1. 2011 EXECUTIVE REPORTYou re Never Too Smallfor Business Analytics:How Small and Midsize Businesses Can RevUp Their Growth Engines with Data-DrivenInsights

2. You re Never Too Small for Business Analytics Rev Up Your Growth Engine with Data-Driven InsightsIntroductionWithin small and midsize businesses (SMBs) across all industries, C-level executives andsenior-level managers are trying to make the case for adopting a business analyticssolution. After all, business analytics is key to extracting maximum value from data andtaking businesses to new levels.However, SMBs typically lack the IT resources or analytic talent needed to aggregatedata from disparate sources and analyze it for insights valuable for decision making. Inaddition, they often lack the budget to hire someone with the necessary experience andskills.Moreover, the analytic solutions available to these organizations are either too simplisticor too complex. While some solutions that claim to deliver analytics merely providesimple query-and-report and OLAP drill-down capabilities, others are enterprise solutionsdesigned for larger organizations too complex and not the right fit for SMB users.This paper offers an overview of business analytics, provides guidance on how to prepareyour SMB organization for success, and outlines what to seek in an analytics solution.Why SMBs Need Business AnalyticsThough data underpins the strategic decisions of every business, many decision makers atSMBs whether business managers or senior-level executives struggle to drawmeaningful conclusions in a timely manner from the array of data at their fingertips.Worse yet, they base decisions on what s happened in the past rather than using businessdata to prepare for the future.One of the key reasons for this shortsighted approach to business is the over-reliance onspreadsheets, which were not designed for data analysis.While many SMBs recognize the need for better analytic tools, they continue relying onspreadsheets because they lack confidence in using tools designed to support dataanalysis. Moreover, they often can t bring the necessary analytic talent in-house due tobudgetary constraints.Yet, without analyzing data to make strategic decisions about the future, SMBs arerelegating themselves to the lower rungs of the marketplace. In a rapidly changingbusiness environment characterized by high market volatility, increasing competition andtight credit, making a poor or misguided decision can be disastrous and potentially fatal to an organization s existence. At the very least, it can erode an SMB s profitability andmarket share over time.Copyright 2011 IT Business Edge and SAS Corporation. All rights reserved. Page 2

3. SMBs need to make fact-based decisions and in a timely manner. The key is to takeadvantage of analysis and reporting tools that empower even those with no analyticalbackground to gain insights and extract maximum value from organizational data.The fact is that all organizations regardless of size realize a range of top- and bottom-line benefits by using business analytics. In addition to reducing costs through a moretightly controlled operating environment, increased efficiencies and enhanced businessprocesses, organizations can use business analytics to improve the effectiveness of theirsales and marketing activities, to reduce customer churn and to increase revenues,margins, profits and cash flow.According to Tom Davenport, co-author of the Harvard Business Review Key LearningSummary Analytics and the Bottom Line: How Organizations Build Success, Companiesthat invest heavily in advanced analytical capabilities outperform the S&P 500 onaverage by 64 percent.What is Business Analytics?Business analytics comprises three parts: data Business Analytics Definedmanagement, analytics and reporting for decision Business analytics enablesmaking. people in an organization to make better decisions, improve processes and achieve desired Data management is about making high- outcomes. It brings together the quality data easily accessible, when and where best of data management, it s needed. This includes aggregating the data analytic methods and the to provide a comprehensive view; in other presentation of results. words, to provide a single version of the truth Tom Davenport, co-author of to anyone within the organization needing data Competing on Analytics to make decisions and take action. Analytics involves applying analytic techniques to data to derive insights. Analytic techniques come in many varieties, from standard querying and reporting ( What happened, where and when? ) and statistical analysis ( Why is this happening? ) to forecasting ( What if these trends continue? ), predictive modeling ( What will happen next? ) and optimization ( What is the best that can happen? ). That said, business analytics falls into two main categories: descriptive and predictive. Descriptive analytics is confined to assessing historical events or answering questions as they arise, leading to reactive decisions. Predictive analytics focuses on identifying likely future outcomes based on current trends, actions and strategies to make optimal decisions proactively. Because the value of business analytics increases as organizations move from hindsight to insight to foresight, SMBs need both descriptive and predictive analytics to drive their businesses forward.Copyright 2011 IT Business Edge and SAS Corporation. All rights reserved. Page 3

4. Reporting is the means by which users canDescriptive versus surface, visualize and share meaningful intelligencePredictive Analytics from data. It also enables organizations to track andDescriptive analytics monitor performance and address any deviationsdescribes the what, from the course early on. Think of reporting as thespecifically what happened presentation layer of business analytics, serving anin the past. Predictive important role in getting executive buy-in for businessanalytics provides insight analytics. Impactful, easy-to-understand visuals, graphsinto the so what by and reports can help with faster decision making andfocusing on the future. action.Today s advanced solutions bring all these capabilities together in an easy-to-useinterface that empowers even nontechnical users to gain insights from data.Gaining Insight and Advantage with Business AnalyticsElevating company performance and establishing competitive advantage requires SMBsto leverage advanced analytics. Here are a few real-world examples of how companieshave moved the needle by using business analytics.Golfsmith Shoots Well Below Par with Help from SASFirst, let s look at an SMB that improved its marketing-campaign effectiveness usinganalytics.Golfsmith is one of the largest golf specialty retailers in the US, with 75 retail stores anda large Web and catalog following. The company wanted to improve the response rate ofmarketing efforts, reduce costs and develop a stronger relationship with customers.Prior to using SAS, Golfsmith hired a third party to manage customer databases.However, processes slowed to a crawl. For instance, it took two to three months toidentify campaign conversion matches.The company chose SAS Analytics to better understand its customers across all saleschannels, segment customers and increase mailing response rates. The results have beendramatic. Campaign results are now available in near-real time. Most importantly, thecompany increased direct mail response rates from 10 to 60 percent, decreased datamerging costs by 50 percent and shaved 70 percent off the time it takes to preparecampaign results.With SAS, Golfsmith knows which customers are active or inactive, motivated by salesor by new offerings. It can then develop targeted campaigns to meet each segmentsneeds."Every month we learn from the past month so we can make quick decisions.- Mu Hu, Director, Customer Relationship Management, GolfsmithCopyright 2011 IT Business Edge and SAS Corporation. All rights reserved. Page 4

5. Triad Analytic Solutions Helps Insurance Clients Succeed with SASNext is a case study of a small financial services company using analytics to improveportfolio management through a better understanding of risk associated with customers.Triad Analytic Solutions, an insurance analytics expert, is dedicated to helping small andmidsize insurance carriers with limited or no dedicated statistical expertise or datamanagement capabilities.Small to midsize insurance carriers need their data in a singular, unified format to be ableto apply advanced analytics, which in turn enables them to compete in an environmentthat relies heavily on accurate segmentation. Triad often integrates multiple databases andbuilds data models to help these carriers get easy access to their data so they can analyzeit. The challenge is to help these firms price policies by understanding the impact of allinteractions between pricing variables rather than just looking at one variable at a time.With SAS, Triad builds proprietary carrier models that offer more lift than the genericones sold by other vendors."Some of the lifetime value retention and premium modeling weve implemented has seenmonoline auto renewal rate improvements of several points a result that could easilyyield a seven-figure improvement to a carriers top line over time."- Chris Hardin, Managing Partner, Triad Analytic Solutions"In terms of loss ratios and profitability, we can show our clients how they can improvetheir performance with better segmentation and pricing . With SAS, we can not onlysegment risk and build rating plans more accurately, but also show and quantify for ourclients, using historical data, how they could have had better profitability."Brian Scott, ACAS, MAAA, Managing Partner, Triad Analytics SolutionsTwiddy & Company Uses Analytics to Enhance Employee Productivity and ImproveBusiness PerformanceFinally, let s review how an SMB used SAS for increased efficiency and productivity.For more than 33 years, Twiddy & Company has specialized in managing a portfolio ofexceptional rental vacation properties on the northern Outer Banks of North Carolina.Over time, the company captured a lot of cost data via Excel. It relied on manualprocesses to better understand what was and wasn t working in terms of its businessstrategy, and where it needed to focus its efforts. In fact, it took one person a couple ofdays to pull all data into Excel in order to track expenditures each month. As a result,Twiddy struggled to manage routine services; one person needed to fax work orders on adaily basis. It was also too resource-intensive to manually catch costs that were faroutside the average charged by a service provider. And the company sometimes lostrevenues due to human processing errors of contractor invoices.Copyright 2011 IT Business Edge and SAS Corporation. All rights reserved. Page 5

6. By deploying SAS Business Analytics, Twiddy can now track expenditures month-to-month and year-to-year without doing a massive data pull into Excel. Plus, it is usingSAS to make better decisions about which vendors to use for what maintenance projects,based on cost effectiveness, efficiency and quality of work. The company reduced error-related financial losses by 15 percent and, by automating service scheduling, freed up onefull-time employee to perform other tasks."This has invented time for us that we didnt have before its providing real savings thatwe can measure on the bottom line Employees have bought into the system and like itbecause they can track and see the impact theyre having on the business. If we can worksmarter, the company and our home owners will benefit."Ross Twiddy, Marketing Director, TwiddyHow to Establish a Solid Foundation for AnalyticsSMBs face a number of barriers IT resource constraints, limited analytical talent, tightbudgets and technology gaps. Combined, these constraints lead to intuitive versus fact-based decisions. To combat this, your organization should implement analytical solutionsthat promote fact-based decision making while overcoming budget and human resourceschallenges. The following steps can help you establish a strong analytical foundation.Get Executive Buy-InSuccessful adoption of analytics starts with securing executive support. That meansgetting senior management s buy-in from the get-go. If this is a struggle, run a pilot of abusiness analytics solution and demonstrate the benefits. The goal is to win over a keydecision maker who can serve as the analytics champion. For example, The Wine Houseused business analytics to gain a complete view of its inventory leading it to discover$400,000 in lost inventory. Use a quick win of this sort to gain the support of anexecutive champion, who then can pave the path for adoption of analytical solutionsthroughout your organization.Establish an Analytics CultureWalk decision makers lacking a statistical background through a few simple examples toshow them how analytics translates into business decisions (start with tactical decisionsand then move to strategic ones). Then tie analytical outcomes to the strategic issues ofthe business. Letting skeptics see the effectiveness of using analytics whets their appetitesand gets other people and departments interested. Over time, this can help analyticsbecome pervasive throughout your business.Identify Your Analytical TalentThe fact is that SMBs usually have none to just a few statisticians and analysts. Moststaff falls in either the amateurs category those who use spreadsheets and run queries or in the semi-professionals category of those who can use some basic statistical toolsand may be able to program in SQL. Only a few SMBs employ professionals who canwrite their own algorithms.Copyright 2011 IT Business Edge and SAS Corporation. All rights reserved. Page 6

7. Don t let the fact that you have only limited analytical pros deter you. Know that theemployees that tend to lead analytical initiatives aren t necessarily analytical experts, butones who understand how to pose analytical questions. The key is to pinpoint that talentin your organization and create processes that enable employees to promote analytic bestpractices.Tap into the Right ToolsImplementing the right technology is essential to building and promoting an analyticalculture in a young, growing organization remember, a bad experience has longer lastingeffects than a good one. So, when selecting a business analytics solution, look for thefollowing capabilities.Robust VisualizationLook for strongvisualization capabilitiesthat empower businessusers with even limitedtechnical skills to:interactively explore largeamounts of data to spotanomalies and hiddentrends; build analyticalmodels in a point-and-clickenvironment to eliminatethe need for manualcoding; and share and Figure 1 Strong visualization empowers business users to spotpresent these results via trends and hidden relationships in data.easy-to-understand,dynamic graphics.Support for Advanced AnalyticsSeek a solution that goes beyond simple query and reporting and OLAP drill-downcapabilities in the name of analytics. The solution should support a comprehensive set ofadvanced analytical techniques, including data mining, forecasting, scenario modelingand optimization, to provide the level of analytical competence to which largercompetitors have access.Prebuilt Analytical Models and Associated Task SupportLook for a solution that offers a choice of prebuilt analytical models to address commonbusiness issues of varying degrees of complexity. A solution offering model assessmenttools enables users to evaluate various models and choose the best for the task at hand,and to deploy and monitor the models.Copyright 2011 IT Business Edge and SAS Corporation. All rights reserved. Page 7

8. Suited to a Range of UsersFind a solution that recognizes the talent constraints facing SMBs and supports basic orintermediate-level modelers and business users. With the flexibility to support moreadvanced users, the solution will satisfy those who like to customize existing models, orwant to embed their own algorithm into the model flows to address more complexbusiness issues.Ease of UseYour final shortlist of solutions should include those that offer data management,analytics and reporting capabilities via familiar interfaces such as Microsoft Office. Thisensures that users won t be intimidated by complex, technical-looking interfaces so theycan fully leverage the solution s capabilities. When users take advantage of only partialfunctionality due to a complex, difficult-to-use interface, the solution is an expensive one no matter what the price. Figure 2 Users can invoke robust data management, analytics and reporting from within their familiar Microsoft Office interface.Balanced User Autonomy and IT ControlSMBs should seek a solution that allows business users to work on their own, but withina well-defined IT environment. This helps ensure that your already limited IT resourcesare not pressured to manage metadata, security and data integrity requirements atmultiple locations.Copyright 2011 IT Business Edge and SAS Corporation. All rights reserved. Page 8

9. ModularSolution vendors who are in tune with the market What to Seek in a Businessrecognize that many SMBs can t take advantage of Analytics Solution Robust visualizationall functionality today. Look for solutions that allow Support for advancedyour organization to purchase the functionality orcapability you need the most right now, while analytics Prebuilt analytical modelsmaking it easy to purchase additional functionality Suited to a range of usersas your needs grow. Ease of use Balance of user autonomyFully Integrated and IT controlSMBs buy what they need, when they need it. In the Modularprocess, they often end up with a collection of Fully integrateddisparate tools and solutions that don t interoperate, Training and technicalresulting in a huge integration and maintenance supportheadache and time drain for precious IT resources. Low total cost of ownershipSeek a solution set from a vendor whose solutionsseamlessly integrate with each other, whether youpurchase each module individually over time or all at once.Training and Technical SupportBecause SMBs have limited IT resources and few analytical experts, they need a solutionthat includes training and technical support. Look for these resources to ensure yourbusiness users get quickly up to speed on functionality and can access additional supportas needed.Low Total Cost of OwnershipOften, solutions with the lowest per-user costs do not turn out to be the cheapest.Consider additional costs you may have to pay that are associated with implementation,integration, training and technical support. Also consider how the solution providerdefines users in its pricing.ConclusionUnique insights and rapid, informed decisions are what can set SMBs apart from theircompetition and put them on even ground with larger organizations. The only way toachieve this level of performance and make fact-based decisions in a timely manner isto take advantage of business analytics.Fortunately, today s solutions are affordable, modular and user-friendly, featuringfamiliar, Microsoft Office-like interfaces. As a result, SMBs like you can now tap intothe power of business analytics and move your businesses forward with confidence.Want to rev up your growth engine with data-driven insights? Check out: SAS solutions for small to midsize business at sas.com/smb. Eight Levels of Analytics.Copyright 2011 IT Business Edge and SAS Corporation. All rights reserved. Page 9

10. SASSAS is the leader in business analytics software and services and the largest independent vendorin the business intelligence market. SAS helps companies of all sizes improve performance anddeliver value by making better decisions faster. SAS has helped organizations across allindustries realize the full potential of their greatest asset: data. Simply put, SAS allows you totransform data about customers, performance, financials and more into information andpredictive insight that lays the groundwork for solid and coherent decisions. Since 1976 SAS hasbeen giving customers around the world THE POWER TO KNOW. For more information, visitwww.sas.com.Stephanie Tilton - AuthorStephanie Tilton is a content-marketing consultant who helps B2B companies craft content thatengages prospects and customers, nurtures leads and advances the buying cycle. She hasproduced hundreds of white papers, case studies and eBooks for a range of organizations,including some of the worlds leading technology companies. She contributed to chapter 10 ofContent Rules by Ann Handley and C.C. Chapman, which appears on the Inc. Business BookBestseller List.IT Business EdgeIT Business Edge delivers the information, analysis and context business technology decisionmakers need to maximize returns on IT investments and align IT initiatives with businessobjectives. As a technology intelligence agent, IT Business Edge provides content different fromthat of a traditional IT publisher, news service or analyst firm. Our editors monitor all thesesources plus many others for critical IT information that they translate into actionable advicefor high-level IT and business managers. Subscribers access our practical content and usefuldecision-making tools through a rich Web site, targeted e-mail newsletters and varied RSS feeds.All these outlets feature our business-focused blogs, exclusive interviews with field experts andindustry insiders, plus our database of more than 20,000 abstracts summarizing content from2,500-plus sources. Visit our website at http://www.itbusinessedge.com.Copyright 2011 IT Business Edge and SAS Corporation. All rights reserved. Page 10