What Is Business Intelligence?
Investopedia defines business intelligence (BI) as “the procedural and technical infrastructure that collects, stores, and analyzes the data produced by a company’s activities…a broad term that encompasses data mining, process analysis, performance benchmarking, and descriptive analytics.”
Phew: quite a mouthful! All this translates to visual representations or reports of the data collected, along with performance measures and trends to help illuminate the present realities of organizational management.
Well, that’s the what of BI, at least. The how? That’s another story altogether.
How Does Business Intelligence Work?
Ideally, good BI helps turn data into actionable insights that steer business strategy. But how?
First, organizations work to collect and organize their data, ideally from multiple sources. A big part of the organizational process involves adopting consistent labeling practices, for example, enabling data recognition using the same search parameters every time. The data collection process starts with the basic extraction model, “extract, transform, and load,” otherwise known as ETL. This data integration process synthesizes raw data from various sources and moves it into a data repository or application.
Next, companies evaluate and analyze their data, uncovering trends and inconsistencies. Organizations decide upon a new data collection process to ensure as much storage, collection, and labeling consistency as possible. Data mining utilizes automation to discover outliers or patterns that provide insight into the current state of business—from a bird’s eye view.
After the evaluation process, organizations find new ways to use data. They use data visualization to more effectively present findings to management and team members. Data reporting methods include maps, graphs, charts, and interactive dashboards to display information from one place in near-real-time. Data visualization and presentation may change how data is stored and used. If inconsistencies arise, managers or team leaders may decide to adjust data storage methods and usage. Lastly, business analysts brief other departments on conclusions. They then recommend taking specific actions based on business intelligence-related data findings.
What Are the Benefits of Business Intelligence?
There are many ways companies can utilize the advantages created by business intelligence. Originally, BI was used to solve the problem of “garbage in and garbage out,” which can result from insufficient or inaccurate data analysis. Some common ways BI tends to be applied include marketing, production, hiring, and compliance.
- Data: One of the most foundational benefits of BI is improved data quality, which in turn helps produce more accurate data reporting and analysis. Improved data quality includes faster identification of historical data reporting practices anomalies.
- Efficiency: BI can increase operational efficiencies, reduce costs, and increase revenues—saving time through better data reporting practices.
- Business Development: BI allows for a greater variety of business trends and insights, allowing various management teams and departments to make better business decisions.
- Information Diversity: Besides improved project management and compliance, BI supports diverse departments such as HR, marketing, and production.
Traditional Business Intelligence Versus Modern Business Intelligence
Because BI-related technology is evolving rapidly, there is a significant difference between traditional BI and more modern BI. Whereas conventional methods generate reports using in-house transactional data, more modern approaches to BI allow users to utilize intuitive, agile data analysis and reporting systems.
An example of a traditional method would be legacy software housed on-premise that generates financial or regulatory reports. With these types of programs, the number of application users is limited to those with specialized application or IT knowledge, and the data sets and questions are static.
More modern BI approaches—typically housed in the cloud—are utilized when quick insight is needed into dynamic events, such as a marketing conference where fast information is privileged over reliability or accuracy. When data is accessible online, it is more likely to be utilized by a wider variety of user-provisioned teams and implemented differently, broadening the number of potential insights to be had.
To put the risks versus rewards in perspective, consider the analogy of casino betting odds: ignoring BI insights and data-based precedent is akin to betting against the odds. There’s a slight chance that following your instincts or intuition, rather than the data, could yield a big win, but the odds are against you. Rather than paying undue attention to past exceptions to the rules, it’s wise to pay attention to what the data indicates as outcomes of similar situations in the past.
LoadSpring has over two decades of experience helping companies of all sizes incorporate better project intelligence. BI trends like mobile intelligence, collaboration, and data governance allow companies to harness the power of BI more efficiently and securely. The BI applications you use to shed light on operations and real-time trends get the best mileage when powered by LoadSpring.