Business analytics for small and midsize businesses
Research uncovers a perception gap in SMBs' understanding of the benefits of business analytics and the availability of affordable solutions
Managers of small and midsize businesses (SMBs) are reaching out for a method to leverage the mass of data they have about their operations and customers to help determine the direction of their businesses and improve upon past performance.
For SMBs, business analytics presents an opportunity to be more efficient, effective and profitable. However, a recent TechWeb study* – commissioned by SAS – shows a large perception gap in the awareness of business analytics' benefits and the availability of solutions that can be adopted easily and affordably.
Three-quarters of those surveyed recognized that they need better visibility into the data they already have or need to have it presented in a way that can help them better understand it.
A better way to analyze business performance
According to the survey, 60 percent of respondents said they collect a wide variety of data and analyze it themselves manually – or through a third party – using Microsoft Excel. Jim Linn, Managing Director of IT for the American Gas Association (AGA), said his organization does its "own analysis and it's fairly personalized and labor intensive." Linn's organization employs a staff of analysts to perform a significant amount of analysis, but he worries that automated business analytics might cost too much and be too difficult to implement.
The cost concern
While 7.5 percent of all respondents said that they had never heard of business analytics, other respondents said that they could see the value the software would provide: allowing them to measure their current performance and forecast future outcomes.
Sixteen percent said they use manual methods because they need to understand what is happening with their operations but don't have a better way. Twenty-one percent admitted that they don't know how to present the data in a useful manner. The survey, however, shows a lack of familiarity with low-cost options for business analytics and a limited understanding of analytical processes. According to the findings, SMBs are trying to analyze their business performance with the tools they have – labor intensively and inefficiently.
There's also a lack of understanding of what constitutes a business analytics solution. "We don't currently use business analytics," said Brian Long, CIO and IT director for Chem Quip, a wholesale distributor of industrial chemicals. "We use Excel and Crystal Reports," Long explained. Long said that he already uses his solution to produce exception reports, which identify trends such as major changes in sales. He said that he's trying to help his company be a better vendor by staying ahead of the curve when it comes to factors that affect his business and its customers.
Of course, Long is using business analytics – albeit in a way that's largely manual and requires expert knowledge of his business to interpret the data he already has. Long admits that his current approach has shortcomings. "It would be better if we had something to tell us what would happen in the next 30 days," he said. He added that he thinks there would be real benefit to an integrated business analytics system. He said that he needs to be able to keep tabs on factors such as shipping and lost sales so that small problems don't creep up.
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An economical approach to adopting business analytics
The good news is that SMBs acknowledge that they are ready for solutions that will allow them to be more competitive, successful and effective in delivering the products and services their customers want.
*In June 2010, TechWeb research conducted a study on behalf of SAS on the state of SMB analytics. The survey included 800 respondents and has a margin of error of no more than 3.4 percent.
Bio: Wayne Rash is a freelance writer and editor with 35 years covering technology. He is a frequent guest on network news and talk shows, and has appeared on NPR, Fox Business News and NBC as a technology expert.
This story appears in the First Quarter 2011 issue of