RESEARCH & RESOURCES

Q&A: Small Business Analytics Needs Differ from Large Enterprises

Small and midsize businesses need analytics too, but their specific needs are often overlooked.

On the surface, small business BI needs are clearly different -- their source systems and data volumes are probably much smaller, and they seldom have the technology resources that enterprises do. The differences go deeper than that, explains Kurt Steckel, CEO of Bison Analytics.

In this interview, Steckel discusses how small businesses can benefit from analytics when their specific needs are considered. Steckel, who started Bison Analytics in 2006 after working on the Hyperion business intelligence implementation team, is a graduate of the Thunderbird School of Global Management and has served as a consultant for numerous Fortune 500 and public companies.

BI This Week: When we talk about analytics and small companies, what is your general definition of a small company? Does it mean revenues under $10 million?

Kurt Steckel: Defining a small business is often not as simple as a straight revenue figure. For example, service businesses with lower revenue often require more complex systems and processes than manufacturers due to the complexity of the service business. In our experience, service businesses earning under $10 million in revenue fit the small business definition, and manufacturers can go significantly higher -- often as high as $20 or $30 million -- and still fit the small business definition.

How are the BI needs of small businesses different from those of large businesses?

For starters, source systems and data volumes for small businesses are distinctly different than enterprises. Likewise, small businesses don't have the resources to implement BI that enterprises do. On the other hand, the BI reporting and dashboard capability requirements for both small businesses and large enterprises are very similar.

Within a small or midsize business (SMB), who is the typical user of BI?

The typical SMB financial analyst is the CFO, director of finance, or an accountant. They do the real analysis with BI. The CEO or owner often reviews dashboards and reports, making strategic decisions, but they usually don't perform nearly as much analysis.

Do business workers in small companies often know what analytics is and how it can help them? Is reaching small business with analytics solutions partly a challenge of definitions?

Many of the smallest businesses aren't prepared for analytics, it's true, but growing businesses eventually reach a point where they have a burning need to answer a specific question and they know their data holds the answer. Furthermore, they often want complete mastery of the factors behind that answer. This is the defining moment at which a small company is prepared for analytics, whether they know the associated terminology or not.

How well are small and midsize businesses coping with BI challenges in general? What else is specifically different for them compared with larger companies?

Small businesses lack the necessary resources to implement real BI solutions. This leaves them with a cookie-cutter solution that doesn't answer their questions or requires them to waste precious time in Excel. The big difference between small business and enterprise BI is resource availability. Simply having BI software doesn't solve the SMB's problem. They usually need guidance to create their first few analytical entry points.

For example, the service industry benefits from a drillable dashboard showing employee hours by job along with project profitability. Firms that sell goods require sales and profitability by customer and the ability to drill into the product dimension. Once the first few of these are built, clients can proceed on their own.

Enterprises have whole teams supporting BI initiatives, but SMBs often need to find expert resources elsewhere to assist them. Either accountants or specialists within the company commonly play this role; their cross-domain expertise can be a real asset to SMBs.

What is the tool landscape like for small businesses looking for a BI solution?

Small business BI options can be categorized in three ways. First, there are on-premises solutions that are complex to install and set up. Second, there are cookie-cutter cloud solutions that are simple to set up and use but don't answer many meaningful questions. These are for very small businesses. Finally, customizable cloud solutions are simple to install but still require the user to set up custom dashboards and reports to answer meaningful questions. This requires expertise from their technically skilled accountant or from their BI vendor's professional services.

How useful are the cloud-based solutions you mention for small businesses and why?

Cloud-based solutions are the most advantageous option for small business BI. The biggest challenge for small businesses to overcome is access to expert BI resources to help with meaningful dashboard and report creation. Moving to the cloud takes tool installation out of the equation. It's already done. Cloud providers that offer a customizable platform generally enable client's accountants to access their system or they have professional services on standby for mentoring.

Based on what you've seen in working in the industry and in working with customers, is open source BI generally a good option for small businesses to consider? What are the pluses and minuses?

I appreciate the strong options available in open source software, but small businesses often don't have access to the resources needed to properly implement open source BI. That often takes open source off the table for small business.

How is the challenge of big data hitting small businesses?

Very few small businesses deal with truly big data. I speak with small business owners who believe they have "big data" simply due to the trendiness of the term. Small businesses primarily have small data issues that can be addressed with traditional BI solutions tailored to small business needs. Certainly social data is useful in specific situations to make tactical tweaks, and this data is readily available from many services. Small businesses benefit from mastering strategic BI and setting their course on longer-term trends. "Will I be profitable next month?" is more important than today's social noise.

You've blogged about the importance of small businesses in particular remaining competitive. Is investing in technology solutions rather than more employees part of that?

Small businesses located in high-cost countries need to use their brains to solve problems rather than throwing workers at the problem as can be done in low-cost countries. BI enables these businesses to make the proper resource decisions, thus keeping the business competitive and future-proofing its market position. These factors are critical to the families relying on that business to succeed. BI provides intelligent stability and growth in high-cost markets. BI doesn't replace employees per se, but BI makes hiring decisions more rational, which ensures the business will be around next year to keep paying its employees.

Expanding on that point, how can BI and analytics better position a smaller company to succeed?

Businesses that create a niche are often successful in the early years despite the absence of specialized software. After competition becomes a factor in their marketplace, analytics becomes a requirement. Successful companies use it as a primary differentiator. It speaks to organizational maturity -- a hallmark of companies that are prepared for acquisition. If a company is in a competitive industry and doesn't use analytics, that should be a red flag during the acquirer's due diligence.

Can you tell us a little bit about Bison Analytics and what your company brings to this discussion?

Bison Analytics provides a complete BI stack for growing businesses that run on QuickBooks. I've worked in enterprise BI for many years and wanted to make all of the capabilities of QuickBooks accessible to growing businesses.

Since 2006, we've been hard at work making this a reality, accepting no compromises along the way. Now, in partnership with InetSoft, we deliver a highly competitive, innovative, complete, and accessible BI system for growing companies.

As the foundation for domestic economic growth, these businesses must be able to customize their analytical entry points, perform write-back for planning, and easily import data from a multitude of systems. The Bison System enables all of that and more.

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