Business intelligence: transforming data into knowledge to orient business decisions

30 December 2013 Off By Pastaria

The business intelligence could have a strong impact in improving companies in the areas of business development and orientation and optimizing processes and organizational structure. This also brings prospective benefits in terms of a concrete reduction in costs – a fairly important aspect in a context, common also to businesses in the pasta sector, where margins are being squeezed and competitive pressures are growing.

We call it “business intelligence”, and it means the power of information and knowledge. It has the effect of considerably increasing capacities for controlling company performances and applying new business models, in a competitive context whose continuous evolution forces businesses to make constant, large-scale efforts to adapt.

Managing masses and masses of unstructured data and information, coming not just from company information systems but also from the outside world, can prove to be a task of great complexity for small and medium-sized firms, especially if they are not used to employing technologies in management planning and control activities and in those of marketing.

And yet business intelligence, today supported by software applications able to process and structure millions of data and information of different kinds, could have a strong impact in improving companies in the areas of business development and orientation and optimizing processes and organizational structure. This also brings prospective benefits in terms of a concrete reduction in costs – a fairly important aspect in a context, common also to businesses in the pasta sector, where margins are being squeezed and competitive pressures are growing.

The most frequent charge levelled at business intelligence is the difficulty in understanding and using the tool, which by its very nature is not particularly user-friendly. But the real barrier is cultural more than anything else – a sort of resistance to the use of tools of which the potential effects on turnovers and growth prospects are often unknown, or anyway cannot easily be imagined.

Nevertheless, the subject is worth thinking about. The business intelligence (BI) observatory of the Politecnico di Milano School of Management, in a recent analysis backed by a solid empirical base comprising over 90 case studies, has detected a greater effectiveness in decisions and a high speed of reaction to be some of the main advantages achieved by introducing BI systems into companies. But the barriers hindering the spread of these tools are essentially organizational and cultural in nature. Studies reveal, in particular, widespread forms of resistance to change with regard to processes, the absence of internal skills (professional profiles) suitable for managing the tool, and the inability to translate the information into effective actions.

As the Politecnico study explains, the scenario is anyway changing under the pressure of the forces converging on it, such as the growing popularity of social networks with their enormous information potential, the availability, at low cost, of technologies for managing even very large data banks, and the predictive power, by means of extrapolative forecasting methods, of the new business analytics tools.

In short, therefore, BI does not just help companies to understand situations and to act in consequence, by extracting from a huge mass of data – which may be unstructured and otherwise unmanageable – information that can greatly help the processes of decision-making and orientating marketing and sales actions. Through time series analysis, it also enables the future evolution of fundamental variables to be forecast, for example for sales relating to a particular product or a category of merchandise.

Basically, business intelligence tools allow companies, notwithstanding their size, to exploit to the full the wealth of knowledge that is contained within the data, after it has been suitably treated, analysed and interpreted, and to explore complex databanks to acquire information and knowledge that may be used in decision-making processes.

Useful information is also found in a survey by the Bocconi School of Management, conducted on a sample of Italian family businesses; it emerges from this that another obstacle to the introduction of business intelligence systems lies in the lack of time available to the management to devote to data analysis.

Yet relying exclusively on the company’s knowledge and the market dynamics can be a serious drawback in taking decisions and in defining company lines of action. This is all the more true if we consider that making use of the support of business intelligence tools, which appear to be very complex and laborious because of the lack of knowledge of them, is possible even without especially large investments, if an outsourcing approach is taken.

From the responses of companies who have adopted BI tools, the Bocconi survey identifies, among the benefits conferred by the introduction of these systems, an increase in company control ability and the possibility of applying new interpretative business models, for example, through new customer segmentations, commercial actions linked to new product/channel mixes with higher profit margins, or adapting and restructuring prices.

There was also a positive contribution brought about by BI systems in terms of greater availability of information, improvement in the quality of data present in management systems, increased capacity for forecasting and for the creation and launch of new products.

It is estimated that companies who adopt BI tools achieve performances that are three times better than others, as they offer a holistic view of business.

According to the latest ISTAT (Italian National Statistical Institute) Report on information and communication technologies in companies, during the last few years Italian companies have progressively increased their adoption of basic technologies, and have especially improved their types of Internet connection. On the other hand, the adoption of specific software for using information about customers with other functional areas for analysis and marketing purposes seems to have been slower, rising from a 13% share in 2009 to 17% in 2012.

It also emerged that companies that use software applications to manage information relating to customers use these tools more for purposes of collecting, filing and sharing the data than for analyses aimed at developing business.

In general – the Report concludes – in the area of ICT (Information and communication technology), a preference emerges for companies to resort to external skills, although to different degrees, depending on their size and economic sector they belong to. One company out of four, according to ISTAT, takes advantage of specialist computer skills through consultants and collaborators from other companies, while only one company in seven uses professionals who are already present in the workforce and have been appropriately trained.

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