by Kevin Craine for Workflow
Business intelligence (BI) is a technology-driven process for analyzing data and uncovering actionable insight to help executives, managers and analysts make more informed business decisions. The world of BI embodies a variety of approaches and methodologies, but in the end it’s about enabling organizations with the ability to not only collect data, but also to make sense of it in more thoughtful and profitable ways. After all, information is only as good as the insight that it provides, so BI systems are geared to help prepare data for analysis, run queries against the information, and create a variety of reports to make the results available to decision makers in ways that make a difference.
Organizations from all industries are using BI to accelerate and improve decision making, optimize key business processes and drive new revenue streams. In this way, BI helps organizations gain competitive advantages over their rivals by being able to more quickly identify market and consumer trends, and spot business problems before they get out of hand.
The term "business intelligence" is frequently used interchangeably with business analytics in some cases; in other cases, business analytics is a term used either more narrowly to refer to advanced data analytics or more broadly to include both BI and advanced analytics.
Why You Should Care
Today, large companies as well as many small and medium-sized businesses use business intelligence to boost business performance and get an edge in the market. BI helps decision makers assess business processes, performance, market trends and other factors in order to improve corporate strategies and internal operations. Here are just a few examples to consider.
Retail: Retail managers must arm themselves with accurate, insightful information to drive profitability in today’s world of online reviews, social media, and mobile usage.
Manufacturing: Demand and supply metrics are essential for manufacturers to respond better to changes in the market and improve their product strategies.
Health care: BI helps providers offer better service to patients or members by closely monitoring multiple key performance indicators with data that’s always on time and accurate.
Financial Services: A highly dynamic market, changing client demands and fierce competition are all reasons why banks, credit unions and broker/dealers adopt BI to boost customer satisfaction and loyalty.
Strategies and Tactics
Business intelligence can include existing internal information as well as data gathered from outside the organization or received from third parties, enabling the analysis to support both strategic and tactical decision-making processes. Programs can also incorporate different types of advanced analytics, such as data mining, predictive analytics, text mining, and big data analytics. Data is stored in a data warehouse, or in smaller databases that hold subsets of information. Before being used in BI applications, raw data from different source systems must be integrated, consolidated and cleansed using data integration and data quality tools to ensure that users are analyzing accurate and consistent information.
Business Intelligence Tools
There are various BI tools that are used to help a company assess its business processes, performance, market trends and other factors. Here are three important ones to consider:
1. Reporting tools generate information in an electronic report format. The report typically supports finance-associated organizational planning, budgeting and performance management processes. These tools can range in sophistication from simple report generators to reporting software built into elaborate enterprise resource planning (ERP) suites.
2. Query tools run common queries, while guided systems anticipate user intent and make recommendations based on that understanding. This helps automate the analytics process and quickly generate more meaningful results.
3. Advanced analytics tools use approaches such as predictive analytics to dive deeper, and analyze current and historical data to make predictions about future events. This capability remains at the heart of business intelligence: understanding and acting upon information about the market prior to competitors.
Surrounding and supporting these tools is a BI analytics infrastructure which should be designed to ensure access to a broad range of data. Today's BI market is dominated by a few large vendors with a broad array of products and extensive offerings. These include IBM, Oracle, SAP, Microsoft and Salesforce.com. These enterprise-class vendors lead the way, but smaller vendors such as MicroStrategy, Birst and Tableau Software, among others, offer competitive tool sets with a narrower focus. But even with these options, cost is often a factor for many small and midsized businesses because they often don't have a data warehouse and must depend on outside vendors — value-added resellers or service providers — to provide an equivalent BI approach.
Upper management, such as CFOs and CMOs, are the primary users and beneficiaries of business intelligence, as well as business analysts and other staff in the marketing and finance departments. For these executives, BI can provide invaluable insights that show, for example, how business strategies are affecting the quarterly results (and why), and how the company compares to competitors. According to a variety of C-suite surveys, more and more executives feel that their contribution to the performance of the organization is increased as a result of adopting more ardent BI strategies; they can better anticipate customer problems and identify new markets and new sales tactics. For example, a McKinsey Global Institute study found that business decisions based on data-driven insights result in 23 times greater likelihood of customer acquisition, six times greater likelihood of customer retention and 19 times greater likelihood of profitability.
Business intelligence and analytics has become an essential competitive advantage for most organizations today. The approach helps leverage information in more thoughtful and profitable ways, reduce operational risks and costs, and identify and fine-tune any number of key business strategies. A well-designed BI analytics system gives executives a more comprehensive view of the organization and its related markets. This provides a strong foundation for business process improvement and redesign, on-the-fly performance management and more agile marketing. In addition, BI can be used to incorporate feedback from end users and external customers into improving such areas as help desk operations and customer experience management.
Are you ready to move forward? Look for providers and partners with the right mix of expertise, capabilities and vision that will allow you to make the most of business intelligence for your organization.
Kevin Craine is the managing director of Craine Communications Group.
This article originally appeared in the May 2016 issue of Workflow.