These are the rainy days we hoped would never come. We are living in a time of tightened purse strings and uncertain prospects. The shadow of the bank manager looms over many previously flourishing businesses.
Difficult decisions are being made everywhere. Business owners are searching for financial stability, managers for the consistent performance results which will signal job security.
But whilst the current situation may be grim, there is gold at the end of the rainbow for those companies which do survive this recession. Rewarded with a bigger market share, and armed with the kind of confidence that outrunning the predator brings, these businesses will step out into a brighter future and reap the rewards.
Business Intelligence can help you to ensure that your business is one of those survivors.
Undeniably, the most pressing issues facing any business are those of eliminating unnecessary cost in all areas, attracting and servicing custom and avoiding the cashflow pitfalls of debtors.
The good news is that for every one of these crucial areas, there are ways to excavate the secrets to maximize profit and uncover the potential in the data you already hold from your day to day trading activities.
BI can aid a company’s survival during the lean times as well as its expansion in times of abundance.
While they are an undeniable fact of a tough economic climate, redundancies are never a nice event, but selecting the wrong person for redundancy can be a disaster both in monetary terms and for staff morale.
And the beauty of BI is that it can fine tune decision making. With all the information to hand new options can be considered.
Maybe your call center is open from 08:00 to 18:00, when only two calls a month are received after 17:00 and none until after 09:00. Cutting the working day by 2 hours for four employees saves a fifth from redundancy and does not impact the service to the customer.
BI provides the means to explore these opportunities and really fine tune a business.
Using the call center example above, the workload can also be determined based on the length, frequency and distribution of enquiries and an accurate estimate of the man hours needed to cover all calls.
Joe’s Garage is going from strength to strength. He has bought two more struggling garages and through his approach of specialization and Business Intelligence driven decision making.
Then, disaster. In an attempt to rejuvenate an ailing motor industry, the government introduces an initiative where the driver gets £2000 guaranteed for their old cars when they trade them in for a new car.
Suddenly, Joe’s customer base is buying new cars, not repairing their old ones.
Striking a Balance and What Your Business Needs
As is no doubt apparent, Business Intelligence really comes into its own when providing guidance in company critical situations.
But things are not quite that cut and dried, and following BI generated results blindly can be as harmful as operating without guidance.
BI should aid decision making, not replace it. This is true in all cases, but is particularly crucial when a company is endeavoring to survive a drop in the market place.
BI can also be used to justify a decision which has already been made. To provide a simple example, if you are fully aware that one employee has a poor absence record and worse timekeeping, then providing proof of this to back up your decision makes it seem more considered.
Indeed, it is. And a quick look at said employees work performance may reveal they are more productive than those that do have good attendance record.
In this case, it may be worth warning the employee (or buying them an alarm clock).
However, some things will never show on a BI report, such as how well an employee works with others and such soft skills.
Recession based BI is not just about cutting hours or downsizing the workforce. It can also assist in fine tuning other business practices that can make all the difference when every penny counts.
Identifying which customers take months to pay and insisting they pay in advantage (or not to deal with them at all) can have a huge positive impact when cash flow is so important.
Outstanding debtors can be categorized as regular clients and one off customers, and treated according when reminding them of their debt.
Focused marketing is also an ideal strategy when cash is short and your customer base needs extending.
Other, more company specific analysis may be invaluable to cutting costs. Any company that features transport in its services or business process may want to geographic reporting to compare actual mileage to ideal distances. Some longer routes may be quicker than short ones, but the savings in fuel may make it worth it.
Joe knows that all will return to normal in a year or so, when the new cars are in need of servicing or repair. But currently, his target market is down forty percent.
For his business to survive he knows he needs to take action, but the severity of the situation makes him reluctant to make any ill considered decisions.
Joe arranges a one day consultancy with Patrick to discuss his options. He has a few ideas but knows that Patrick has been doing a lot of work in this arena and so will have ideas of his own.
Instant Pay Off
An additional advantage of using BI for this task is that it provides a solid proof of why a certain employee has been made redundant. This can help explain the situation to the employee themselves and usually curtails the said employee from wanting to appeal the decision as they know it is based on fact rather than personal opinion.
The avoidance of one tribunal can be enough to offset the entire cost of the BI development.
Basing a redundancy on facts and figures that can be demonstrated and shown to the employee goes a long way to removing the personal element that can cause the employee to take offence and make a bad situation worse.
Using BI to analyze performance before making any redundancy decisions also sends a positive message to the more capable of members of staff that their hard work has not been ignored.
Experience has also shown that overall productivity tends to increase as employees have positive goals to work to rather than just waiting for the hammer to fall.
Because of the nature of the business requirements driving these reports, they can also be used for awarding bonuses or evaluating staff for promotions or pay rises when more abundant times return.
Joe gives a broad idea to Patrick of the factors he wants to measure his employees by, as well as investigating the general statistics regarding cash flow and profits.
Because of the economic climate, the consultant has produced these reports many times in recent months for many businesses in all types of sectors. It is a quick job for him to alter some existing reports for the staff evaluations.
However, the reports for cash flow are more specific to Joe’s Garage and so it is quicker to develop these from a fresh start, though the reports the BI Consultant has previously developed for Joe are certainly a help.
The options for implementing employee evaluations are the same as for any BI implementation and are covered in my article “Business Intelligence – Project Management Tips”.
Some of those options may seem expensive to a struggling company. However, because of the commonalities with HR reporting, an additional option is available in the form of off-the-shelf reporting packs.
These are a set of reports that should cover most, if not all of a company’s requirements with a minimum of configuration, and such a product is available to purchase from Scry Business Intelligence Ltd.
The strength of these report packs is that they tend to be comparatively inexpensive (Scry’s Employee Evaluation Pack is less than the cost of a single day consultancy) and quick to implement compared to beginning from nothing.
I personally recommend starting with a report pack and complimenting it with a few days consultancy to amend and tweak the pack to your company’s specific requirements. Ideally, hire a consultant from the company that developed the pack and so is familiar with its contents.
This approach should cost less than a photocopier, and can save a struggling company.
While the types of reports are the same for any type of BI implementation, dashboards really come into their own.
Being able to provide an overview of an employees entire work based ranking, from accuracy of work to time keeping, is a powerful tool.
With all the information at his fingertips, Joe looks over his company. The news is not good and it is clear that the garages are losing more money than he first thought.
Joe has only just built his empire and is reluctant to lay off any of his employees. He rings Patrick and requests a few additional options on his reports to allow him to explore a particular idea his has.
New versions of the reports are supplied and Joe is able to juggle the numbers to reach a viable solution with minimum damage.
Joe consults with his employees to gauge their reaction to his proposal.
Joe cuts everyone to a three and a half day week and closes two garages. No employees are made redundant, instead the week is split so that one team of mechanics work the first half, the other team the second half of the week.
Between the cost cut on the lack of rent for the two closed premises and the cut working week, Joe is back in profit for the time being. His employees are not overjoyed about the shortened week, but prefer it to being unemployed and Joe has assured them he will pay flat rate overtime when the work load justifies it.
Mistakes in this situation are not just a loss of opportunity, but a possible crippling blow, so every decision should be supported with as much information as possible. Business Intelligence can make the difference between flourishing and floundering.