With Business Intelligence, It's What You Don't Know That Hurts

Dan is living the life that most of us only dream about: With very little effort and zero marketing, Dan has found a way to parlay his love for music into a moderately profitable web business. He uses a database to keep track of his 30,000-plus inventory of record albums, but he captures limited information and doesn't tie the database to sales transactions.

Dan knows how much money he spends buying records at garage sales and how much he brings in reselling them online, but he doesn't know which albums in his collection are top sellers and which albums are dust collectors. He doesn't know about his customers' buying patterns or seasonal trends, and he doesn't know which genres and artists -if added to his collection -- would triple sales.

Sadly, Dan operates his business like thousands of other business owners. They buy or hire someone to build the applications they need to run their business, but they don't give much thought as to how the data captured by the individual applications could be used to make their business better. The applications do the job as required and nothing more.

Business intelligence turns your everyday data into useful information. It's about taking the data captured as it relates to inventory, sales, customers, work schedules, and so forth, and using it to lower overhead costs, increase cash flow, and capitalize on new opportunities.

Business owners do not need to completely define their business intelligence solution reports before creating the applications and databases they need. Rather, I recommend that BI be included in the planning stage of any new application you buy or build.

As you consider why the application is needed and how it will be used, you should also consider:

• What the new data captured may reveal about the business
• How this new data relates to the data already captured by other applications, and
• What possible follow-on questions may arise when the data is analyzed en masse.

Your answers will likely lead to other data that you will want to capture as it happens.

In Dan's case, knowing how long an album sits on his shelf before it is bought will prevent him from buying more slow-moving inventory. Knowing monthly sales per genre will help him keep up with future demand. While knowing who his best customers are, how often they buy, and what they buy will help ensure they keep coming back and leave with the albums they came for.

The BI data you collect will depend on your type of business and goals. Planning for business intelligence during the application planning stage doesn't take much time, and in return you'll have a universal, dual-purpose database that is useful for application users and business managers.