by  Search Engine People Blog

Quick, can you tell me which is your most profitable customer?

Or as the headline points out, pick the dimension or view of your company and tell me what, who, which is most profitable?  Or least profitable?  And can you tell me why?

There are typically three answers to this question:

Companies in the first group answer with a resounding “No way!”.  Why?   Likely the information they need to analyze these points is all over the place – in different systems that don’t talk to each other or worse not in any system at all.  Maybe some in an accounting application and the rest is in a spreadsheet somewhere.  Or maybe on a napkin in your sales managers pocket.  You know what I am talking about.

Companies in the second group answer with “of course”.   This sounds pretty good until you ask the next question which is something more complicated like “who are your top 5 most profitable customers by product line?”.  What I find at this point is these companies have some decent rudimentary analytics, likely manually extracted from various systems and housed in a spreadsheet.  This is not altogether bad – they know what metrics are important to their company and have a process for producing those metrics.  The problem is that this isn’t scalable – as soon as you want to change the question, even slightly, you’ll find the metrics are created in an inflexible way.  Someone has to go back and manually change the spreadsheet, maybe making another version, maybe disconnecting it from the base data.  The thing about analytics is that as soon as you know one thing you want to know something else about that thing – it never ends!    This means static spreadsheets, while  good for getting your feet wet, won’t last long.

Companies in the third group can answer with “of course” and then proceed to further analyze their business for key insights and trends.  In this case they have integrated their data from various systems and sources into a source for analytics and reporting using business intelligence tools.  These tools allow them to more easily change their questions without re-doing  bunch of spreadsheets.  Some of you have probably heard about business intelligence and business intelligence tools and dismiss them for use by small and medium sized businesses.  It is time to think again!

What has changed in BI tools?

Traditionally large enterprises have been able to leverage BI tools and data warehouses to gain tremendous insight into their businesses.  They can do things like predict what products you might like to buy after an initial purchase or tell a store how to most effectively position products on their shelves.  They can analyze service routes and call center performance.  There really is no end to what CAN be done – it just takes money.  A boatload of money.  Money on software and hardware and lots and lots of money for people (either employees or consultants) install, configure and make sure all the pieces work together.  In recent years this has started to change.  There are tools that run as a service (SaaS, in the cloud) that provide many of the capabilities that the large BI tools can.  These smaller, nimbler tools can pull data from your existing systems (even files and spreadsheets) and organize it in a way to be easily accessible for analytics and reporting.  Usually your expenses will be a monthly subscription for these tools and probably some initial consulting help to get you started (some of the vendors purport that you don’t need that but I’m dubious – at the risk of venturing into the realm of self-promotion I think that some consulting help at the beginning to define goals and metrics and help choose a vendor would save most businesses money in the long run.  But I digress.).

In short, what do these BI tools do?

They can  help you measure and manage your business, enabling what-if analysis and the easy ability to change the questions you are asking.  They make pulling the data together from diverse sources easier and less painful.   They create “one version of the truth”.  Some even package up solutions for function-specific analysis – pipeline analysis (sales), financial analysis (finance), cost analysis (operations) , or supply chain analysis (supply chain).

How do I get started?

There are a number of good vendors in this space.  They include (but are not limited to) Birst, Pivotlink, Gooddata, Easy Insight, Jaspersoft, and Zoho Reports.  Each of these has different features and integrates data in different ways.  If you have someone experienced with analytics and reporting on your staff you are in luck.  Otherwise your next step is to talk with your technology advisor to determine what your needs are and which product suits them the best.  Then you can put together a plan that lays out initial steps and associated costs.  Start with a plan, start slow and measure your progress (use metrics to measure your analytics!) and soon you’ll have greater insight into your business.