I always wonder, when the economic bureau news says around
50 % of start-ups fail in first 2 years and more than 90% start-ups fail in
first five years. Only 2% of start-ups survive after 10 years. I hear the same
news for last 10 years.
On the other hand BI market is growing around 10%
annually. As BI (Business Intelligence) is a process that helps the stake holders
to take decision, which will increase the life of the business.The economic bureau news should be reversed.Surprisingly not!!!
- Is it really true, that BI helps the business to thrive?
- Does the BI make any difference in the business life cycle?
- Can BI help in avoiding the start-up failures?
- Can’t the start ups and the young companies with small bank balances use BI for their growth?
- Or Is Business Intelligence solution should be used only by the big companies with bulk bank balances?
Before answering our question let me explain what is BI and
where it is making an impact
Business intelligence (BI),
is an umbrella term that refers to a variety of software applications used to collect
and analyze the organization’s raw data.BI as a discipline is made up of several related activities,
including data mining, analytical processing, querying and reporting.
Companies use BI to improve
Decision making -
Restaurant’s chains like Wendy’s
Cut costs -
Wal Mart
Identify new business opportunities - Target, GE
Launch new products -
Wendy, Ruby Tuesday’s
Planning
- Professional sports team red sox, Patriots (They claim that BI is the reason
for them to win the Super bowl 3 times), South African cricket team
Etc…The list is end less
It is true the BI is helping in increasing the life cycle
of an organization (Ex: Walmart, Patriots sports team etc...). There will be no
question about it.
Then our next question is why the start-ups fail? Is BI only
for big companies?
No, for utilizing BI the company need not to be established
nor it should have bulk balances in their bank.As older companies have an established process and product
line, they can reap benefit from BI immediately for process improvement, cost cut down,
operational improvement, financial planning, etc…The start ups don’t have anything established which they
want to control, correct or to improve upon.For start up BI can be used to establish a process or correct
the processes before it matures. Once the process matures it is very
difficult to change. BI can be used in areas which help the start-ups to survive
and grow.
The discussion point for any organization to go for a BI are
1. Usability
2. Affordability
Usability:
If you see the reason for the start up failures, it will
fall in to any of these 4 categories
-
Wrong product and market
-
Customer dissatisfaction
-
Financial problems
-
Wrong Management
Having a BI can help the company to survive these problems.
Wrong product and market: For a start up every entrepreneur has
to do their due diligence even before entering in to the business.If there was a mistake in choosing product
or market, establishing a BI process may not be able to help the organizations
life cycle. The existing BI reports (Government or private agency reports) have
to be used by the entrepreneurs to re-access their situation and make a decision.
Once the organization grows, the BI process plays a major role for product and
market management. BI is required for analysing various things from market
reach, validating the promotion effectiveness, new customer reach, product
categorisation, etc…
Customer dissatisfaction: This is
the second biggest reason for the start-up failures. For any business to survive
they require happy customers and word of mouth marketing from these satisfied customers.
The customer reference is required for business growth. Establishing a BI
process for this area will help the organization not only to survive but to
grow and to out grow the competitors. The BI process will help the management to
identify and rectify the customer dissatisfaction at root cause level. It will help
them to validate the effectiveness of the corrective actions the management had
implemented.
Financial problems: This is the third
reason where most of the entrepreneurs fail. This is the area where most of
entrepreneurs lack knowledge. They fail
to observe the earlier signs. They fail to see the warnings on cost increase,
Profitability decrease, bills receivables, account payable etc...Having a BI
for this department will help the entrepreneurs to identify the earlier signs easily and make
necessary corrective actions before it goes uncontrollable.
Wrong Management: If there are any
red flags created in the customer department or on the financial department,
probably that is due to the wrong management. A BI process can be implemented
to see the employee satisfaction level, which in turn drives the customer
satisfaction of the business.
Over all for a start-up BI process
is required in the financial department and customer satisfaction department. Once
start-up become stabilised with cash flow the BI implementation is very much
required on the marketing and product departments. Once the organization
matures the BI can be implemented across organization for better cost control
and process improvement.
Ex: Infosys (largest IT service provider in INDIA with
150,000 employees) had a BI process implemented on their HR department from day
one of their operation. Now they were having BI process implemented across all
departments.
Affordability:
As most of us think, Implementing BI doesn’t require
millions of dollars to start with. For a start up spending 400 dollars on Microsoft
office suite and another 500 $ on the developer is better place to start with.
If the organization doesn’t want to spend 900 dollars initially they can use
any of the cloud solutions from Google, Microsoft web apps, Zoho etc… These
products may cost maximum 30 dollars per month. By spending maximum of 1000
dollars (if you know development on excel / Access then it is only 500 $) we
have a BI solution for start-up in our hand. This investment will help the business
to survive the initial years.
Once the organization matures and the data set becomes big,
either the organization can go for BI proprietary products like SAP, SAS,
ORACLE, IBM etc...(If ready to spend millions) or they can target Open source solutions like Pentaho, Jasper, PHP & MySQL combo etc… (Require only 25% of the cost of proprietary products On Average the cost
of Implementing an open source solution will span between 30,000 $ to 500,000 $
annually based on the complexity and the volume.
Once an organization crosses a threshold time of 10 + years,
either it can stick with the existing open source solution or they can move to
the proprietary product solution. The
reason I would prefer to move towards the proprietary solution is due to ease
of implementation and the proprietary products provide enhanced insights and
capability for the top management decisions. Moreover they are always updated
with the new technologies for better performance. To me these enhanced features
or technology advancements were not required at initial stages of the business.
One more thing as we have a BI process implemented from day
one, without any risk we can move from open source to proprietary tools based
BI solution.
Hope by
utilizing an BI solution for the start-ups
and after 5 years we will have the revised news from business bureau as "only 2% of the
start-ups fail after 5 years in operation".
