Business Intelligence for start-up's

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".