Are Small Businesses More Intelligent?
New research shows that business intelligence tools have a higher adoption rate among small businesses than their medium-sized counterparts.
Posted Jun 5, 2008
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Business intelligence (BI) tools have very low penetration among small and medium-sized businesses, with many relying on spreadsheets for CRM and other BI uses, according to a new survey from New York-based research firm Access Markets International (AMI) Partners. Even more surprising is that the penetration of BI as a software-as-a-service (SaaS) tool is much lower among medium-sized businesses (about 1 percent) than small businesses (about 5 percent), according to Nichelle McKenzie, a research analyst at the firm.

About 16 percent of small businesses (SB)--and 22 percent of medium businesses (MB)--in the U.S. said they use BI or data mining in forecasting and financial planning as part of an ERP/SCM module. Wholesale and retail are the dominant sectors. "This makes sense, considering the volume of e-commerce and email data that is collected daily," McKenzie says. "However, for MBs we see a different pattern,where 30 percent are using BI as part of ERP/SCM and professional business service is the dominant sector."

More than 25 percent of SBs that use BI separate from a larger module feel that it is important to study and use e-commerce data to drive sales and revenue, according to McKenzie, who added that SBs are using CRM data to deploy BI software. "However, we still see the need for awareness of BI and the positive impact that it can have on SBs. Most SBs in the U.S. use BI as part of the ERP/CRM module," McKenzie adds. One factor driving SBs to adopt BI is the feeling that the existing software is no longer adequate.

Since current penetration is so low among SMBs, McKenzie expects increased sales in this market in the next year, though she isn�t forecasting what that increase might be. McKenzie says that there is no dominant market leader in the BI space, so the opportunity to make a mark is huge. BI vendors hoping to take advantage of this opportunity need to revamp their marketing messages to inform target customers of the CRM, marketing and other benefits that BI can offer, according to McKenzie.

"There is a need for MBs to realize that they can do more with BI than just put it into [a spreadsheet]," McKenzie says, explaining the reluctance to use more comprehensive BI tools that enable a firm to improve CRM, increase sales through better customer segmentation and provide other benefits. "These companies are sticking to what they know."

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