What is business intelligence?

Business intelligence is a technical and procedural infrastructure that encompasses the collection and storage of data, process analysis, descriptive analytics, and performance benchmarking. BI parses this data to produce reports that are easy to understand, performance measures, and trends that can impact management decisions. Business intelligence tools generally display analytical findings through reports, dashboards, summaries, charts, graphs, and maps. These tools are available in various forms, including:

• Spreadsheets: Google Docs and Microsoft Excel are some of the most widely known BI tools for tracking spreadsheets.
• Data mining tools: These tools search through large amounts of data using AI, machine learning, and statistics to find patterns.
• Reporting/query software: Reporting software finds, organizes, filters, and displays data.
• Online analytical processing (OLAP): These tools enable users to analyze data from various angles based on different business perspectives.
• Data visualization software: This software translates datasets into visually appealing, easy-to-read graphical representations to give employees a quick snapshot of valuable insights.
• Self-service BI: An analytical approach that empowers employees without technical knowledge to access and explore data.

Related: How to Write a Successful Business Plan

Business intelligence vs. business analytics

BI and business analytics typically have similar purposes and are often interchangeable terms. However, BI is a subset of business analytics. Business intelligence focuses on data collection, storage, descriptive analytics, data analysis, and knowledge management to evaluate previous company information, better understand current data, and enhance decision making. It tells you what’s happening now and what happened in the past to get your company to that state. In contrast, business analytics focuses on looking forward using data mining, modelling, and machine learning. It’s predictive (what will happen in the future?) and prescriptive (what can we do to create better outcomes?).

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Business intelligence benefits

Companies adopt BI for many reasons, from using it to support hiring and compliance to production and marketing. Because business intelligence is frequently a core business value, it’s challenging to find organizations that don’t benefit from having better data to work with. BI puts the right information in the hands of company decision makers so they can make better, data-driven business decisions. However, the benefits of BI go beyond decision making and include the following:

1. Recognizing market trends

As patterns change within the business environment, standards tend to change with them. BI tools can help you determine if your market is trending up or down and identify distinct market trends like customer preferences, AI, and new regulations. Employers can use market trends to adjust strategies and use market shifts to their advantage.

2. Better customer experience

Part of business intelligence includes gathering data about customer loyalty and ratings. The system can then generate reports summarizing consumer options, and you can use this information to implement measures to fix challenges and improve satisfaction. Also, when employees have immediate access to company data through centralized BI storage, they can provide customers with faster service and better experiences to grow your business.

3. Competitive advantage

A strong BI strategy can help you monitor your ever-changing market and better anticipate customer needs. A competitive analysis gives you a comprehensive look at how your products and services align with similar offerings. These reports typically factor in market share, growth rates, audience, and current product or service interest. For example, you could do a competitive analysis that shows the sales of one of your products versus one of your competitor’s rival products.

4. More accurate data

Data mining involves sifting through significant data to identify patterns or trends that can help organizations increase their market value. Many BI platforms combine internal databases with external sources to create a single data warehouse. This benefit allows departments across your organization to access the same accurate data simultaneously. Since many BI systems have integrated features that can identify and remove corrupt data, your leaders can make better decisions knowing they’re basing them on higher-quality information.

5. Improved productivity

BI can improve the efficiency of your analytics by condensing reports into easy-to-use dashboards, saving non-technical users time when looking for data insights. These systems can generally gather and analyze information faster than team members, allowing you to address issues better when they arise. BI software provides holistic views of your operations, allowing leaders to identify areas of opportunity, identify ways to overcome problems and inefficiencies, and benchmark results against more prominent business goals.

6. Increased employee satisfaction

When employees have direct access to data, they don’t need to wait for a response from your analysts or IT department, which can increase productivity, improve employee engagement, reduce friction, and facilitate faster results.

7. Business insights

Business insights are any information that can increase a leader’s understanding of a business situation. These insights may include ideas for success or knowledge about competitive advantages. For example, your BI system may provide data about a lack of competitor marketing addressing specific challenges. You can use this information to your advantage by creating an approach for your products, situating them as a solution, and marketing your strategy.

Read more: A Guide to Business Rules

Business intelligence examples

Reporting is typically at the heart of BI, with the dashboard being an archetypical BI tool. Dashboards automatically pull available information and put it into graphs and charts to give users an instant idea of the company’s or department’s current state. Business intelligence doesn’t tell leaders what to do or what will happen if they go a certain route. It allows leaders to examine data to derive insights and understand trends by searching, merging, and querying the necessary information to make informed business decisions.

For example, an organization that wants to manage its supply chain needs better can use business intelligence solutions to determine where delays are and if variables exist in the shipping process. The company could also use BI to learn which products have the most delays and the transportation modes most often involved. From there, they can make better decisions to reduce or eliminate setbacks. Real-life examples of BI in action include:

• Coca-Cola Bottling: They had problems with their daily manual reporting processes by restricting access to real-time operations and sales data. By replacing their manual process with an automated BI system, they streamlined their procedure and saved over six 40-hour work weeks (260 hours a year). Now, their teams can quickly analyze metrics like budget, delivery operations, and profitability in seconds.
• Lowes: This box store was one of the first to lean on BI tools to improve its supply chain, analyze products to find potential issues, and solve errors with collective delivery charges from its stores.

Read more: Why Is Critical Thinking Important to Business Teams?

Business intelligence strategies

A BI strategy is your blueprint for choosing how to use data across your organization. Deciding on the right technology and implementing a software platform is only half the equation and may be insufficient to realize an ROI. To create an efficient business intelligence strategy, consider the following questions:

• How will you manage your data for analysis?
• How will you deploy your software platform?
• How will you empower your leaders to make informed, data-driven decisions?

The following tips can help you answer these questions:

• Identify clear company goals. Before implementing a BI system, you should understand your goals and what you’d like to gain from the system. For example, to improve access to company information, you could set a goal to make your data easier to find.
• Test different BI tools. Since business intelligence tools typically offer varying features, testing different systems can help you decide on the options for your organization.
• Develop and follow a budget. BI systems are scalable, so it can be beneficial to determine a budget for your business intelligence operations. This strategy can help optimize your resources without overextending.
• Focus on data accuracy. To be useful, BI should increase the accuracy, timeliness, and amount of clean data you receive. Clean data means it’s free of corrupted and incorrect figures. BI tools with features for cleaning data can ensure its accuracy and help make the best business decisions possible. This feature can help you capture new information, check data for errors, and structure your info to make analysis as easy as possible.

Please note that none of the companies, institutions, or organizations mentioned in this article are affiliated with Indeed.