In today’s info-intense business world, the axiom “good data equals good decisions” has never been more spot on. It’s hard to make intelligent business decisions if you don’t have all the facts and perspective you need. And as more and more information takes shape in advanced computer systems, digital data warehouses and the Internet, companies are continually looking for new and better ways to capture, comprehend and capitalize on the business intelligence these repositories can provide.
Banking on business intelligence
The term “business intelligence” was first coined back in 1865 to describe how banker Sir Henry Furnese gained profit by understanding and acting upon information about the market prior to his competitors. As computer systems evolved in the 1960s through the mid-1980s, the notion of business intelligence re-emerged to become an umbrella term to describe modern business decision-making using digital fact-based support systems. Regardless of the technology used, the ability to collect and react accordingly based on information retrieved is still at the very heart of what we call business intelligence (BI) today.
Modern BI techniques use computer-driven tools and systems to help transform raw data into meaningful and useful information that can be used for business analysis and decision making. The technologies include data mining and text analytics, online analytical processing and predictive modeling, among others, and together are directed at handling very large amounts of unstructured data to help identify new strategic business opportunities and to fine-tune existing processes.
Just as Furnese discovered in the 19th century, identifying new opportunities and implementing an effective strategy based on these insights can provide businesses with a highly competitive market advantage. Indeed, Nucleus Research examined a number of cross-industry case studies to determine exactly how much companies were getting back from their investment in business intelligence. Their study found that for every dollar spent on BI, $10.66 is made back – that’s a return on investment of more than 10,000 percent.
Business intelligence can be used to support a wide range of business objectives and strategies. Short-term operational decisions, such as product positioning and competitive pricing, are greatly enhanced with better business intelligence. Long-term strategies concerning things like brand positioning and market share are more successful with the perspective that BI can provide. In any case, BI is most effective when it combines external data culled from the market in which a company operates with internal data found within the company like financial numbers and operational information. When external and internal data are combined together the perspective creates an “intelligence” that cannot be derived by any singular view or set of data.
Aspects of advanced business intelligence
The technologies and methodologies behind business intelligence are all aimed at providing historical, current and predictive views of business conditions. A variety of technologies and capabilities can come into play depending on how BI technologies are used and implemented. These include things like reporting, data and process mining, complex event processing, business performance management, and benchmarking, among others. Here are three important aspects of business intelligence to consider:
Predictive Analysis. Predictive analysis is one way that companies get value out of business intelligence by virtue of the ability to predict the future. The analysis provides concrete predictions grounded in statistics and specific outcomes. Consider the value of an enterprise selling athletic shoes knowing that a certain season accounts for the highest sales volume. Or the power of knowing that customers in the Pacific Northwest are much more likely to buy your shoes versus customers in the Northeast … and that customers in the Midwest are extremely unlikely to buy at all.
Real-time Monitoring. Another important aspect of BI is the use of near real-time monitoring to help close the gap between data acquisition and data analysis. One example of near real-time monitoring includes using transportation ticket data to match passengers with the most appropriate flight, bus, or train. Another example is using data about emergency patients to trigger the quickest essential care at a hospital or urgent care clinic. This is the type of real-world business intelligence that transcends the technology involved by allowing organizations to take a proactive approach, in real time, to conditions that otherwise would have triggered a crisis, problem or unseen inefficiency.
Knowledge Management. Knowledge management is another aspect of business intelligence that companies use to drive their success. The idea is to get more “knowledge” from the data that you already have. This involves using internal information to drive strategies and insights based upon that proven business experience. By its very nature, knowledge management is closely intertwined with business administration systems and information management systems, and as a result can often become quite complex. But the fundamental tenet is a greater focus on the management of knowledge as a strategic asset and a focus on using that knowledge as an enabler of organizational learning and decision-making.
The growth of business intelligence
The past two decades have seen explosive growth in the field of business intelligence, both in the number of products and services offered and in the number of organizations adopting the technologies and approaches. This growth has been fueled by the declining cost of capturing and storing very large amounts of data, which has increased the appetite of organizations to acquire more and more data in order to extract as much competitive advantage as possible, as quickly as possible. Successful enterprises today collect data at a finer granularity, at a much larger volume, and work aggressively to leverage more sophisticated data analysis techniques to drive business decisions and deliver new and more profitable business strategies. Here are just a few examples to watch for:
The New Information Governance Paradigm. Information governance is most commonly associated with things like data security, information privacy and regulatory compliance. As a result, the customary focus is on reducing and avoiding these data-centric risks. But a more expansive definition is emerging; organizations are now beginning to view information governance in terms of organizational cost and performance as well. There is great cost in using information inefficiently, or not using information in ways that improve the performance of the organization.
Social Media Intelligence. Social media is pervasive today, but are we really able to get any actionable competitive advantage from it? Some social-savvy organizations are. In 2014 we saw organizations begin to analyze social data in earnest and analysts say that 2015 will be the year that the early adopters will start to take advantage of their BI capabilities. Tracking conversations on a large scale in social media lets companies find out when a topic is starting to trend and what their customers are talking about. As a result, look for social analytics to open the door to more responsive product and service optimization, all driven by consumer sentiment in social media.
Mobile Access. Workers are spending less time at their desks. But that doesn’t mean they should be less informed by data; in fact they have a greater need for data than ever before. As a result, mobile data capture and BI analytics are quickly becoming important differentiators for many companies and organizations, especially those in traditionally document and data-intensive fields like banking, insurance, healthcare and government operations.
Any enterprise today will benefit by adopting business intelligence technologies and strategies. BI enables executives and decision-makers with the information and perspective needed to make quicker, more informed decisions based on what is happening within their environment and market – hopefully, before their competitors do. Organizations that can benefit most from BI technologies include those in financial services, healthcare, manufacturing, retail, telecommunications, transportation, and utilities.
While the systems and methodologies behind business intelligence are often complex, it is important to remember that BI is about much more than the technology that’s behind it. To get the full benefits you must establish a clear vision for your business intelligence strategy before you bring technology into the conversation. This means clearly defining the need and benefits, securing executive buy-in and support, and ensuring that the technologies that you do bring on board will be flexible and robust enough to grow and evolve as your business needs grow and evolve over time. Look for solutions and partners that provide the right mix of experience, vision, and advanced capabilities that leverage the full value of the business intelligence.
This article originally appeared in the May 2015 issue of Workflow.
Latest posts by Kevin Craine (see all)
- Five Steps to Step Up Your Vertical Marketing Success - March 1, 2020
- Five Steps to Improve Data Security in 2020 - November 1, 2019
- Welcome to the Automation Revolution - September 1, 2019