Picture a factory owner who receives a thick folder from the accountant every week. Dozens of pages inside: stock cards, customer account movements, bank statements, sales invoices. He sets it on his desk, flips through a few pages, and closes it. The answer he is looking for is buried somewhere in that folder, but finding it would take hours. This scene is familiar in many Turkish small and medium-sized businesses. The information exists, but it is not in a usable form.
Business intelligence, often shortened to BI, exists precisely to solve this problem. BI takes the raw data sitting inside the accounting software, stock system, and sales records, and turns it into a summary that a manager can actually read and act on. The key word here is ‘summary’. The board of directors should not be looking at the same tables the warehouse supervisor uses. The board asks different questions: Is the company making money? Is cash flow healthy? Which customer group contributes the most? The answers to these questions can fit in a few lines. But choosing those few lines correctly is serious work.
This is where the concept of a strategic indicator, commonly called a KPI (key performance indicator), becomes important. Every company tracks dozens of figures. But the number of indicators the board should monitor should not exceed five, or at most seven. This is not an arbitrary limit. The human mind cannot process too many pieces of information at once. A manager looking at twenty different charts during a meeting does not truly see any of them. Five well-chosen indicators are worth far more than twenty mediocre ones.
So which indicators should be selected? There is no single answer. For a retail company, the most important indicator might be inventory turnover rate. For a service company, the average collection period might come first. But a few core areas are common to almost every business. The first is cash position: how much money is in the account this week, and how much is expected to go out next month? The second is sales performance: what percentage of the target has been reached? The third is gross profit margin: what is the real profitability of each product sold? Even these three pieces of information are not available in ready form for most SME managers right now. The data is inside the computer system, but scattered across different places.
Once the indicators are chosen, the next task is to report them regularly and in the same format every time. This is where report design matters. A good board report should be simple. It should fit on one page if possible. Each figure should sit next to a comparison with the previous period: this month sales were 120,000 lira, last month they were 95,000 lira. Direction can be shown with arrow symbols or colour coding: green means good, red means watch out. Printing this out and placing it on the meeting table is enough. No complex software is needed. What matters is that it arrives every month in the same format, tracking the same indicators. Consistency is more important than visual polish.
Here a real practical difficulty appears. In many Turkish SMEs, the accounting software and the stock program run separately. Sales figures are in one place, inventory in another, bank movements in a separate file. Bringing this information together requires the accountant or a staff member to do hours of manual work every month, copying figures one by one into an Excel table. This takes time and creates the risk of errors. Some accounting programs can produce these summary tables automatically, but not every program has this feature. It is worth asking before purchasing whether the software can do this job.
For an SME manager who wants to start producing board reports, the practical starting point is this: take a piece of paper and write down five questions. When running the business, which five questions do you most want answered? Take those questions to the accountant or a software consultant and ask whether the current system can produce those answers. If it can, ask them to deliver those answers in the same format every month. If it cannot, find out what additional information needs to be entered into the system. Without any major investment, simply by using existing software more deliberately, these reports can be produced. The real challenge is not the technology. It is choosing the right questions to ask.
This article was originally written in Turkish by Gökhan MERCANOĞLU on February 24, 2003 and has been automatically translated into English and other languages using machine translation.