Business intelligence (BI) is becoming a vital asset for today’s businesses. More than half of organizations that use data analytics report faster and more effective business decisions, and many have also achieved improved financial results.
However, a lot of organizations are still struggling to take advantage of data analysis in their decision-making processes. Research shows that nearly 70% of data available to companies go unused, while 60% of employees wait hours or even days to get the data they need for a business decision.
This article will answer the question “What is BI?” and cover its benefits for businesses. We’ll also explain how business intelligence works and the features you need to consider when building a business intelligence solution.
What is business intelligence (BI)?
Business intelligence comprises the tools and methods of data collection, management, and analytics used in business decision-making. BI gives organizations complete visibility of their current and historical business data. As a result, they can generate actionable insights, improve their strategy, and optimize their performance.
Though BI is often used in the same sense as business analytics, there are some important differences.
For example, business intelligence usually doesn’t include predictive and prescriptive business analysis that needs to be interpreted by data science experts. Instead, BI covers only descriptive analysis and its tools. This means that business intelligence visualizes the current state of a business and gives insights into what happened in the past — for example, in the previous quarter or year.
That’s why BI is easy to use and understand, even for non-technical specialists. This makes it a convenient tool for generating meaningful insights for company employees at all levels.
Why is business intelligence important?
Humans are innately visual, which means visualized data has a strong impact on us. BI leverages advanced technologies to present findings as colorful and interactive charts, maps, and pictures, making complex business data more accessible and understandable. It also makes it easy to share data, which broadens the impact of data on business decisions.
Companies use business intelligence solutions for many reasons. Let’s run through six benefits that you can get from BI.
Business intelligence solutions give you an instant bird’s-eye view of your performance in areas such as marketing, sales, and finance. BI platforms can automatically generate reports using your company’s databases or by integrating with your operational systems.
For example, you can use BI tools to monitor order returns and staff KPIs or track the status of your projects. Real-time performance monitoring, in turn, lets you assess your business efficiency and set clear benchmarks based on your current and past achievements.
BI improves data transparency and accuracy, allowing you to speed up decision-making across your organization. For instance, with BI, you can effectively monitor your supply chain and labor costs, manage worker scheduling, or adjust products to changing buying trends. You can even use BI for cost optimization of electricity usage.
Business intelligence also automates routine analytics tasks, which frees up staff time for more productive work. Additionally, clear performance benchmarks and real-time tracking help employees keep track of their productivity and eliminate bottlenecks in day-to-day processes.
BI tools bring all relevant real-time data together on a dashboard in an easy-to-understand visual format, so you can identify errors, risks, and security issues before major problems arise.
As an example, you can easily discover which products in your supply chain are often delayed or even what causes such delays. If you use several means of transportation for delivery, a chart will clearly show which means are less efficient and when they started.
In healthcare, organizations can use business intelligence solutions to identify adverse changes in health parameters and react accordingly quickly. BI software is often embedded with medical decision support systems to help healthcare specialists better analyze patient records and identify diseases.
Business intelligence tools can create reports about customers by integrating directly with your CRM system. This means that you can analyze your customer portfolios, behavior, and preferences all in one place.
Additionally, BI solutions allow you to see correlations between your customer buying activities and your products or services. As a result, you can discover new services’ potential or find additional products to offer customers based on their interests.
BI solutions can also come in handy when you plan your marketing strategy. You can group your customers by their interests or other criteria, assess your campaign metrics, and improve advertising.
Using business intelligence, you can gather data on your competitors and analyze your current position in the market. For example, you can compare your financial results, your number of customers, and other parameters with those of your rivals.
Many companies also use competitor analysis to understand the market better and set performance standards. This helps them understand the industry better and ensures that their offerings stay relevant.
Trend and pattern recognition
Advanced BI tools and visualization can help you identify market trends and quickly react to them. In the long run, BI makes your business more agile and responsive to changes.
As an example, you can recognize current purchasing trends and adjust your offerings and pricing to suit business intelligence. Pattern recognition can also significantly improve your business strategy, as it takes the guesswork out of your decision-making process.
In summary, business intelligence is an excellent tool for seeing the bigger picture of your business operations based on accurate data analysis. When used effectively, BI data can help you improve anything from business performance to customer analysis.
To understand this better, let’s dive deeper into how BI works.
How business intelligence works
Historically, BI evolved from slow static reporting. If someone had a query, they sent it to an analytics team that would manually collect relevant data and transforms it into a report. This process started over with each new query.
Modern business intelligence solutions replace static reporting with interactive visuals that can be customized, filtered, and grouped without the help of experts. Additionally, BI tools automate the processes of data collection, structuring, and analytics to save you both time and effort.
Here’s how BI performs this data transformation.
Step 1: Data storage
BI data is stored in a data warehouse, which is a repository for all company data collected by different operating systems and software. Department-specific data can also be stored in data marts, which are often connected with the warehouse. Finally, big data systems can contain data lakes of unstructured BI data.
Step 2: Data collection and aggregation
Business intelligence solutions aggregate, organize, and structure company data from numerous operational systems. This structured data can be easily analyzed and processed by BI applications in the future.
Step 3: Data mining
Once the data has been prepared, BI tools automatically analyze it for trends, patterns, and inconsistencies. Along with trend recognition, some tools offer predictions (what-if analyses of multiple scenarios) and make recommendations.
Step 4. Reporting and visualization
BI reporting delivers data mining results to end-users in interactive visual formats such as dashboards, charts, and maps. These visuals help users better understand findings and improve their decisions.
Step 5: Business actions
BI loses its purpose if a company doesn’t move from insights to action. Business intelligence reports enable strategic planning and real-time adjustments, which lead to increased business efficiency.
Though business intelligence brings numerous benefits, not all BI software is equally effective or able to deliver each of the steps above flawlessly. To get the most out of BI, it’s critical to understand its features and the capabilities your organization needs.
Key features and capabilities of BI software
Up to now, we’ve looked at what BI is and the benefits it can bring. So what is business intelligence software?
In short, BI software is a set of tools designed for collecting, processing, and analyzing data for business intelligence.
BI software types and their functionality vary according to business needs. For example, large enterprises may opt for comprehensive BI platforms that require coding and data preparation skills. Meanwhile, small companies can go with self-service BI software with drag-and-drop functionality and ready-to-use templates.
Companies can take advantage of business process management systems with embedded BI software along with these two options.
Whatever the size and type of your BI platform, it should provide the following key functionalities:
- Extract, transfer, load tools (ETL). ETL features are used to move data from business systems and databases to a data warehouse. These tools extract data and identify changes, then transform and prepare the data for further analysis. Once the data is ready, it’s loaded into a warehouse or other destinations designed for analytical workloads.
- Data mining. This feature supports the process of analyzing data collected from multiple sources to identify patterns. The main goal of data mining is to reveal trends and systematic relationships between different variables. It can also validate patterns by applying them to new data subsets.
- Online analytical processing (OLAP). OLAP tools analyze large volumes of multidimensional data from different perspectives through filtering, grouping, planning, and modeling.
- Reporting. This is the process of generating and providing summarized and structured information to end-users through BI software. BI reports allow businesses to find and share insights, resulting in better data accessibility and a faster response to changes.
- Visualization. Visualization transforms data into charts, graphs, maps, or other infographics for better interpretation and, as a result, more accurate decision-making.
- Dashboards. Interactive dashboards display different indicators, analytics metrics, and other role-relevant data on a single screen (see an example below).
As well as offering these core functionalities, your business intelligence solution needs to be in line with global trends in data analysis, such as artificial intelligence, machine learning, and cloud computing.
Companies are increasingly turning to cloud-based solutions that can be implemented, used, and accessed remotely, even from a mobile device. In 2020, 54% of enterprises reported that cloud BI solutions are important or even critical for their current and future initiatives.
Another trend is the rise of self-service BI platforms that can be used by all employees regardless of their technical skill level. Research shows that more than 60% of R&D departments considered self-service BI to be critical for their projects in 2020.
The bottom line
Business intelligence brings many benefits to the table when it comes to efficient decision-making and performance optimization.
Reliable data analytics can help you recognize patterns, align with changing market trends, identify business inefficiencies, and much more. Yet, BI data transformation is a complex process. Depending on your business needs, setting up the right platform can require considerable technical know-how.
Take advantage of comprehensive data analytics with a reliable partner like Quantum. We have over 15 years of experience in delivering analytics services and offer clients a wealth of expertise in data analysis, engineering, integration, and visualization. Let us help you convert raw data into actionable insights, starting today.