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3 Principles to Guide Your Investment in BI Technology

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For many companies, investing in the right tools can pay serious dividends, which is why more companies are making room for them in their annual budgets. However, a powerful piece of expensive software won’t drive growth on its own.

Businesses are getting smarter – or they’re trying to. Gartner Inc. predicts that the global business intelligence and analytics software market will eclipse $18 billion in revenue this year, and that number will be even larger by the end of the decade.

A huge variety of tools is available, and those tools are getting increasingly sophisticated. For many companies, investing in the right tools can pay serious dividends, which is why more companies are making room for them in their annual budgets.

A powerful piece of expensive software won’t drive growth on its own. When you’re choosing technology, sophistication and price are less important than the ability to understand the key performance indicators and metrics that actually lead to growth.

The measure of intelligence

BI is an umbrella term that means something different to every business. In theory, every company – whether a bakery, a chiropractic clinic or an online marketing machine – could benefit from some sort of business intelligence tool.

For companies that depend on online sales, website visitors or mobile app downloads, and especially those that rely on many small transactions, there’s no doubt that more high-quality data can lead to a better understanding of the business. Depending on the business and budget, it could be prudent to explore the market and consider investing in more robust software, keeping in mind that this investment has to extend to training the staff to use the software properly.

Building a solid foundation

What business owners shouldn’t do is spend money on a tool without fully understanding how it benefits them. Stick to what you need for your business to be successful today. If possible, try to build your own software that can scale and be ready for integration with more sophisticated measurement tools in the future.

When the time comes to invest in new technology, keep in mind the following principles:

1. Without the correct data, you won’t reach the correct decisions. 

All the analytics power in the world is only as good as the manager using it. As the leader of a startup or small business, you must understand your data, the behavior of your customers, traffic to your website, account activity and other metrics that are critical to your success. Make sure your data ties back to the key performance indicators you need to watch to ensure business growth.

At Phone.com, we recently started using Tableau.com for reporting. The flexibility to slice and dice data based on a range of parameters allows us to analyze results and reach decisions with higher confidence. It takes a lot of time to get the various systems working together for the most accurate results and to make true apples-to-apples comparisons.

2. You have to know more than the tools you use. 

The tools work for you. You may be drowning in offers from different service providers (both free and fee-based), many of which work similarly. Lots of services just take your Google Analytics and present the same data in a nicer way.

Whenever possible, take time to analyze the row data for yourself. If you can’t trust it, find out why. Exclude the data points that aren’t relevant to your business right now.

My team implemented several tools to measure website traffic patterns, shopping cart behavior and various customer KPIs. As we grew, we moved from basic Google Analytics and Excel spreadsheets to professional tools, but what really moved the needle was human analysis. Free tools provide a lot of data, but manual attention is still essential.

3. Don’t let the tools erode your trust in yourself. 

Business intelligence data can impact your decisions, but it can’t make decisions for you. If the data tells you one thing but your gut tells you something else, don’t fall prey to analysis paralysis. Your intuition is based on experience, so trust your gut instinct in making intelligent business decisions.

If you start with understanding, you’ll grow over time, allowing you to afford more professional tools to analyze the data you’re collecting and automate how it’s presented. Markets and technology are constantly changing, but by properly utilizing what you have and keeping an eye on the horizon, you’ll be prepared for whatever may come your way.

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