Using BIO Business Intelligence to Break Out of Quandary Thinking

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In everyday language, a quandary is like a dilemma—a perplexing situation or state, a choice between evenly balanced alternatives, a predicament defying satisfactory solution.  Sometimes thought of as the lesser of two evils, a quandary must be analyzed carefully and all of the impacts uncovered before making a decision.  How better to analyze which course of action to take than to use a tool made for self-service analysis for decision making?  But better than analyzing two alternatives, a deep dive into the data and looking at trends, outliers, correlations, and dependencies may help you break out of the quandary and come up with an entirely new solution, one that is a win-win, and that’s just plain good business.

Business Intelligence Analysis from Dashboards

Let’s look at an example.  Suppose your company is building a commercial building.  Recently, the profit on this project is significantly lower than budget.  You start thinking about how to get out of this quagmire:  Could you raise your billing rates?  No, the rates are specified in the contract.  Could you buy cheaper materials? No, the materials are governed by the building codes. Could you get out of this project altogether?  No, that would ruin your reputation as well as invoke a lawsuit.  The choices seem to be to 1. complete the project below budget or even at an loss or 2. find a way to lower indirect costs to increase profitability.  This is a true quandary—it’s a choice between two less than desirable outcomes and it’s bounded by rules.  That is what make a quandary different than a mere dilemma.  And that’s why a business intelligence tool can help save the day.

What’s needed here is to take a step away from traditional reporting and look at the data in multiple ways.  Open up your business intelligence dashboard.  With just a few clicks, you look at a line graph of labor rates over time and the trend looks pretty good—a gradual increase over time.  In fact, you see a little step up just before you took on this client.  So you click back to your dashboard and look at costs.  The trend shows costs actually going down as a result of a large supply contract made about two months into this contract which means the materials costs are running favorable to budget.  But wait, according to the graph on the dashboard showing total expenses, the margin should be better.  How about outside services?  Drill down into expenses and see that, sure enough, these are running a little higher than you anticipated, gobbling up a bit of the profits.

But not that much—what the heck is going on here?  How about drilling into expenses by category and looking at the trend of each expense category as a percent of revenue.  In just a few minutes, you see that everything looks good.  So you go back to the dashboard and take a look at billings.  In your dashboard, you have a graph comparing billings to gross revenue for this project but you can easily switch to look at the same graph for any other project.  So you look at the last two projects and you can see the figures are higher for the last two projects than for your current project; this is where your problem lies.  So with a few more clicks you drill into billings for the current project and look at it line by line and you see that recent billings for third party contractors show up as outliers on the graph.  So you drill right into those particular invoices and you can see that three months ago, the billing clerk forgot to charge the markup on third party contractor services and has been doing it that way ever since. So no one has been billing or booking the markup revenue.

Business Intelligence for Breakout Thinking

Quandary avoided!  Send out a corrected invoice for the prior three months and correct the problem going forward.  No need to accept shrinking margins or lay off office personnel.  Your business intelligence platform allowed you to look at trends and complicated correlations in just a few clicks.  And your total research took just under a half hour instead of the hours or days it would take to pull together all of these analyses in Excel.  But more important, business intelligence gives you the ability to look at your data in many ways and consider things that might not even be on your radar.  This is true breakout thinking and it can lead to greater effectiveness and increased profitability.

Join BIO for a free webinar to get a good idea of how BIO business intelligence software can help you achieve true breakout thinking.  And please contact me at 203.705.4648 or by email at [email protected] if you have any questions about BIO or business intelligence in general.

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By Sandi Richards Forman of BIO Analytics, Corp., Microsoft Dynamics Business Intelligence (BI) Solution Provider