What is Business Intelligence?
Business intelligence (BI) is a technology-driven process for analyzing data and presenting actionable information to help executives, managers and other corporate end users make informed business decisions.
BI encompasses a variety of tools, applications and methodologies that enable organizations to collect data from internal systems and external sources, prepare it for analysis, develop and run queries against the data, and create reports, dashboards and data visualizations to make the analytical results available to corporate decision makers as well as operational workers.
The goal of BI is to allow for the easy interpretation of these large volumes of data. Common functions of business intelligence technologies are reporting, online analytical processing, analytics, data mining, process mining, complex event processing, business performance management, benchmarking, text mining, predictive analytics and prescriptive analytics.
Why is Business Intelligence important?
Business intelligence can be used to support a wide range of business decisions ranging from operational to strategic. Basic operating decisions include product positioning or pricing. Strategic business decisions involve priorities, goals and directions at the broadest level. These are significant decisions that impact the trajectory of a company, and therefore should be backed with research and reasoning that data can provide.
In all cases, BI is most effective when it combines data derived from the market in which a company operates (external data), along with data from company sources internal to the business such as financial and operations data (internal data). When combined, external and internal data can provide a more complete picture which, in effect, creates an "intelligence" that cannot be derived from any singular set of data.
History of BI
In the past, BI was more focused on reporting than analytics. Reports were typically delivered in PDF, Microsoft Word or Microsoft PowerPoint format and often included charts, graphs and tables that had been exported from underlying data stores.
Today, BI is most often used to refer to creating and delivering interactive dashboards with visualizations such as pie charts, line graphs and maps that can be manipulated by the user to conduct a deeper analysis of the data. The goal of these tools is to help an organization's decision-makers make better decisions using information they might not have had access to otherwise.
This approach was popularized by Stephen Few, who wrote a book called Information Dashboard Design: The Effective Visual Communication of Data in 2006. Few argued that dashboards should "tell a story" about data — for example, how sales are doing over time compared with forecasts or how website visitors are interacting with a site compared with goals. Few also stressed the importance of making data easy for anyone to use.
BI tools can be implemented in any industry. Some examples of industries that use BI include education (to reduce dropout rates), health care (to improve patient outcomes), retail sales (to increase customer loyalty), automotive (to better understand customer needs) and manufacturing (to increase efficiency).
Most BI tools make it a seamless process to go from stored, raw data, to sorting and organizing through such data, and finally, to data that is ready to be analyzed upon query. They'll also typically make it easy to automate insights you're gleaming from your data, and may even notify you of a negative change in trends. Lastly, they'll make visualization of data easy, which means communicating what your data is saying to stakeholders is a few clicks away.
Common BI tools include:
- Tableau. Known for the ability to create data visualizations and dashboards, Tableau also has a free version of the tool.
- Zoho Analytics. Another great tool for data visualization, Zoho also helps with tracking KPI's and their accompanying trends.
- NetSuite. Regarded as the most popular tool in the BI world, Netsuite is best known for it's ability to integrate multiple business functions and their data onto one platform.