/position resources responsible.
Step 2: Know your data sources. Reports are only as accurate and valuable as the data that drives them. BI tools are designed to integrate data from multiple systems, which all need to be able to export the data into the BI tool’s data warehouse or other storage area. To ensure this process runs smoothly –
- Identify each system that stores data for the reports. If the data is housed in multiple places, understand the differences between those storage units. Knowing your data storage sites is especially important when complex calculations are leveraged for more sophisticated reporting.
- Identify the data’s accessibility. You need to know the amount of effort required to export your data, whether or not the export can be automated, and if the export is in a format that is easily usable.
Step 3: Know why and how your company will use the data. Some companies work from a “wish list” rather than a “needs list” simply due to the dramatically expanded BI options. The result can be very costly, especially if the wish list includes data from less accessible systems or reports that add little overall value. Keep in mind these three steps when creating your “needs list” of reports from the system:
- If you already have a formalized KPI measurement practice, it’s a good time to revisit the objective, tangible value of each metric you want to include.
- If you measure KPIs informally, loosely mock up what you would like your reports to look like, including the data sources, how the metrics are calculated and, most importantly, the tangible decisions that can be driven by the data.
- Brainstorm with key stakeholders to understand what data and reporting could be more beneficial to decision making, such as, “If we had this, we could do this.” Vet each requested report carefully by asking hard questions like, “What tangible business benefits will it provide?” Many companies have reports that provide little-to-no meaningful contribution to the organization’s decision making at any level and simply consume resources and margin.
Step 4: Shop around. The emergence of fierce competition in the BI market means that you’re in the driver’s seat. To take full advantage, create a prioritized list of requirements to hand to your existing technology partners. Here are three tips to help you evaluate solutions.
- Confirm that the solution can be deployed based on your IT environment and corporate purchasing policies. Although it’s historically been an on-premise offering, BI is increasingly available in the cloud. Both have pros and cons –
- On-premise, perpetual license solutions come with higher upfront costs and generally higher total cost of ownership because internal resources are often required for maintenance and upkeep. Software upgrades can be included in maintenance, but implementation of the upgrade is usually a fee-based services engagement. With on-premise licensing, you’ll need to procure the hardware and additional operating system/database licensing to run the solution.
- Cloud-based, subscription (i.e., license lease/rental) solutions come with lower up-front costs and generally lower total cost of ownership because you do not need to purchase hardware and internal resources are far less involved in ongoing maintenance. Upgrades are typically included in the subscription pricing. If the solution is multi-tenant, implementation is usually faster and at a lower cost than on-premise solutions because the data integration connectors are typically pre-built and often require only minor modifications. Some cloud-based offerings do, however, offer a lower level of configuration of standard reports and customization.
- Make sure the solution is highly regarded within the BI industry. This reputation can stem from high analyst and customer grades and also from the strength of vendor partnerships. Is the vendor connected with other leading corporations?
- Compare “apples to apples.” It might be a cliché, but in order to choose the BI solution that is best for your company, you need to cut through the marketing and sales lingo and evaluate solutions on a level playing field. Because each vendor wants you to believe that their solution is unique, they will often avoid direct comparisons with their competitors. If you do your homework sufficiently, you should be able to analyze each solution using a checklist or matrix with the same criteria. There are a host of factors that you should be considering, including –
- Do you have the ability to create complex reports, or are you limited to just basic reports? Can the solution utilize complicated algorithms to produce outcomes that you need?
- Does the solution have a dashboard with a powerful user interface? Will your current employees need extensive training to learn how to operate the new system?
- Can multiple departments link to the system? Does the dashboard provide just one view or can you have multiple views based on department login? Can you use it as centralized solution?
BI is a valuable tool that can help assess and monitor the health of your supply chain operations. It can be used to build stronger relationships with suppliers, secure better pricing, and serve as an early warning system for issues, such as supplier on-time delivery performance, that can negatively impact customer satisfaction and your bottom line.
While the cost of on-premise, perpetual BI systems has historically been prohibitive for any but the largest enterprises, new cloud-based solutions that are priced more appropriately for mid-market companies are quickly entering the market. If you are prepared and disciplined in your BI evaluation—and if you ask the right questions and come armed with answers to the negotiating table—you can acquire a BI solution that improves both your business operations and your bottom line.
Donna Fritz is vice President of Marketing & Product Management, TAKE Supply Chain.