In good times, people want to use business intelligence; in bad times, they have to.
Forgive the modification of this Bruce Barton quote about advertising. Regardless, the takeaway is this: business intelligence is even more critical during bad times. But there are companies that don’t think this way.
When your KPIs are green, the CEO is happy, and so is everyone down the line. People are encouraged to propose new ideas because your company has money to spend. Along comes a grinding recession or a crippling industry downturn, and the enthusiasm vanishes. It’s crunch time, and crunch time means two things:
- Find ways to improve and optimize your selling (which is a positive step your business can take)
- Begin to cut costs (which no business owner, nor employee, is necessarily excited about)
Cost-cutting might not be welcomed, but it’s necessary. You want to scrutinize every expense, right down to coffee and toilet paper. Cost cutting becomes the order of the day. Every extra dollar flowing out of the business is a red flag, and it should be. Cutting expenses during bad times is crucial, but cutting expenses the wrong way can be devastating for growth and survival.
Sometimes, in the drive for tightening financial controls, companies can choke their businesses to death. Most often, it happens when they don’t have business intelligence.
Investing in Business Intelligence – Even When You’re Cutting Costs?
We can sit here and talk about the need to invest in business intelligence, particularly during bad times. But that might lead you to respond with this piece of logic:
“How can we possibly make an additional investment when we’re looking for ways to minimize costs?”
It’s a valid question, but how you answer it could dictate the fate of your company.
What ‘good’ companies do with business intelligence in bad times
When bad times come, good companies lean forward on their business analytics dashboards and look for the exact points of pilferage and inefficiency, as well as for opportunities to uncover smarter selling tactics. They put their processes under the microscope before cutting costs surgically, ‘with a scalpel’.
What ‘bad’ companies do with business intelligence in bad times
Bad companies, on the other hand, go after their costs with a hatchet. Investment in business intelligence is postponed, because to them it’s an extra cost. New product development also becomes a victim of the cash crusade, as the company fights tooth and nail to weather the storm.
“Desperately seeking cash cure,” an article published in The Economist in November 2008, warns against axing expenditures too recklessly. Whereas preserving cash and minimizing losses are your first priority in hard times, making cuts that are too deep and too fast can be detrimental to the responsiveness and competitive ability of the company.
For example, if Canon had stopped investing in R&D after the film camera market went bust, it would have been where Yashica is today—dead and forgotten. Instead, Canon evolved, because its business systems were geared to foresee the shift in trends.
Business Intelligence: The Path That Leads You Out of Bad Times
Chopping off investment in business intelligence is one of the worst things you can do during bad times. It would be like walking on a dark and treacherous road without your GPS and night vision goggles. Business analytics give you the capability to slice and dice your way through the data, weeding out undue expenses and finding new sales opportunities, without affecting growth.
A predictive analytics tool allows you to estimate the impact of a price or cost change. And performing historical analysis oftentimes uncovers opportunities for growth in a shrinking industry or economy.
“A recession can be a fantastic time to launch innovations,” says the above mentioned Economist article. Hard times compel people to rethink their buying habits, creating room for businesses to find new ways for satisfying old and new needs. For example, the 2008 downturn and the ensuing circumstances gave rise to the idea of frugal and natural living and green lifestyles, creating opportunities for many businesses that were working in these niches.
On the darker side, many bad companies go under when the economy tanks, so better companies can benefit from a less crowded playing field. Would you say it’s a coincidence that Apple launched its iPod right after the dotcom bubble burst, and introduced the iPhone when the 2008 economic crisis was at its worst?
Luckily, only about two in ten companies go for the hatchet approach. A SIM survey conducted in November 2008, one of the worst times to have ever hit businesses, showed that only 19% of CIOs and IT executives were planning to slash their budgets in 2009. Business intelligence was one of the very few industries that continued to grow at an average rate of almost 10% in the years following the 2008 financial crisis.
The truth is that business intelligence becomes more important than ever during bad times. Yet many companies fear investmenting in business intelligence while the cookie is actively crumbling. In such times, a smart analytics service like Bison is your best friend. It gives you all the functionality of an enterprise tool at a fraction of the cost, and ensures that you can “dashboard your way out” of the crisis.
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