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Business intelligence breakthrough: No data warehouse required

On a smarter planet intelligence is incorporated into everything from phones and cars to appliances and the electric grids that power them. Data is being captured as never before. The question is, how can we use it?

The same scenario is true for midsize companies, where there's also an abundance of data coming in. Managers have access to reports from ERP systems, CRM, the general ledger, sales systems and more. The problem is that this data all too often resides in separate, siloed systems, so the challenge is putting it together in meaningful ways. Spreadsheets from different departments can be difficult or even impossible to merge, and getting answers to pressing business questions is all too often a very time-consuming and labor intensive process.

While business intelligence (BI) solutions can address these challenges and provide a competitive advantage, many midsize companies shy away from BI initiatives, assuming that it’s too expensive and too complicated. Another misnomer is that BI must involve a full-blown data warehouse at the onset, In fact, getting started with BI need not be complicated, nor expensive.

A successful approach to BI involves taking small, discrete steps, but in the context of a long term roadmap. By starting with a well-defined business problem where quick results are likely – companies can achieve results that provide proof of concept.

Quick results, no data warehouse required

California Natural Products (CNP) is a midsized company that learned how success with BI can be realized by taking an incremental, “building blocks” approach. As a producer of both natural ingredients and branded organic products – two separate lines of business that share some data – CNP was struggling to obtain robust financial reporting. Its current system required pulling data from multiple sources, a time-consuming process that required employees to spend more time and energy collecting data than on analyzing it for useful insights.

CNP sought a collaborative reporting system for all the various departments that would provide faster, more comprehensive results for the whole company. But as a smaller business, it needed a system that would optimize the use of limited resources and staff, and deliver business results without requiring the substantial upfront investment of time and resources required to launch a data warehouse.

CNP took its first step into the world of BI by working with IBM Partner Locus Solutions, to deploy IBM® Cognos® Express software which centralizes data from multiple, disparate sources onto one platform so that employees can access information directly from a single source, with the confidence that it is reliable, trustworthy and consistent company-wide. The new approach has the added benefit of significantly reducing errors by eliminating the need to extract data from an ERP system and merge it with Excel-based budgets.

While increasing data quality, the company was able to reduce its reporting costs by 50% and reporting time by 20 days, giving employees more time to analyze data, understand its implications, and create business solutions.

Non-technical users can now generate financial analysis reports comparing actual results to budget or to prior years, as well as reports covering operating expense, SKU levels, product segmentation and other areas – all without a data warehouse. Users can also analyze data in new ways not covered by standard reports via easy-to-build ad hoc reports.

And because the solution is tightly integrated with Excel, CNP's current tool, users have the convenience of an interface with which they’re familiar, and where the learning curve is close to zero.

Another misnomer is that BI must involve a full-blown data warehouse at the onset.

Putting the puzzle together one piece at a time

In addition to solving a specific business problem, CNP now has a scalable, extendable solution that can be adopted by other departments whose managers will be motivated by the initial success of the financial reporting project, and the fact that the solution has been proven to be self-sufficient and easy to use after implementation. This broader adoption is a key point, because the power of decision support with BI is not limited to financial reports. Marketing, sales, engineering, manufacturing and supply chain management can all benefit from BI, as it enables managers to make smarter, more informed decisions. It is also advantageous to integrate data from these various business activities, because they are all interconnected systems that influence one another.

CNP has demonstrated the viability of the building block approach to BI with an implementation that was modest in scope, addressed a significant pain point, delivered impressive results, and, importantly, provided a model for broader use of BI moving forward.

As companies try to build a picture of their operations on a broader scale, they should move forward on two fronts. From a strategic perspective, they need to strive for an information-driven culture, where data replaces guesswork. Operationally, they need to pay close attention to the details of how data is named and categorized. In many companies, manufacturing has one name for an item, while marketing has another. The finance department’s definition of “customer” may not be the same as the one used by marketing or sales. Resolving these discrepancies early on will eliminate future roadblocks to progress while supporting collaboration among departments.

CNP’s experience demonstrates that taking small, discrete steps in the context of a long term roadmap makes it easy and affordable for midsize businesses to move beyond spreadsheets and benefit from the insights BI can provide for running a smarter business. And that's important because converting data into valuable insights as California Natural Products has done is essential for midsized businesses if they are to retain their competitive edge in today's information-oriented global economy.

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