Modernize your Business with Predictive Insights: Paving the Way for Business Growth

Businesses have always needed the ability to track and measure critical success metrics in a quantifiable way. Yet this is often a tall order for midsize businesses (100 to 1,000 employees) to address. The problem is that when there’s too much information, people find it difficult to fully comprehend it and make informed decisions. In fact, in our 2017 SMB Routes to Market Study, midsize businesses indicated that “getting better insights from the data we already have” as one of their top technology challenges.

Figure 1: U.S. Midsize Business Top Technology Challenges

We live in an age where technology is transforming virtually every industry. As a result, midsize business decision-makers face added pressure to “read the tea leaves” to reduce uncertainty. In this shifting business environment, simply analyzing past performance is no longer enough. You also need predictive capabilities to anticipate trends so they can plan for what’s likely to happen in the future.

A new generation of powerful, yet cost-effective and easy-to-use cloud-based analytics solutions can help level the analytics playing field for midsize businesses. The solutions offer the insights you need to answer key business decisions, such as “Who are my best customers?” or “How can we better match market demand with product supply?” or “How can I recruit and retain employees with the skills the business needs?” Armed with the right insights, you can better assess how they are doing today, and plan for what they should be doing in the future to optimize business performance.

This means that now is a great time for you to rethink your approach to business intelligence and analytics. In this paper, we examine why businesses should start using modern, predictive analytics solutions, and how they can help your business stay on ahead of new trends, opportunities and market shifts.

Dealing With the Data Rush

“Big data” is a big buzzword in the IT industry—and for good reason. According to IDC, 1.7MB of new information is being created for every human on the planet, every second of every day, and 180 zettabytes of digital data will be generated worldwide by 2025.

While zettabyes may be hard to wrap your head around, just consider all of the different types of information that’s moved from physical to digital form over the last several years:

  • Doctors have moved from paper charts to electronic medical records.
  • Merchants have moved from paper credit card imprinters to POS terminals to virtual terminals to mobile payment devices.
  • Internet of Things (IoT) technology is equipping objects—from Fitbits to traffic sensors to seismographs—to record, report and receive data, and create entirely new digital data streams.
  • People are growing their digital footprints on a myriad of social networks, and via their interactions with the companies they do business with.

Figure 2: U.S. Medium Business Attitudes About Decision-Making and Use of Analytics Solutions

Although 62% say they currently use an analytics solution to support this data-driven approach, many midsize businesses rely primarily on spreadsheets or homegrown tools for data analysis: In SMB Group surveys, spreadsheets are the most frequently used analytics tool among midsize companies. Because they don’t often have data scientists on staff, many feel that moving from basic tools that analyze internal, transactional data to a more comprehensive analytics approach is out of reach.

Figure 3: U.S. Midsize Business Top Business Challenges

The Limitations of Spreadsheets

As Albert Einstein noted, “Information is not knowledge.” Midsize businesses may have plenty of data, but if they’re using spreadsheets, they will reach a tipping point where they lack the means to extract knowledge and insight from it. In fact, many midsize businesses struggle to get the information they need to meet the wide range of complex business challenges (Figure 3) on their plates.

This is because as powerful as spreadsheets are, they have limitations that can lead to inefficiencies and expose the business to potentially damaging risks, such as inaccurate calculations and security breaches. When spreadsheet analysis is the norm, it’s also likely that everyone is crunching their own data–which can results in conflicts about what’s the “right” version of the truth.

In addition, spreadsheets must accommodate the increasing volumes of digital information that are being created every day. But as spreadsheets grow, they also get slower. It takes more time to run queries, and links and formulas are more likely to break.

Finally, spreadsheet analysis is typically limited to providing information to tell you about what’s already happened–limiting most midsize businesses to using analytics for descriptive purposes only (Figure 4). This stops short of answering predictive questions that can you evaluate what could happen in the future, or providing insights about possible outcomes so you can determine the best course of action for a given situation.

Figure 4: Ways in Which U.S. Midsize Businesses Use Analytics

 Advancing Your Business with Predictive Insights

But new technology is advancing at warp speed in the analytics space. Vendors are building powerful, yet easy to use solutions that help midsize businesses gain the benefits of predictive insights so they can stay ahead of market and competitive trends.

These solutions use database technologies that can deal with both structured data, such as transactional data from orders or payments, as well as unstructured data, such as emails. They can pull in and analyze both internal data, as well as data from external sources, such as social media. They also use technologies to speed data processing, number crunching and analytics to deliver analysis more quickly to decision-makers.

Modern predictive analytics solutions are also easier to “layer” on top existing data than in the past. As important, they are often designed for business users, offering capabilities such as:

  • User-friendly interfaces, with guided discovery to make it easier to ask the questions that will lead to “aha” moments and insights.
  • Visualization tools that turn rows of data into visuals that represent what the data says in intuitive ways that makes it easier to communicate the story the data is telling.
  • Natural language capabilities so users can easily query the data.

Some vendors provide pre-packaged applications that integrate all of the components necessary for analytics solution, including connectors to business solutions; the data model; tools to extract, transform and load (ETL) data; a semantic layer; query and reporting capabilities; and predefined metrics, reports and dashboards. Many solutions offer free-trials, and are available as subscription-based services. This takes the friction out of the buying process, and makes using analytics solutions much more affordable.

For instance, IBM offers a free trial for SPSS Statistics and a Subscription payment model of $99/month, without any term commitments, from the IBM Marketplace.

The self-service offering is easy enough for business users to learn to use, while also providing advanced capabilities that data scientists expect. From one online interface, users can subscribe to and download SPSS Statistics Service, which will help you to:

  • Improve business decision-making processes and business outcomes by quickly gaining insights from data sets in any format, including spreadsheets.
  • Eliminate labor-intensive manual checks with advanced data preparation capabilities.
  • Monetize the data you own by analyzing trends, forecasting, and planning to validate assumptions and drive accurate conclusions.

Users can input and aggregate data from multiple sources–whether from spreadsheets, email, call center notes, transactional data, sensors, social media or other inputs. Once the data is aggregated, decision-makers can get a clearer view of the business and the market, and get everyone on the same page to enable more efficient and effective decision-making.

With these capabilities, you can start thinking about moving beyond descriptive analysis, which provides insight into the past to answer, “What has happened?” to predictive analytics, which use statistical models and forecasts techniques to understand the future and to answer, “What could happen?” For instance, you can use predictive analytics to anticipate customer behavior and purchasing patterns, predict sales profitability trends, or forecast inventory demand, such as:

  • Who are my best customers?
  • How can I reduce customer churn?
  • Where should I open a new store or facility?
  • How is a new competitor affecting my business?
  • How can I improve employee engagement and performance?

As a result, you’ll be able to more readily identify and act on opportunities for cost savings, efficiencies and new business opportunities. Because SPSS Statistics Service is subscription-based, businesses can adjust resources up or down as needed for peak decision-making times, such as during the holiday season for retailers.

Smoothing the Shift

Although analytics solutions have gotten easier to access, use and gain insights from, Inertia and the tendency to stick with “the devil you know” prevent many businesses from moving from spreadsheets to more capable analytics solutions. In most cases, key stakeholders must be on board to help spearhead this shift.

One of the best selling points for this transition is that many studies show that businesses that can effectively harness and use data can gain dramatic market advantages over those that don’t: SMB Group’s 2017 SMB Routes to Market Study shows that midsize businesses that use “purpose-built” analytics solutions are 80% more likely to expect revenues to rise than those that rely on spreadsheets for business analytics.

Often, a good way to get started down a successful path is to cherry pick your first use case. Determine the most obvious missing information links, and at those where having better insights would yield the most immediate value. You should also identify areas where spreadsheet use is heaviest, as this may indicate that people looking for better business decision support and may be more willing to try new tools. Choose a place where you can quickly demonstrate the value, and build from there.

The best place to start will differ for every firm, but here are some pain points questions to think about in different functional areas to get started:

  • Sales and marketing: Is the organization more reactive than pro-active in addressing critical situations such as declining pipeline, increase customer churn, lowering conversion rates. Do you lack visibility into sales and marketing activities and effectiveness? Does a lack of visibility into customers’ buying trends undermine your ability to up-sell and cross-sell?
  • Finance: Does it take too long to close the books? Is it difficult to measure actuals against targets? Is it challenging to analyze large volumes of data? Is the budgeting process complex, inefficient and lengthy? Do you spend too much time producing reports for others in the organization?
  • Operations, manufacturing and customer service: Does the team lack visibility into overall performance of the supply chain, preventing them from taking timely corrective action? Is it difficult and complex to adjust to shifting customer needs and demands? Is there information disconnect with other departments, such as sales and marketing?

Across business functions, predictive analytics provides insights to help you solve these problems by answering three critical questions:

  • How are we doing?
  • What is driving our current performance?
  • What should we do to improve results?

As a result, managers can make better, faster decisions to drive growth, reduce costs and create better business outcomes.

Summary and Perspective

While decision-makers must do their homework to determine which analytics solutions will be the best fit for their businesses, the advantages of fact-based decision-making cannot be underestimated.

At a time when the business environment is undergoing rapid transformation, and information is proliferating at an unprecedented rate, midsize businesses need an intelligence edge that spreadsheets can’t provide. Being able to easily access, understand, analyze, report and act on critical information will increasingly become a make or break factor for business success.

Predictive analytics solutions can provide midsize companies with insights needed to spot new opportunities, avoid mistakes and identify small problems before they mushroom into big ones–and stay ahead of market trends and the competition.

© SMB Group, 2017

SMB GROUP, INC.

SMB Group focuses exclusively on researching and analyzing the highly fragmented “SMB market”—which is composed of many smaller, more discrete markets. Within the SMB market, SMB Group’s areas of focus include Emerging Technologies, Cloud Computing, Managed Services, Business and Marketing Applications, Collaboration and Social Media Solutions, IT Infrastructure Management and Services, IoT and Green IT. Read our 2017 Top 10 SMB Technology Trends for our views on game-changers in these and other areas of the SMB market.

Sponsored by IBM

Small Businesses Want to Go Mobile–But Need Less Expensive Data Plans

We just published our latest SMB Group survey study, “2010 Small and Medium Businesses Mobile Solutions Study,” which reveals that although just a small percentage of U.S. small and medium businesses (SMBs) currently use mobile applications, they are revving up plans to implement mobile business applications to help fuel growth.

Judging from the types of mobile business solutions that these businesses are most often planning to deploy–mobile marketing, customer service management, social media marketing, time management and field service–it’s clear that they want to use mobile solutions to help them meet their top business goals of attracting new customers, growing revenues and improving customer satisfaction.

SMB plans to implement mobile business applications are very strong–in some cases, plans to deploy are almost triple current use. However, the high cost of mobile service plans threatens to stall SMB adoption of smartphones and other devices that enable employees to take advantage of mobile business solutions. This is particularly true in very small businesses (1-19 employees), where 40% cite high voice and data costs as a the top barrier to broadening mobile solution use by employees. Even when we look at the total small business group (1-99 employees), 37% say these costs are their top obstacle. As a result, 43% of small businesses currently provide voice-text phones and plans only to employees.

Of late, service providers are offering more limited choices for voice-text only phones. This will give some small businesses the push they need to bite the bullet and invest in data service plans. But, these findings underscore that small businesses need more flexible and affordable data plans in order to take advantage of the mobile applications that can help their businesses grow.
It will be interesting to see what types and which vendors will be willing to shake up the status quo with some new pricing schemes, bundles and incentives to help small businesses act on this opportunity.

Top Takeaways from IBM’s General Business Influencer Summit

Last week, I attended IBM’s General Business (GB) Influencer Summit for analysts covering the mid-market (companies with 100 to 1000 employees and larger enterprises that are not currently spending a lot with IBM, sometimes termed “white space” accounts). I’ve attended this event since IBM began holding them a few years back. IBM recently split GB into two groups, creating separate sales and marketing arms for the mid-market and white space large enterprise accounts to better tune its resources and initiatives to the very different needs of these two sectors. While Big Blue is a natural to grow market share in the large enterprise space (especially as the ranks of Sun defectors grow), the mid-market is an area that IBM is still figuring out. It’s also the area that I cover, so focused most of my attention on how IBM is evolving strategy and execution in this area. Here are a few key takeaways that bubbled to the top for me, and that underscore some of the ways IBM is shifting gears to better reach and serve the mid-market.

  • Telling a more aspirational, transformative story. IBM is making its corporate Smarter Planet (which centers on the message that the world is rapidly becoming more intelligent, instrumented and interconnected—in other words, smarter) more relevant to mid-market customers by engaging them in deeper, more industry-specific conversations, such as “What does it mean to be a smarter retailer?” and providing solutions that will help them to achieve better business outcomes from their IT investments. In addition to the industry-specific approach, IBM has themes that run across industries, such as Dynamic Infrastructure, New Intelligence, and Green IT. While it may be difficult for IBM to condense the Smarter Planet story in sound bites, if IBM can clearly articulate the vision in a targeted way (by industry and/or horizontal requirements), it should resonate as the economic recovery gets underway and mid-market companies re-focus towards growth.
  • Continuing to shift from commodities to solutions and bottom line business benefits. Mid-market customers prefer to buy solutions, not piece parts. To that end, IBM continues to push its revenue mix further towards software and services. The vendor is introducing more integrated, cross brand offerings that zero in on top mid-market issues such as improving efficiency, reducing costs, getting new customers, increasing productivity, improving customer service and managing risk. The goal is to make it easier for mid-market customers to deploy solutions for specific workloads, and speed time to value from them. For example, IBM has introduced solutions building blocks that offer customers pre-configured, pretested building blocks that combine IBM hardware, services and financing. IBM packages the components in a loose bundle that customers can order and assemble quickly. Comprehensive Data Protection and Cognos Express are some of the first out of the gate, with more scheduled for 2010. Then there’s IBM’s Linux based smart appliances, which include the SmartCube and Lotus Foundations (see What is a Business Applications Appliance and Why Should You Care? for background), as well as a growing portfolio of cloud-based services (see below). IBM’s new integrated solutions story is kind of a back to the future experience—ala the AS/400—that IBM has had great success with in the past. This time, however, IBM is offering customers many more solution paths, which is good for choice, but also makes the story more confusing. IBM will need to clearly position and delineate benefits and outcomes to avoid getting in its own way.
  • Shaping its cloud strategy and portfolio. Like most legacy hardware and software vendors, IBM has been somewhat ambivalent about the cloud. However, it seems to be moving past this ambivalence with a more decisive strategy that includes both public and private cloud offerings. IBM will significantly expand its Smart Business Services offerings, which are standardized services that run on IBM’s cloud, such as LotusLive, which IBM currently offers, and a slew of planned solutions for  analytics, development and testing, desktop and devices, infrastructure and storage, and business services. Smart Business Services also includes IBM’s private cloud services, in which IBM builds and runs a private cloud behind the customer’s firewall. In addition, IBM is developing Smart Business Systems, an integrated platform to deliver and manage cloud solutions. While the vendor still has a lot of work to do to clearly position and market these solutions, and is still searching for the right formula for creating value with SaaS developer partners, it seems to have a more substantive and cohesive strategy than its had in the past.
  • Ramping up and revamping partner programs. In addition to significant investments in global partner recruitment and enablement, IBM is restructuring incentives to help partners weather the recession. The vendor has moved from a cumulative type ladder approach to a simplified incentive program that pays partners in a more linear approach from step one. IBM is also trying make it easier for partners to do business with it, with new PartnerWorld communities and concierge service designed to remove administrative costs and hassles. Being the behemoth that it is, IBM may never be able to make the partnering process friction-free. But, I’ll give it points for pushing the needle forward, and more points for helping cash-strapped partners stay the course in difficult times, and its efforts to remix its channel to better align with evolving mid-market customer requirements.
  • Increasing investment in demand generation. Partners have told IBM to focus more on demand generation, and less on lead passing. So IBM is scaling up resources for high air cover marketing. All told, IBM conducted 835 marketing events, drawing more than 63.000 mid-market customers, in the past year. For instance, the vendor is conducting what it terms “Grand Formaggio”sessions around the world to personally engage mid-market CEOs with senior IBM executives, and also has a series of events aimed at CFOs. IBM also recently launched InfoBOOM, a social network for U.S. mid-market businesses, in partnership with CIO Magazine. IBM sponsors the site, but content is designed around mid-market themes and issues so that IBM can better understand and share with the community. IBM intends to launch this in other countries soon. Successful demand generation will be critical to raising IBM’s profile and heightening awareness about what IBM can offer mid-market customers—and keeping the channel happy.
  • Reconfiguring operations for growth markets. IBM has invested in building two management systems, one for established markets, and one for emerging growth markets. This enables IBM to tune in to the different requirements, approaches and government investments that different regions afford, and accelerate expansion in emerging growth markets. For instance, IBM has added more than 50 new offices in growth markets, and investing in leadership and talent development by moving seasoned IBMers from developed markets to emerging ones, and bringing fresh new faces to more established territories to learn the ropes. Big Blue has built new innovation centers in countries such as Vietnam, South Africa, Poland, Brazil and Hungary, and a global innovation center in China.
  • Better financing programs for the mid-market. IBM’s 30 year-old Global Financing arm (IGF) is strong, healthy and proactive—in fact, financing accounts for 9% of IBM’s pretax income. The vendor offers solution financing for hardware, software and services with at least 20% IBM content, and has simplified rate structures and contracts to help streamline the financing process. IGF has also introduced some “recession busters”, such as a Q4 deferral program and 0% financing for Software Group financing for 12 months. IGF also runs a huge asset recovery program (processing about 40,000 pieces of hardware a week) and $1.5 billion dollar used equipment business, which offers cash-strapped companies value based alternatives as well. IGF is also ramping up partner programs and education to help partners better engage mid-market CFOs in the IT purchase conversation. In the current economy, IGF is clearly one of IBM’s most powerful marketing weapons, helping companies to invest now to jump start growth as the economy turns around.
  • Continuing investments in asset-oriented acquisitions that can scale to the broad market. IBM has been on a shopping spree, acquiring companies such as Internet Security Systems (ISS), Cognos, Outblaze and SPSS, among others. IBM can use its global distribution capabilities to expand the footprint for these solutions, and as necessary, make them more relevant for mid-market customers.

As it nears its 100th anniversary (in 2011), IBM is putting a more shape and substance into its mid-market strategy and execution capabilities than it has ever done. However, in a market where brands such as Microsoft, Dell and HP dominate, and Google and other “born on the Web” vendors are ascending, IBM’s job isn’t easy.

The IBM brand is already well-respected in the mid-market, but IBM will need to continue to step up its efforts to become more relevant. Unlike many of its competitors, IBM doesn’t have a consumer or even a small business presence to leverage in the mid-market. Big Blue will need to wow the mid-market to move customers out of their current comfort zones.

One of IBM’s strengths is that it has a very rich portfolio of offerings and solutions, but this is also a double-edged sword. IBM will need to articulate and position overlapping solutions to help guide both customers and partners through the clutter to best-fit solutions. IBM will also face challenges on the channels front. How will it make the economics of the channel and the economics of lower-cost, volume based solutions work? And how will it fold high-growth SaaS vendors into a value-added and profitable business model?

To succeed in its mid-market quest, IBM will have to fire on all cylinders over the long haul, continue to sharpen its mid-market focus, and ensure that its offerings stack up well not only against the Microsoft-centric status quo, but against the increasing array of newer solutions available.