Business Intelligence Industry Healthcheck

Recently, we’ve been working with many companies to deliver what we call LucidEra Pipeline Healthchecks.  It’s a free assessment of the strengths and weaknesses of your pipeline, your sales people, and your sales process.  There’s nothing you need to do except provide us access to your sales data, and the results are ready in 48 hours.  It has quickly become one of our most popular services.

It’s interesting to look at why a service like this is so popular, and why it is so valuable to customers.  How is it possible that in just 48 hours, a third party can look at a company’s data and identify issues and opportunities that the company didn’t know about?  In our case, when we deliver a Pipeline Healthcheck, it’s certainly the case that we don’t have in-depth knowledge of how the company works or what their biggest business challenges are.  So how does a 48 hour assessment provide real value?

The answer lies in the fact that the vast majority of business people have never been taught how to analyze the area of their business that they’re responsible for.  Finance is an exception, since most people with a finance degree have taken several classes on how to interpret financial statements and how to manage by key metrics.  But for the rest of us, managing the things we’re responsible for is done more as an art than as a science.  Looking at sales in particular, how many of us were ever taught how to analyze our pipeline?  Universities don’t have classes on the topic.  Even business schools don’t.  And most companies don’t teach it to their employees either.

Traditional Business Intelligence has tried to provide tools to help people gain insight into their businesses so they can figure out what actions to take to grow their companies.  But there is a fundamental flaw with this approach: as I stated above, people don’t know what to do with these tools.  They don’t know what questions to ask.  They have to make it up as they go.  That is, they don’t know what they don’t know.

So, I thought it would be useful to go through the mental exercise of doing something like a “Healthcheck” for the BI industry to see what issues and opportunities I’d uncover there.  Let’s start with a general framework for what BI is about, often referred to as the Three A’s:  Access, Analyze, Action.  This is the core value proposition that traditional BI vendors have always touted — they give you simplified access to data (often, this data comes from multiple sources), then you analyze the data to find insights, and then that leads to taking positive action in your company.

Access: If I were grading the industry, I’d give it a “B” here.  From some perspectives, the industry has done well.  Before BI and Analytic solutions were available, getting access to the data you needed was pretty cumbersome, particularly if that data resided in multiple systems.  For example, you had to go to your CRM system to get pipeline information, but your ERP system had information on actual bookings and discount amounts.  BI solutions have made that much easier by bringing the data you need into one place, and providing multiple convenient ways to get the data either through a web browser, through being embedded in enterprise applications (often via mashups), being sent via email, as cellphone-based alerts, etc.

But, another aspect of access is “is it available to everyone?”  Here, there is a huge opportunity to make BI and Analytics far more accessible.  Given the cost, complexity, and skill sets needed to implement and manage traditional BI solutions, most smaller and midsized companies have been left out in the cold.  This is one of the major reasons that the SaaS model for BI is becoming so popular — the vendor does all the heavy lifting regarding the infrastructure, making it available to everyone.

Analyze: I’d give the industry a “C” here.  Traditional BI has focused on giving people powerful tools to answer almost any question they can think of asking when they analyze their business.  But, it misses the main point that people don’t know what questions they should be asking.  It’s like giving a patient a full set of state-of-the-art medical equipment, and telling them that they can now go diagnose their own health.

There are two major actions we need to take here.  First, we need to move away from the concept of “BI as a tool” and move towards “BI as an application.”  That is, we need to stop thinking that the right solution is a tool that let’s us answer any question we can ask, and start focusing on prebuilt analytic applications designed for specific roles in a company that include best practices to guide people towards the things they should be looking at.  Second, we need to help educate customers about using analysis effectively.  The SaaS model means we don’t have to pay consultants as much money to implement BI for us.  So, take the savings there and apply the resources towards educating employees on how to use analysis effectively in their roles.  People want, and need, help using analysis.  As one of our customers recently commented on a prior blog post,

[Smaller organizations] do not have the budget for a sales operations person (typically) let alone a full-time analytics person. We absolutely need a tool that can start us in the right direction and then let us tune it to our business… which, in my experience, Lucidera does very well so far.

Our industry needs to put more energy into helping people understand what they should be looking at and why.  The products need to embody best practices, and the services should focus on the “why” of analytics, not the “how.”

Action: This one gets a “D”.  If people don’t know what they should be looking at, then they’re not getting valuable insights, so there’s nothing to act on.  Using the patient analogy above, assuming the patient had no prior medical training, he’d probably just be able to take his own pulse.  As long as it was reasonably normal, he’d assume he’s healthy, and there’d be no action to take.  Until we make it much easier for people to understand what they should analyze and why, there won’t be much progress here.  But, if we can change this, whole industries can reinvent themselves.  Once the manufacturing industry went from the purely skill-based artisan / apprentice model to the production line with data driven manufacturing processes, we launched the industrial age.  Similar things are waiting to happen to other industries.

I find it fascinating that people have been crying out for a long time about needing simpler Business Intelligence solutions and more guidance, yet historically the only response has been to add even more features to an already complicated solution.  If the response to our Pipeline Healthchecks is any indication, a new approach to analysis is emerging — one that incorporates best practices and guidance.

posted by Ken Rudin at 11:39 am

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