What is Business Intelligence (BI)?
Business intelligence (BI) leverages technology to analyse business data, empowering executives and managers with actionable insights for informed decision-making. It encompasses various processes like data mining, process analysis, performance benchmarking, and descriptive analytics. BI integrates all business-generated data, offering easy-to-understand reports, performance metrics, and trends vital for management decisions.
Key points:
- BI is the technical backbone that gathers, stores, and analyses company data.
- It generates reports and insights crucial for managerial decision-making.
- Software firms develop BI solutions catering to diverse data needs.
- BI tools include spreadsheets, reporting/query software, data visualisation tools, data mining software, and online analytical processing (OLAP).
- Self-service BI enables non-technical users to explore and access data for analytics.
Understanding Business Intelligence (BI)
The need for Business Intelligence (BI) stems from the idea that managers with inaccurate or incomplete information are likely to make poorer decisions than those equipped with accurate data. This principle is commonly known among financial model creators as “garbage in, garbage out.”
BI aims to address this issue by analysing current data and presenting it on dashboards with quick metrics designed to support better decision-making.
Note: Most companies can benefit from incorporating BI solutions, as having accurate and complete information significantly improves the quality of managerial decisions.
Practical Applications of BI
To be effective, business intelligence (BI) must aim to enhance the accuracy, timeliness, and volume of data. This involves finding new ways to capture unrecorded information, verifying the data for errors, and organising it to facilitate comprehensive analysis.
In practice, companies often have unstructured data in various formats, making collection and analysis challenging. To address this, software firms provide BI solutions to optimise the information extracted from data. These enterprise-level applications are designed to unify a company’s data and analytics.
Despite the evolution and increasing sophistication of software solutions, data scientists still need to balance the trade-offs between speed and depth of reporting.
While big data insights can prompt companies to capture everything, data analysts can typically filter out sources to identify key data points that reflect the overall health of a process or business area. This selective approach reduces the need for extensive data capture and reformatting, saving analytical time and increasing reporting speed.
BI Tools and Software
Business Intelligence (BI) tools and software come in various forms, each serving specific purposes. Here is a brief overview of some common types of BI solutions:
- Spreadsheets: Tools like Microsoft Excel and Google Sheets are among the most widely used BI tools due to their accessibility and versatility.
- Reporting Software: This software helps in organising, filtering, and displaying data in structured reports, making it easier to understand and analyse.
- Data Visualization Software: These tools convert datasets into visually appealing and easy-to-read graphical representations, facilitating quick insights.
- Data Mining Tools: Data mining tools use techniques such as artificial intelligence, machine learning, and statistics to identify patterns and trends within large datasets.
- Online Analytical Processing (OLAP): OLAP tools enable users to analyse datasets from various perspectives, allowing for in-depth business analysis from multiple angles.
Benefits of Business Intelligence
Companies adopt Business Intelligence (BI) for numerous reasons, utilising it across diverse functions such as hiring, compliance, production, and marketing. BI is integral to business operations, enhancing nearly every area by providing better information for decision-making.
The benefits of incorporating BI into business models are substantial. Companies often experience faster, more accurate reporting and analysis, improved data quality, increased employee satisfaction, cost reductions, higher revenues, and enhanced decision-making capabilities.
Fact: BI was developed to address the issue of “garbage in, garbage out,” which occurs due to inaccurate or insufficient data analysis.
For instance, if you manage production schedules for several beverage factories and notice strong month-over-month sales growth in a specific region, you can promptly approve additional shifts to meet demand. Conversely, if a cooler-than-normal summer starts affecting sales, you can quickly scale back production. This ability to adjust production in real-time exemplifies how BI can boost profits and cut costs when effectively implemented.
Example of Business Intelligence
Coca-Cola Bottling faced a challenge with its daily manual reporting processes, which limited access to real-time sales and operations data.
By implementing an automated BI system, the company significantly streamlined the process, saving 260 hours annually (equivalent to over six 40-hour work weeks). Now, the team can swiftly analyse metrics such as delivery operations, budget, and profitability with just a few clicks.
FAQs
What Is Power BI?
Power BI, a business analytics tool provided by Microsoft, enables both individuals and enterprises to connect, model, and visualise data through a scalable platform.
What Is Self-Service BI?
Self-service BI empowers individuals without technical expertise to access and analyse data. It democratises data usage across an organisation, granting control beyond just the IT department.
What Are the Disadvantages of Self-Service BI?
Challenges associated with self-service BI encompass potential overconfidence in end-users, elevated licensing expenses, limited data granularity, and occasional issues with excessive accessibility.
Conclusion
Executives and managers are responsible for enhancing their companies’ efficiency, profitability, and competitiveness while also improving the workplace environment for employees. Implementing technology-driven processes, known as business intelligence, enables companies to achieve these goals more quickly and accurately.
DISCLAIMER: This article is for informational purposes only and is not meant as official business advice. AVANTE PARTNERS has no working relationships with any companies named in the article or with any business intelligence provider.
