Understanding Business Intelligence
What is Business Intelligence?
Since the digital transformation, terminology in the business world has evolved dramatically. One frequently used term that applies to various industries across the United States is business intelligence. Business intelligence is the use of data visualization, intelligence tools, embedded analytics, and artificial intelligence to optimize decision-making. It also requires a set of best practices that depend on business needs and the type of automated tools in use.
So, how does any organization know when it has business intelligence? When companies have an overarching view of all collected data and utilize it to make better decisions, they have BI. Data-driven decisions include finding new ways to save money, improving resource allocation, enhancing customer service, and eliminating inefficiencies.
Traditional business intelligence came about in the 1960's as a way to deliver data across companies. When computers came about, its definition evolved. Nowadays, business intelligence requires complex modeling and in-depth analysis driven by qualified specialists.
More than anyone else, employees and managers gain the most benefit from good business intelligence. Workers have the data-driven insights to perform their jobs more effectively, and managers can use it to make better choices that increase profit.
Examples of Business Intelligence
BI is an umbrella term that encompasses a set of practices which involve business data. It covers the ways data is collected, stored, and analyzed to improve performance. Each of these things works together to generate an overarching view of business. Its purpose is to help stakeholders gain actionable insights which improve decision-making.
Since the digital transformation, BI has changed to encompass even more activities to optimize performance. These include -
- Data Mining - Utilizes databases and machine learning to pinpoint patterns in large sets of data that exist in a data warehouse.
- Reporting - Provides business analysis to key personnel so they can gain actionable insights that improve decision-making.
- Performance Metrics and Benchmarks - Uses historical data and compares it to real-time performance data. This helps to track how well the organization meets goals. Dashboards are used to gain a comprehensive view of all data. These can be fully customized, depending on user needs.
- Descriptive Analytics - Uses initial analysis to discern what happened in any given situation.
- Querying - Business intelligence uses data to answer specific questions.
- Statistical Analysis Uses any findings from descriptive analysis to drill down into data, utilizing statistics.
- Data Visualization - Turns data analytics into visuals, charts, and graphs that make it easier to understand.
- Visual Analysis - Drill down into and explain data to showcase insights.
- Data Preparation - Compiles different sources of data, pinpoints measurements, and prepares it for analysis. Requires extensive knowledge of data science and information systems.
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The Importance of Business Intelligence
Companies use business intelligence to identify significant situations and monitor patterns. This allows managers to adapt to evolving circumstances much more quickly. Traditionally, owners had to use a combination of guesswork and instinct to make choices. They did collect data manually, but did not have the manpower to perform in-depth analysis.
With BI software, companies gain a host of benefits that provide a big competitive advantage. Read ahead to learn about these benefits.
1. Business Intelligence and Customer Behavior
Companies can use machine learning and various data sources to learn more about customer preferences. This helps to fine-tune marketing campaigns and bring in more customers, which will increase profits. It will also help provide better customer service because teams have more information at their disposal to respond to questions and complaints.
Owners can also drill down into sales data to improve future products. Furthermore, they can analyze market trends to identify which products customers want and when.
2. Business Intelligence Improves Visibility
If owners can't find the root cause of problems or pinpoint areas for improvement, they need quality business intelligence tools. BI software allows business users to drill down into raw data and gain visibility into processes.
If teams have to look through hundreds of report pages to analyze performance, BI solutions are much less time-consuming. Quality business analytics should be at the core of every company because it provides improved control over processes.
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3. Business Intelligence and Actionable Information
BI tools give employees the insight they need to create better plans. These solutions pinpoint key patterns in big data, which make it easier to see cause and effect. As a result, an analytics platform allows users to comprehend the implications of business activities more effectively. It also makes it easier to locate more suitable options for the business, which enables decision makers to plan for the future.
4. Business Intelligence Improves Efficiency
Organizations invest in good data analysis and a business intelligence tool to optimize efficiency. Business intelligence is shared across different business units across the supply chain. This allows employees to save time on reporting and data analytics.
Because it's easier to access and share information, there is less duplication of efforts. Furthermore, this information sharing saves a lot of time and increases productivity dramatically.
5. Business Intelligence Enables a Competitive Advantage
Self-service performance management software also lets owners see what the competition is up to. This improves the organization's capacity to make choices and optimize future-planning. Because teams are more productive, owners can rely on a higher quality of output.
Customers will enjoy the better, faster service. This will increase sales and help to showcase a brand more effectively to consumers. All of this helps to build a competitive advantage.
Ways to Improve Business Intelligence
Any business intelligence project's success will depend on a variety of factors. Unfortunately, many executives are not getting the results they want. Less than 10% of businesses were able to build better infrastructure as a result of BI.
While data collection efforts are better, reporting and analysis are not producing much fruit. In fact, over 2/3 of employers feel that their collected data is not applicable to business needs.
As technology evolves and analysis improves, more companies will gain the results they want from a BI project. Until then, here are some suggestions to improve BI in the workplace.
- Improve Business Alignment Strategy - Business operations data should always align with business goals. Otherwise, there's no point in collecting it.
- Establish BI Governance - People should be able to access and make use of collected data. This requires better BI governance, clear ownership of information, and insight into who can use the data.
- Monitor Performance and Process Management - There must be a way to track and measure all business processes to ensure they are effective. This will help employers know whether team members deserve to be rewarded for their performance.
- Integrated BI Platform - A good BI platform is part of an integrated network. It contains various applications that enable easy extraction and cleaning.
- Watch Excessive Costs - Owners should avoid purchasing too many applications, or systems that require too many information demands. This will drive up costs and cut into profits.
Business Intelligence vs. Business Analytics
Business intelligence and business analytics are buzzwords that are frequently confused, but are actually quite different in meaning. BI refers to a set of applications and tools used to drill down into data and improve decision-making. Dashboards are a typical example of a business intelligence tool. Users gain a comprehensive view of data, and can customize their view of it to align with department needs. This helps employees perform their jobs, share information, and collaborate on tasks.
Business intelligence provides insight into current, real-time data and historical data. It answers questions such as
- How many employees has the company hired this month?
- What are sales numbers for last month?
- How are employees performing in comparison to last month?
- How is the new inventory management process in comparison to last year?
Business intelligence is used to distribute exact, short snapshots about current performance. It is also used by employees to share information and make quick decisions. BA requires a team of data scientists to analyze and drill down into data further. BI is for the average, daily person, while BA is a science and set of practices.
For example, a data scientist may use specific computer models to identify the best customized campaigns that align with new market trends. BA is most useful for organizations that want to innovate, grow, and find new revenue opportunities. Big organizations tend to invest in BA because they need to. However, small companies can also benefit from hiring a data scientist in order to remain competitive.
Why You Should Invest in Data Analysis for a Better BI
Any organization that is committed to business intelligence must employ data scientists as well. To grow and innovate, companies need to drill down into collected data to predict future outcomes. Unfortunately, most business owners don't have the expertise nor background to do this themselves.
Data analysis is a subset of BA that inspects, cleanses, and models data to find valuable information. Not all data an organization collects is worthwhile. An inexperienced person will collect any data in case it holds value. Too many businesses now do this. They spend time and energy collecting large data sets that mean little to them. Because they aren't sure what to do with this data, they don't receive the return on investment from a set of BI tools. That's where BA and data analysis comes in.
Intelligence analysts will maintain and manage all applications and vendors. They also standardize reporting to ensure all insights are applicable to managerial needs. Most importantly, they sort through and cleanse collected data to ensure it is meaningful. This will help companies improve predictions, understand customer preferences, and make better decisions. While a set of BI tools is critical in the digital age, data analysis is how to receive a return on investment.
Key Takeaways of Business Intelligence
In conclusion, here is what to know about business intelligence -
- Examples of business intelligence include data mining, reporting, performance metrics, descriptive analytics, querying, statistical analysis, data visualizations, visual analysis, and data preparation.
- BI platforms help employers gain insight into consumer behavior. It also improves visibility, optimizes efficiency, turns data into actionable information, and helps to gain a competitive edge.
- To improve business intelligence BI, companies should improve their business alignment strategy, establish governance, monitor performance and process management, use an integrated BI platform, and watch excessive costs.
- Business intelligence is about using existing, real-time data to make better business decisions. BA is about drilling down into existing data to predict future outcomes. BA is good for companies focused on growth, innovation, and improving processes.
- Organizations need data analysis specialists to improve business intelligence. This will help improve data collection efforts, rid the company of unecessary information, and make better decisions for the future.
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