What business analytics means for small and medium businesses

An interview with Matthew Mikell, SMB Global Product Marketing Manager

When it comes to business analytics, it sometimes seems like only major en­terprises garner the spotlight. That’s somewhat understandable given the complexity and scope of their analytical challenges and the nature of their high-profile brands. But the fact is, far more small to medium businesses (SMBs) are poised to implement business analytics solutions.

In the US, these companies have revenues of less than $500 million. In Europe, the SMB category comprises companies with a maximum of EUR 450 million (about US$611 million). While in the Asia Pacific region, SMB often refers to both employee numbers and revenue, and range between 200 and 250 employees and $200 million and $500 million in revenue. In many ways, these businesses are striving for the same goals to grow their business through innovation, and need the same sophisti­cated functionality scaled appropriately to their processes. In this Q&A, Matthew Mikell, SAS Global Product Marketing Manager, shares his perspec­tives on what business analytics means to SMBs.

Q. What are some of the unique challenges that SMBs face with respect to business analytics? 

A. SMBs primarily face the issue of scale. At SAS we have heard four general constraints when listening to organizations that are SMBs:

1) Decision-making style
Transitioning from gut instinct to fact-based framework can be difficult in part because the former approach has likely served the successful SMB very well. Most SMBs have Excel experts who can generate some great static charts and graphs — and I wouldn’t ever want to denigrate the value those reports provide. But there’s so much more val­ue that can be derived from in-depth analyses. Once SMB executives get a real glimpse of the insights that are lurking beneath the surface of their transaction data, their willingness to adopt business analytics increases pretty quickly.

2) Cash flow
In addition to a shift in decision-mak­ing style, cash constraints can pose very real obstacles for an SMB that wants to mature in this area. Consid­ering the business analytics frame­work helps improve margins, retain key customers and grow share of wallet in their markets. However, the long-lasting return on investment far outweighs the capital required to undergo the transition.

3)  IT resources and infrastructure
More than 80 percent of SMBs with about 100 employees have only four dedicated IT staffers. They’re stretched thin, and that can make it very difficult to expand the IT mandate beyond criti­cal business operations into managing business analytics environments.

4) Business analytics maturity 
SMBs must have an appreciation for the level of skills required to meet over­all strategic goals through business analytics. Research from Aberdeen Group suggests that SMBs without the relevant skill sets are poorly positioned to drive value from an analytical solu­tion. It reports that SMBs using some sort of analytical applications perform at a higher level than their competitors that do not.¹ 

The main SMB challenge for moving to business analytics is the understanding of its impact on these four critical areas, and building a capability that is cost-effective and remains flexible and easy to use.

Q. Why should SMBs adopt business analytics?

A: It essentially boils down to competi­tive pressures. SMBs need to continu­ally innovate. If you’re an SMB that isn’t constantly seeking to optimize every possible aspect of the operation, you’re at a disadvantage. Internally, employees need these tools to be productive. Oth­erwise, it’s gut-based decisions, or cut­ting and pasting from multiple tools.

The truth is what brought you to where you are typically won’t take you to the next level. But it’s very difficult, cultur­ally, to walk away from what’s made you successful. SMB executives – often owners or people with lengthy tenures – worry about letting go of the information flow and empowering people to make decisions that were previously reserved for executives.

Q What’s the best way for SMBs to tackle the adoption of business analytics?

A: Of course, every company differs – particularly at the SMB size. But we’ve found that there is a general approach to the adoption of business analytics. The first step is to ensure you have sponsor­ship from company executives. Clearly lay out the business analytics benefits and return to the management team. This transparency is key at the SMB level as SMB executives are tradition­ally heavily involved in analyses, report­ing and the decision-making process. Make it clear how business analytics will resolve a compelling issue or attract and retain customers, for example.

The second strategy is to focus on a particular business process or issue. Don’t introduce business analytics as a broad, unfocused utility for general usage. This will occur naturally as you solve more focused issues, building up confidence in fact-based decision mak­ing as a core competency. Some of the typical issues that we see being solved with business analytics include improv­ing customer data quality for improved marketing, invoicing or customer ser­vice, or improved product pricing and packaging analysis to drive a higher market share.

Finally, don’t rest on your laurels. Capi­talize on your initial success to broaden deployment to other areas of the orga­nization. Those adoptions move faster once you can point to a successful track record in another area.

Q. What’s the difference between business analytics for large enter­prises vs. SMBs?

A: In a nutshell, it’s about scale. Deploy­ment and support strategies will have a different nature. What’s more interesting to me, however, is the important com­monality: functionality. Business analyt­ics in SMBs is not about presenting a subset of functionality but rather surfac­ing the right functionality for the problem at hand, and opening up to more as the business requires it. Despite their size, SMBs face similar challenges to make better and more informed decisions to continue innovating in their markets. It is therefore essential to provide a rich set of features and a very high level of tech­nology usability.

Q. Can you share some examples of how SMBs have been able to capitalize on business analytics?

A: Sure. We’ve worked with an energy-trading company that enables staff to predict what today’s electricity and gas purchases will sell for months later when consumers buy. Business analytics supplies that intelligence to traders in a cleaner, faster and more accurate way.

A collection agency uses SAS Business Analytics to analyze bad-debt portfolios before acquiring those assets. This is a quantum leap forward from its previous model, which was simply buying any debt assets for as little as possible and hoping to collect successfully.

A player in the secondary-ticket market uses SAS to develop a deeper under­standing of the needs of its thousands of customers. By segmenting them and catering to psychographics, the company can optimize how frequently it contacts the customers and improves loyalty.

Matthew Mikell leads Global Product Marketing for SMB markets and software-as-a-service (SaaS) offerings at SAS, supporting strategic planning, messaging and product offerings through direct and indirect channels.