Business Intelligence and the SME Company Part One

Part One – Organisational requirements to make money

The current discussions regarding “Global Financial Crisis (GFC) has been going on now since mid 2007. The GFC has caused the global stock market to fall and large banks to be either taken over or collapsed when governments are not able to support or “bail” them out. Due to this GFC, many companies have had their income source either been terminated or re-negotiated by their customers / clients. The termination and re-negotiation of contracts saw many companies collapsed overnight and others are struggling to restructure their organisation such that they are able to "ride the wave" out of this GFC.

In stable market with good revenue sources, companies concentrate more on building revenue as some of them are mandated in keeping their shareholders happy. In a bear market, in this instance, the GFC, companies are striving to stay afloat by restructuring their business or businesses. Restructuring is another word for cost cutting. Each company and their management teams could have differences of opinion in how a restructure would look like. In general terms, some of the strategies that a organisation could adopted are; reducing labour, inventory, entertainment , and travelling expenses just to name a few. The key word here is reducing cost, since increasing revenue might not feasibly during the GFC, organisations are now looking at the other side of their profit and loss.

Organisations that had been focusing on revenue, some of these organisations might not have concentrated on their expenses. They have been complacent with where they are at with the organisation and believe that the expenses have been reduced as best as possible. The justification of this argument is that the percentage of expense increased is in line with the increase percentage increase of revenue. I had managed such a project in recent years (not during the GFC but the principals are the same) and until BI tools were implemented, the management of this organisation did not fully understand how much wastage was happening in their own organisation.

This will be continued as a mini case study in Part 2.