Three tricky questions BI systems can answer

Should a small or medium-sized business 'trust its gut' or get a BI system? Don Jones shows three examples of things you can't determine without BI.

If you don't have a working BI system, you may be a bit leery of the alleged benefits of these sometimes expensive

software systems. Are they like "Web 2.0," surrounded more by hype than reality, or do they offer an obvious, tangible benefit that you just haven't seen yet?

A SQL Server business intelligence (BI) system is a kind of decision support system. As the name implies, a BI system's job is simply to help you make decisions. Many businesses -- especially small and medium-sized ones -- tend to rely on management's experience and "gut instinct" to make decisions. "Of course we have to hire new people for the holidays," one might say. "It's always busier then." While experience is an important factor in making business decisions, cold, hard facts are also important. BI systems are simply designed to make complex facts, derived from multiple interrelated data sources, easier to see and understand. In particular, a BI system can -- with its access to reams and reams of data-- often spot patterns and trends that might otherwise go unnoticed. In that regard, it can often help you to ask questions you never would have thought of asking before.

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One question might be what your top 10 most profitable customers are for each country in which you do business. That's a question that's actually tough to answer with traditional relational databases. Your customer order entry system can probably tell you the highest revenue customers -- but it takes a tie-in to several other systems to show profitability. You might not realize, for example, that you experience 10% higher labor costs for transactions in certain countries due to complex import and export paperwork that has to accompany each order -- but a business intelligence system can highlight that fact. As a businessperson, you might want that profitability number to include as many factors as possible -- payroll, rent, utilities and so forth - meaning data is going to have to be combined from many different sources and run through some pretty heavy-duty math.

What about if you have a spike in winter coat sales -- in July? Your order management system can easily show you that there is such a spike, but it might have a difficult time determining why. Use a BI system to bring in data from your shipping systems, perhaps a publicly available weather database (certainly relevant data if you're selling coats), and elsewhere and you might spot a trend -- like increases in shipments to the southern hemisphere, where July is a bit cooler than in the north.

What are the most profitable cities in which you do business? This is an even tougher question, because a city would probably include several customers. And if by "city" you really mean "metropolitan area," the question becomes even more complex. Does your order management database understand that Las Vegas and Henderson are really the same small area? So now you have to combine sales and geographic information with your financial systems, with your payroll systems, and the list goes on; that's exactly what a SQL Server business intelligence system is designed to reveal. It'll also help you understand why those areas are more profitable: Is it because of lower shipping costs? Lower taxes? Whatever the reason, a BI system helps you to dig them up -- which is one reason BI system users are often called data miners.

If the key to a successful business is making the right decisions, then a BI system can be a key tool in helping to make that happen. By bringing together disparate, seemingly unrelated pieces of data across broad periods of time, BI systems can highlight facts you might never have thought of on your own.

This was first published in November 2012

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