When you’re planning the future of your company, it’s always beneficial to have as much data as possible to support the decision-making process. That’s why business intelligence, a catch-all term encompassing a range of different processes and methodologies, has become such a touchstone for organizations across the world. Explore the importance of business intelligence with our comprehensive article, starting with our business intelligence definition.
Business intelligence definition
Business intelligence (BI) is a broad term that combines analytics, data, and computing to help businesses make data-driven decisions. As business intelligence is something of an umbrella term, it doesn’t refer to one specific process, but all the processes and methods related to the collection, storage, and analysis of data with the aim of optimizing your company’s operational performance. Some examples of business intelligence processes include statistical analysis, data visualization, data mining, performance metrics, and descriptive analytics.
Understanding the importance of business intelligence
In a nutshell, business intelligence and analytics helps organizations to make better decisions by grounding them in historical and present data, presented within a business context. It can help improve almost any aspect of business, whether you need to identify ways to increase cash flow, spot market trends, analyze customer behavior, or set performance benchmarks. Following the rise of digital transformation, there’s been a proliferation of data that – in many cases – is still untapped. Put simply, business intelligence solutions give you the tools you need to harness that data.
How does business intelligence and analytics work?
The business intelligence process varies depending on the specific tools you’re using. Having said that, there’s a simple framework for business intelligence and analytics that can help you understand how BI works in practice. Basically, you’ll need to start with a question or goal, gather the necessary data, analyze it, and work out what actions to take to bring your business to the next level.
Let’s look at an example – say Company A wants to identify areas where they can cut operational costs without reducing revenue. Using a business intelligence solution, you can see which areas of your business carry waste (for example, if you’re collecting recurring payments manually, that means extra work for your accounting team), and take the necessary steps to boost your bottom line.
Business intelligence vs. business analytics
Business analytics is a subcategory of business intelligence, and as such, it should be part of your company’s larger BI strategy. Whereas business intelligence is centered around descriptive analytics (i.e. using present/historical data to show what’s happening with your business), business analytics is focused on predictive analytics (i.e. using data to determine the likelihood of future events and outcomes). So, when it comes to business intelligence vs. business analytics, there are several key points of difference that it’s important to keep in mind.
Taking advantage of business intelligence solutions
Want to explore the benefits of business intelligence and analytics for yourself? There are a broad range of business intelligence solutions that you can pursue. As we mentioned earlier in the article, business intelligence is an umbrella term, and as such, it covers a broad range of tools, including:
OLAP (online analytical processing)
ETL (extract, transform, load)
As they’re accessible and easy-to-understand, dashboards and visualizations are the most popular type of business intelligence solution. Giving you the ability to tell a story about your operational performance using data, visualizations are an ideal way to communicate the importance of business intelligence to your wider workforce, many of whom may not have the necessary technical know-how to decipher raw internal data.
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