What Is Business Intelligence?
In the business world, being able to stay competitive is key. But how to do that? The most successful businesses are constantly looking at their data in order to track trends and stay ahead of others in their industry. A great tool for collecting and analyzing this sort of data is business intelligence software.
Business intelligence tools combine many other types of tools, such as business analytics and data mining.
Read on to learn more about business intelligence and why it can be so beneficial to your company and employees.
- What Is Business Intelligence?
- What Is Business Intelligence?
- How Does Business Intelligence Work?
- Categories of Business Intelligence Strategy
- Traditional Vs Modern Business Intelligence
- Examples of Business Intelligence
- Choosing a Business Intelligence Platform
- Frequently Asked Questions
What Is Business Intelligence?
First things first, what is business intelligence?
Business intelligence, or BI, as it is also referred to, is something that combines factors such as data mining, data visualization, business analytics, data tools, and infrastructure.
Typically, it refers to software that helps companies to make more data-driven decisions.
Business intelligence gives companies a bird’s eye view of the organization’s raw data and breaks it down into bite-sized, more palatable pieces of information.
This makes the data easier to understand and to make inferences from– it can help business owners and their teams to make decisions that help them stay competitive within their industry.
The business intelligence that we are familiar with these days assists in bringing about change, eliminating inefficiencies, and being able to adapt more quickly to changes in the market or supply chain. However, this is a modern definition of business intelligence.
Bi and bi tools have long been terms used with slightly different definitions. The 1960s was when the term first entered the scene, as Traditional Business Intelligence– meaning a system of sharing information across organizations or teams.
Then, in 1989, the term business intelligence was coined with computer programs for decision-making. These programs and models continued to develop until they actually became a specific offering from business intelligence teams.
How Does Business Intelligence Work?
Every company has its own specific questions and goals. In order to answer these questions and achieve these goals, businesses must gather pertinent data. These data analytics are analyzed so a company can make better decisions and learn from them what actions they should take to further their goals.
Raw data is collected by the BI software from business systems. Then, the software processes the data and presents it in ways that are easy to analyze, such as charts, graphs, or dashboards.
This can be important for presenting data to teams or to investors and shareholders.
The data is also then stored in the cloud and the data warehouse. It can be accessed by users once it is stored– this is when the analyzing princess begins and actionable conclusions are reached.
Business Intelligence Methods
Some may believe that business intelligence is a specific product or thing, but it is more accurate to call it an umbrella term, as it can be used to describe many different processes and methods that occur when collecting and then storing and analyzing data in order to optimize business and operations performance.
Collecting, storing, and analyzing data helps to put together a more comprehensive view of the company, so that employees and decision makers are able to make strategic, well informed choices. We will go over some of the processes of BI below.
Reporting is when data analysis is shared with team members or shareholders so that they can draw conclusions about the questions being put forward. From there, they can make better decisions.
Data mining is when a company utilizes statistics, databases, and machine learning (or ML) to pull out the trends from large data sets.
Descriptive analytics refers to when preliminary data analysis is used to find out what has happened.
Performance Metrics and Benchmarking
Performance metrics and benchmarking refers to comparing a business’ current performance to its historical data. This helps to track the company’s performance against its goals– this usually involves using customized dashboards.
Querying is when you are asking data-specific questions and using BI to extract these answers from the data sets.
Statistical analysis is when results are taken from descriptive analytics and the data is then explored in more depth, using statistics– such as how a trend happened and why it happened.
Data visualization refers to turning the data analysis into visual representations that make it easier to understand. These visualizations include charts, graphs, and histograms that make data quicker and easier to consume.
Visual analysis is the process of exploring the data collected through a method of visual storytelling. It assists in communicating insights more quickly and at a glance, as well as staying in the flow of analysis.
Data preparation involves compiling a number of data sources, identifying the dimensions and measurements, and then preparing the data for the process of data analysis.
How Do Business Intelligence and Analytics Work Together?
Of course, business intelligence is an umbrella term and it includes data and business analytics as part of the process. So, how do these analytics functions work together with BI?
Data analysis helps the business intelligence users at a company to draw conclusions from the data that is collected. Advanced statistics and predictive analytics are used in order to discover patterns as well as to predict future patterns.
Business intelligence takes the models and algorithms from data analytics to condense the data into language that is easy to understand and actionable.
The business analytics that are an important step of BI is simply a part of a larger process, but a crucial part of the larger business intelligence strategy. Without analytics, a business would not be able to learn from the data that they are gathering.
The function of business intelligence is to answer specific questions or queries, as well as to put forward a glance like overview to help inform decision-making.
This is what it is designed for. Analytics, on the other hand, can also be used to continuously improve iteration and follow-up questions. Business analytics is less of a linear process– answering one question may lead to follow-up questions. This is more of a cycle of data access, discovery, exploration, and sharing of information.
Categories of Business Intelligence Strategy
There is not a one size fits all approach to business intelligence analysis. In fact, there are actually three different categories of this! They cover different needs and uses for BI, and are as follows.
Predictive analytics utilizes your historical and real-time data as well. It involves modelling future outcomes for the purpose of planning ahead and planning approaches.
Descriptive analytics is when you work to identify trends and relationships that occur in your data by using your historical and current data.
Prescriptive analytics is a category that uses all relevant data to answer the question of “what should the business do?”. It is, essentially, prescribing a solution.
Traditional Vs Modern Business Intelligence
What we know as business intelligence or BI, now is not the same as traditional business intelligence. The traditional business intelligence model was what business intelligence tools were originally based off of. For traditional business intelligence such as this, the analytics questions were answered by static data reports.
So, if someone then had a follow-up question, their question would be pushed to the bottom of the queue and the process would have to be started over again. Of course, this meant slow and frustrating reporting cycles. Users were also unable to leverage current data to help make important decisions.
Modern business intelligence, on the other hand, is much more dynamic and interactive. It is also more approachable! Different levels of users are able to customize their dashboards and create their own reports quickly and easily, with little notice.
This empowers all members of the team to run reports and get their own questions answered efficiently.
Examples of Business Intelligence
Now, you may be curious about how different businesses or industries implement bi, bi tools and business intelligence tools for their unique needs.
Some of the industries that began using bi and bi tools early are those of healthcare, education, and information technology or IT. These companies were looking to affect their business processes and transform data. They knew their data sources were working, even giving them advanced analytics, but interpretation and implementation was needed.
One example of business intelligence being used in the real world is in banking and finance. A nationwide bank, for instance, can utilize business intelligence in order to get a comprehensive view of all of the branches or offices. From there, they can better identify areas of opportunity or understand their performance metrics.
A region’s performance can be tracked to see if it is above or below projected performance, and it is easy to determine which branches are driving performance in the region as well. These are just a few quick examples of how BI can be utilized to make real world conclusions in a particular industry.
Choosing a Business Intelligence Platform
If you do not yet have a BI platform for your business, after reading this article, you will want to invest in one! However, choosing the right platform for you can seem to be a daunting responsibility.
You will want to sit down and note what key features of a business intelligence platform will be most beneficial for your company.
Some of the features that you should consider are smart insights, deployment flexibility, being intuitive and easy to use, and having a variety of dashboard and visualization options to work with.
Other key features of this kind of platform are alerts for both good and bad metrics, data connectivity, being able to embed in your business applications, and integration with other platforms or applications that you use in your day to day.
Frequently Asked Questions
What do you mean by business intelligence?
Business intelligence is also referred to as BI, and it uses software to convert lots of information into smaller, more palatable insights to help inform decision-making for a company.
It is software that analyzes data sets and then presents them in reports and dashboards that are easy to read and to understand. BI combines business analytics, data visualization, and more!
What is business intelligence and why is it important?
Business intelligence, or BI, as it is sometimes referred to, is a term that encompasses the tools, strategies, techniques, and practices that businesses use to collect, integrate, and visualize information.
BI is usually a software system that collects and breaks down large subsets of data for a company. It is so important because it turns data into information that is easier to understand, and the business is then able to learn from this in order to make good decisions.
They can help a business to leverage their analytics to become more competitive in the market they are a part of.
What are the five basic tasks of business intelligence?
There are five basic tasks or stages of business intelligence. These are known as data sourcing, data engineering and analysis, situation awareness, decision-making, and decision support.
The five tasks, or steps, help to usher you through the process– first, the data is gathered, then it is analyzed and presented in a more palatable way, and then it is time to look at it and make decisions based upon the information that is now provided to you as a business owner.
This can help you to execute better strategies to help your business grow and succeed.
Why is it called business intelligence?
If you have heard the term business intelligence, you may wonder why the term business intelligence was chosen to describe this software application.
This can actually be traced back to 1865 when Richard Millar Devens came up with the term business intelligence, or BI, in the Cyclopædia of Commercial and Business Anecdotes. He was using it as a way to describe how a banker by the name of Sir Henry Furnace profited off of information by gathering it and acting upon it before the opposition was able to.
Of course, BI software functions in the same way and can grant the same type of advantage to a business.