How to choose the right business intelligence tool
The word ‘intelligence’ is sometimes used to mean ‘information:’ Think of the Central Intelligence Agency, commonly known as the CIA, which gathers and processes national security information in the United States.
‘Business intelligence’ is information about business, generally your business, and it’s very valuable. That’s because the more data people in an organization have, and the more ways they can aggregate and visualize it, the better they can understand what’s going on around them. And the better they understand what’s going on, the better decisions they can make.
The business intelligence market is big (about $16 billion this year) and it’s growing at an estimated 10 per cent a year.
Klipfolio, as a provider of data dashboards that help aggregate and visualize information, is part of that market.
But before anyone looks for a business intelligence solution, it’s important for them to understand what business intelligence is, how it can be used, and which products are a right fit for their needs.
There are four ways to use business intelligence:
Reporting looks at the past. It’s static information that often relates to financials, as in how much a company earned/spent/sold last month or last year.
Monitoring is reporting in real time: What is our current wait time for our support desk? How many sales have we made so far today? How many widgets do we have left in inventory at this moment?
Analytics is about exploring data to look for relationships, patterns or explanations. It’s not a real-time exercise, and its purpose is to understand things, not to present them.
Prediction combines information from monitoring and analytics in an attempt to predict the future.
For both analytics and prediction, data must be organized, compared and otherwise interpreted. The information in itself is not enough.
Though our dashboard can sometimes be used to help with analytics and reporting, Klipfolio provides, above all else, a monitoring tool. We provide real-time information that helps people in a business see what’s happening from moment to moment.
Potential clients have to understand that – and they have to understand their own needs. That’s why one of the first things we ask potential clients is: “What are you using the information for?” There is a right answer to that question: It’s ‘monitoring.’
Another way to ask this question is to ask how often the information you want changes, and how important it is to be able to take action quickly? Again, if these concerns are important to the people using the information, then a monitoring tool is likely the right fit.
Another telling question is: “Who will be using or consuming the data/information?” If the answer is analysts or data scientists, an analytical or predictive tool might be a better fit. If the answer is that they want their general employees to use our dashboard, then we’re on the right track. The anticipated use has to match the tool.
Upfront cost and cost of ownership are other important considerations.
Analytics and predictive tools are generally quite expensive, and need to be bought and run by a firm’s IT department, so smaller firms don’t really go for them. Historically, smaller firms were left with less expensive tools like Excel, which really don’t provide much value in terms of monitoring, analytics, or prediction. Nonetheless, these tools continue to be much of the backbone of how companies are gathering business intelligence. Learn more: Excel dashboard
Real-time monitoring was not part of the business intelligence equation at first, because it took computer horsepower – the ability to ingest raw data, perform calculations, and visualize it all within seconds.
But with the cloud, things changed. The cost of monitoring dropped, so it became possible to do it on a large scale.
That’s good news for firms of all sizes. But we found that small and medium-sized businesses were more likely to want to use a cloud-based solution for the simple reason that they, unlike the larger firms, didn’t have a large IT department with vested interests. That left them freer to look at non-IT solutions like ours.
The bottom line? Companies have to know what kind of business intelligence they need. A company that buys an analytics platform when all they want is monitoring is setting itself up for trouble: It will be stuck with an expensive tool poorly suited to its needs.
So when you are choosing a business intelligence solution, think first about how you are going to use the information. Start your search only when you know what you want the information for.
Allan Wille is a co-founder of Klipfolio, and its president and CEO. He’s also a designer, a cyclist, a father and a resolute optimist.