Business intelligence (BI) combines business analytics, data mining, data visualization, data tools and infrastructure, and best practices to help organizations to make more data-driven decisions. In practice, you know you’ve got modern business intelligence when you have a comprehensive view of your organization’s data and use that data to drive change, eliminate inefficiencies, and quickly adapt to market or supply changes.
Over the past few years, business intelligence has evolved to include more processes and activities to help improve performance. These processes include:
- Data mining: Using databases, statistics and machine learning to uncover trends in large datasets.
- Reporting: Sharing data analysis to stakeholders so they can draw conclusions and make decisions.
- Performance metrics and benchmarking: Comparing current performance data to historical data to track performance against goals, typically using customized dashboards.
- Descriptive analytics: Using preliminary data analysis to find out what happened.
- Querying: Asking the data specific questions, BI pulling the answers from the datasets.
- Statistical analysis: Taking the results from descriptive analytics and further exploring the data using statistics such as how this trend happened and why.
- Data visualization: Turning data analysis into visual representations such as charts, graphs, and histograms to more easily consume data.
- Visual analysis: Exploring data through visual storytelling to communicate insights on the fly and stay in the flow of analysis.
- Data preparation: Compiling multiple data sources, identifying the dimensions and measurements, preparing it for data analysis.
Why is business intelligence important?
Great BI helps businesses and organizations ask and answer questions of their data.
intelligence can help companies make better decisions by showing present and
historical data within their business context. Analysts can leverage BI to
provide performance and competitor benchmarks to make the organization run
smoother and more efficiently. Analysts can also more easily spot market trends
to increase sales or revenue. Used effectively, the right data can help with
anything from compliance to hiring efforts.
A few ways that business intelligence can help companies make smarter, data-driven decisions:
- Identify ways to increase profit
- Analyze customer behavior
- Compare data with competitors
- Track performance
- Optimize operations
- Predict success
- Spot market trends
- Discover issues or problems
How business intelligence works
Businesses and organizations have questions and goals. To answer these questions and track performance against these goals, they gather the necessary data, analyze it, and determine which actions to take to reach their goals.
On the technical side, raw data is collected from the business’s activity. Data is processed and then stored in data warehouses. Once it’s stored, users can then access the data, starting the analysis process to answer business questions.
How BI, data analytics, and business analytics work together
Business intelligence includes data analytics and business analytics, but uses them only as parts of the whole process. BI helps users draw conclusions from data analysis. Data scientists dig into the specifics of data, using advanced statistics and predictive analytics to discover patterns and forecast future patterns. Data analytics asks “Why did this happen and what can happen next?” Business intelligence takes those models and algorithms and breaks the results down into actionable language.
The difference between traditional BI and modern BI
Modern BI prioritizes self-service analytics and speed to insight.
Historically, business intelligence tools were based on a traditional business intelligence model. This was a top-down approach where business intelligence was driven by the IT organization and most, if not all, analytics questions were answered through static reports. This meant that if someone had a follow-up question about the report they received, their request would go to the bottom of the reporting queue and they would have to start the process over again. This led to slow, frustrating reporting cycles and people weren’t able to leverage current data to make decisions. Traditional business intelligence is still a common approach for regular reporting and answering static queries.
However, modern business intelligence is interactive and approachable. While IT departments are still an important part of managing access to data, multiple levels of users can customize dashboards and create reports on little notice. With the proper software, users are empowered to visualize data and answer their own questions.
How major industries use business intelligence
Many disparate industries have adopted BI ahead of the curve, including healthcare, information technology and education. All organizations can use data to transform operations.
Branch managers can identify clients that may have a change in investment needs. Leadership can track if a region’s performance is above or below average and click in to see the branches that are driving that region’s performance. This leads to more opportunities for optimization along with better customer service for clients.
The future role of business intelligence
Business intelligence is continually evolving according to business needs and technology. Artificial intelligence and machine learning will continue to grow, and businesses can integrate the insights from AI into a broader BI strategy. As companies strive to be more data-driven, efforts to share data, and collaborate will increase.
BI offers capabilities for near real-time sales tracking, allows users to discover insights into customer behavior, forecast profits, and more. Diverse industries like retail, insurance, and oil have adopted BI and more are joining each year. BI platforms adapt to new technology and the innovation of its users.
Contact us for trainings and more information on how your company can adapt BI.