Considerations of SME’s reporting & analytics capabilities

For small-to-medium enterprises (SMEs), choosing how to report and analyse business performance can be tricky. The needs can also vary largely depending on industry and company size. For example, the medium-sized tech company with 15 employees with ambitions to upscale their business and attract external capital, might need sophisticated reporting solutions. The company will benefit in the external communication, and if also the right analytics capabilities are built (and used!), the chances of upscaling the business will be higher. On the other hand, the small hotel with 10 rooms, might not need the same sophistication, and it might even be so that the business can be well understood without advanced analytics tools. We would argue, however, that both businesses will benefit by automating some, if not most of their reporting and streamlining their performance monitoring.

For example, the hotel might have good overview of bookings by their booking tool. They might handle their financials in another accounting software or with Microsoft Excel. As a third component, they might get user satisfaction data from Google or by other means, like Tripadvisor. To truly integrate all the data streams needed might be a bit too much here. However, they should be able to automatically extract their booking statistics and combine it with their financials, and come up with, say, 10 KPIs to track. How does their historical booking numbers in Q4 (October – December) correlate with their financial performance in the same time period, and how does it compare to the other quarters? What is the sensitivity in the booking rate on the financials, meaning how has +/- 10% in booking rate historically impacted the financials? Perhaps +10% is usually a nice bonus, but -10% is a disaster. That could then impact the whole business steering and the -10% is to be avoided at all costs.

As a general advice for businesses relating to the hotel scenario, they can gain time and business insight by automating some of their KPIs. There will be an upfront investment to build a sophisticated data solution with data extraction, calculations, merges, presentation etc., but also running costs such as license costs for data extraction and cloud costs. Smaller businesses might also be more vulnerable to security issues, so that is also an important consideration. An advice would be to limit the data that you want to analyse and also to anonymise the data. Even if the developer considers security aspects in the development, a data issue might occur by a 3^rd party such as the selected cloud provider. If you do not have an IT person at hand in your business, the lead times will be longer and the exposure larger.

The advices are therefore to:

• Decide on, and limit, the ambition – for example to develop a report with 10 KPIs covering the business
• Decide on the security requirements
• Decide on the budget – both for upfront costs and for maintenance

In the case with the scale-up tech company, there will likely be better IT resources available. The ambition will also need to be higher – for two reasons. The accuracy of the business performance and also the depth at which the business can be analysed, will have to be higher to attract external capital. The data can also be used to guide the company in the growing phase, for example, they can benefit from understanding their position vs the competitors. That is not to say the company needs to have a data-driven steering. Some companies might prefer a “feelings” approach to steering, but arguably they can benefit from having analytics capabilities in some way or form. In general, the same advices apply here – ambition, security requirements and budget.