33.7% of organizations report that their BI and analytics initiatives are a success (Source: Dresner Advisory Services, 2019). The same study also revealed that 37% of organizations say they are able to make better decisions due to their BI capabilities.
In fact, it was also found through the same study that 50% of organizations report that their BI tools have improved collaboration and communication within their teams, while 63% of organizations reported that their BI and analytics initiatives have led to improved operational efficiency.
Also, as per the Market Watch in 2021, the global AI in business intelligence market size is projected to grow from $4.4 billion in 2021 to $14.4 billion by 2026.
Thus, considering all the benefits of implementing business intelligence initiatives for a business, it has become an indispensable part of any organization, especially if you want to have satisfied customers with strong customer loyalty and improved business metrics and operational metrics.
Business Intelligence (BI) is a set of strategies, processes, applications, and technologies that transform raw data into meaningful and useful information used to enable more effective strategic, tactical, and operational insights and decision-making.
It helps organizations to make better decisions and improve their performance. It can provide insights into customer behavior, market trends, operational efficiency, and more.
Business Intelligence thus leads to increased net revenues and higher returns on investments, with improved customer retention. However, to be able to use this effectively for your business, it is essential that you have a complete understanding of business intelligence.
This article will help you with that by covering the following topics:
- What is Business Intelligence?
- How does Business Intelligence Work?
- What are the BI Methods?
- How Do BI, Data Analytics, and Business Analytics Work Together?
- What is the Difference between Traditional Business Intelligence and Modern Business Intelligence?
- What are the Benefits of Business Intelligence?
- How to Develop a Business Intelligence Strategy?
- Categories of Business Intelligence Analysis
- What are the Advantages of Business Intelligence?
- What are the Disadvantages of Business Intelligence?
- How to Choose a Business Intelligence Platform?
- Business Intelligence and Dashboards
- Business Intelligence and Big Data
- The Future Role of Business Intelligence
- FAQs Related to Business Intelligence
- How can Deskera Help You in the Implementation of Business Intelligence?
- Key Takeaways
- Related Articles
What is Business Intelligence?
Business intelligence combines business analytics, data visualization, data mining, data tools and infrastructure, and other best practices to help your business make more data-driven decisions.
In practice, thus, you know you have got modern business intelligence when you have a comprehensive view of your organization’s data and you are using that data to drive change, eliminate inefficiencies, and quickly adapt to supply or market changes.
Modern BI solutions prioritize flexible self-service analysis, empowered business users, governed data on trusted platforms, and speed to insight. In fact, this is a very modern definition of BI.
Traditional Business Intelligence, with capital letters and all, originally emerged in the 1960s as a system of sharing information across organizations. In fact, it was in 1989 that the term Business Intelligence was coined for decision-making alongside computer models.
These programs developed further, turning data into insights before becoming a specific offering from BI teams with IT-reliant service solutions.
How does Business Intelligence Work?
Your business and organization will have questions and goals. To answer these questions and track your performance against these goals, you will need to gather the necessary data, analyze it, and then determine which actions you will need to take to reach your goals.
On the technical side, you will need to collect raw data from your business’s systems. Then, the data is processed and stored in data warehouses, the cloud, applications, and files. Once all this raw data is stored, you, as well as all those who need it, will be able to access the data and even start with the analysis process to answer business questions.
BI platforms will also offer you data visualization tools, which will convert your data into graphs or charts. BI platforms will also help you in presenting to any key stakeholders or decision-makers.
Lastly, business intelligence tools are also used to enable your organizations to gain insights into your business processes and operations, identify trends, and make more informed decisions. These tools are also used to monitor your performance and spot opportunities for improvement.
What are the BI Methods?
Business intelligence is not a specific thing but rather an umbrella term that covers the methods and processes of collecting, storing, and analyzing data from business operations or activities to optimize your performance.
All of these things will then come together to create a comprehensive view of your business that will help you make better, actionable decisions. What needs to be especially noted here is that over the past few years, business intelligence has evolved to include more activities and processes to help improve your performance and profitability. These processes include:
Data mining is the process of analyzing large datasets to uncover patterns and relationships among variables. It is used to discover previously unknown insights and generate predictive models that can be used to make better decisions. It involves the use of statistics, databases, and machine learning (ML).
Data Warehousing or Data Preparation
Data warehousing is the process of collecting and managing data from multiple sources for reporting and analysis. It involves extracting and loading data from disparate sources into a single database, where it can be accessed and analyzed.
Online Analytical Processing (OLAP)
OLAP is a type of database technology used to support data analysis and decision-making. It uses a multidimensional model to organize data into cubes, allowing you to quickly analyze large amounts of data.
Data visualization is the process of transforming complex data sets into graphical representations, such as charts and graphs. It is used to make large datasets more accessible and easier to understand.
Here, the data is explored through visual storytelling so that you are able to communicate the insights gathered on the fly and stay in the flow of analysis.
Dashboards are graphical user interfaces that display key performance indicators (KPIs) and other relevant data in real-time. They provide a quick and easy way to gain insight into business operations.
Business Process Management (BPM)
BPM is a set of techniques and tools used to design, analyze, and improve business processes. It is used to optimize the efficiency of business operations and ensure that they are aligned with organizational goals.
Predictive analytics is the process of analyzing data to make predictions about future events. It is used to identify risks and opportunities as well as to optimize operations.
Text mining is the process of extracting information from unstructured text data. It is used to discover new insights from customer feedback, social media posts, and other sources of unstructured data.
Natural Language Processing (NLP)
NLP is a branch of artificial intelligence (AI) used to understand human language. It is used to automate tasks such as sentiment analysis, intent identification, and topic modeling.
Location intelligence is the process of analyzing location-based data to gain insights about your customers, markets, and operations. You can use it to optimize operations and target customers more effectively.
This involves sharing data analysis with your stakeholders so that they can draw conclusions and make decisions based on it.
Performance Metrics and Benchmarking
This involves comparing the current performance data with the historical data to track your performance against your goals. Typically, customized dashboards are used to do this.
Here, preliminary data analysis is used to find out what happened.
Here, the data-specific questions are asked, and the business intelligence pulls the answers from the data sets.
Here, the results from the descriptive analysis are taken and explored further using statistics to find out how a certain trend happened and why.
How Do BI, Data Analytics, and Business Analytics Work Together?
Data analytics and business analytics are included in business intelligence; however, they are only used in small amounts throughout the process.
BI assists users in making decisions based on data analysis. Advanced statistics and predictive analytics are used by data scientists to delve into the details of data in order to find patterns and predict new patterns.
Data analytics poses the question, "Why did this occur, and what might occur next?" These models and algorithms are used by business intelligence, which transforms the output into language that can be used for action.
Business analytics covers data mining, predictive analytics, applied analytics, and statistics, according to Gartner's IT dictionary. In a nutshell, businesses use business analytics as a part of their larger business intelligence strategy.
BI is made to respond to certain queries and offer quick analysis for planning or decision-making. Companies can, however, use analytics to continually improve iteration and follow-up inquiries. Because the process of answering one question will inevitably result in more inquiries and iterations, business analytics shouldn't be a linear one.
Consider the procedure as a cycle of information access, discovery, exploration, and sharing. This is called the cycle of analytics, a modern term explaining how businesses use analytics to react to changing questions and expectations.
What is the Difference between Traditional Business Intelligence and Modern Business Intelligence?
Traditional Business Intelligence (BI) is a set of processes and technologies used to collect, store, and analyze data to gain insights for decision-making. It typically involves manual processes such as data warehousing, ETL (extract, transform, and load) processes, reports, and dashboards.
Modern Business Intelligence (BI) is a more comprehensive set of tools and processes that combine data from multiple sources and provides sophisticated analytics such as predictive modeling, artificial intelligence, machine learning, natural language processing, and data visualization. It is designed to be faster, more accurate, and more comprehensive than traditional BI. Modern BI also includes self-service capabilities that allow non-technical users to access and analyze their data.
Additionally, traditional business intelligence followed the top-down approach. This meant that the business intelligence was driven by the IT organization, and most, if not all, analytics questions were answered through static reports.
Thus, if someone had a question about the report that they have received, then their request would go to the bottom of the reporting queue, requiring them to start the process all over again. This led to slow, frustrating reporting cycles where people were not able to leverage current data to make decisions.
In contrast, modern business intelligence is approachable and interactive. While IT departments are still vital for managing access to data, multiple levels of users can create reports on little notice and can customize their dashboards. In fact, with proper software like Deskera, users are now empowered to visualize data and answer their own questions.
What are the Benefits of Business Intelligence?
More than software, business intelligence is a way to keep a real-time and holistic view of all your relevant business data. Implementing business intelligence will offer you a myriad of benefits ranging from better analysis to an increase in competitive advantage.
Some of the top business intelligence benefits include the following:
Improved Data Accessibility and Data Clarity
Business Intelligence tools provide users with easy access to a variety of data sources. This will enable you to make decisions quickly and accurately, as you have access to all the relevant data that you need. In turn, this will improve the health of your financial KPIs and financial statements.
Enhanced Decision Making
Business Intelligence tools will provide you with a comprehensive overview of the data, allowing you to make better-informed decisions. This will allow you to make more accurate predictions and take more effective actions. These insights will also help you in demand planning, as well as shop floor scheduling.
Improved Business Performance
Business Intelligence tools will provide you with access to data from a variety of sources, allowing you to identify trends and patterns that can help you optimize your processes and improve business performance. This will thus encourage returning customers, as well as an increased net profit ratio.
Business Intelligence tools will help your organizations save money by automating data collection, processing, and analysis. This will reduce the cost of manual labor and help your company save time and resources. Thus, the pressure on your working capital will be reduced, while your business expenses will be reduced.
Improved Risk Management
Business Intelligence tools will enable your organizations to identify potential risks, such as fraud and security threats, and take steps to mitigate them. This will thus help your organization in protecting its assets and remain competitive.
Improved Customer Service
Business Intelligence tools will enable your organization to identify customer trends and preferences and use this data to create personalized experiences and better customer service.
In fact, you will even be able to predict the patterns of your buyer personas and be able to find ways to best satisfy them. These insights will also help you during production planning and scheduling.
Business Intelligence tools will simplify the process of creating reports by automating data collection, analysis, and presentation. This will make reporting faster and more accurate.
It will also ensure that you do not get penalized due to wrong reporting or due to missed deadlines. Thus, your expenses will be reduced, and you will have a positive brand image.
Business Intelligence tools will enable your organizations to automate mundane tasks, such as data entry and analysis, freeing up your employees to focus on more important tasks. This will lead to higher gross profits and improved cash flow.
Improved Competitive Advantage
Business Intelligence tools will allow your organizations to identify market trends and develop strategies to stay ahead of your competitors. This includes but is not limited to the accurate determination of safety stock and the designing of an efficient master production schedule.
Business Intelligence tools will provide your organizations with access to real-time data, allowing you to track your performance and make informed decisions. In fact, it will also ensure faster product recalls when the situation arises. This will keep your customers loyal to your brand and your revenue secured.
Business Intelligence tools will enable your teams to share data and collaborate on projects, making it easier to analyze data and come up with better solutions.
While there will be several benefits due to it, it will definitely lead to increased operating income as against operating expenses and a reduction in operating costs. This will improve your income statement as well as your balance sheet.
Business Intelligence tools will enable your organizations to create accurate forecasts and predictions based on current and historical data. This will help you with production planning, inventory management, as well as warehouse management.
Business Intelligence tools will enable your organizations to streamline processes and identify areas of inefficiency. This will help your organization save money and become more competitive.
In fact, your productivity and profitability will increase as well, leading to long-term business success, reduced cost of goods sold, or reduced cost of goods manufactured.
Business Intelligence tools will help your organizations detect suspicious activity and protect your data from unauthorized access. This will thus help you in protecting your business secrets, business plans, and strategies that you are going to implement in the coming months.
Business Intelligence tools will help your organizations adhere to industry regulations and standards by providing you with up-to-date information. This will help you maintain your law-abiding standing in the eyes of the court and other regulating bodies. It will also ensure positive brand awareness of your company.
Improved Employee Satisfaction
Business intelligence tools will help in improving your employees’ satisfaction, therefore ensuring better management of workplace stress. This is because all the employees would know what they are expected to do, when, and how.
Additionally, they will have access to all the necessary information, and the insights, as well as automation provided by business intelligence, will help in improving their performance. This will thus also help you in retaining your top talents.
How to Develop a Business Intelligence Strategy?
Your business intelligence strategy is going to be your blueprint for success. This is because here, you will decide how your data will be used, gather key roles, and define responsibilities in the initial phases. While it may sound quite simple, your key to success here would be starting with your business goals.
The steps for developing your business intelligence strategy from the ground up are as follows:
Establish Your Business Objectives and Goals
Set a clear understanding of what you want to achieve from a BI strategy.
Understand the Data Needs
Identify what data is needed to support your objectives and how to source it.
Select the Right Technology
Decide which BI tools, software, and platform are best suited to your needs.
Develop a Data Architecture
Create a data architecture that will support your BI strategy.
Identify the Right Metrics
Determine which metrics will be used to measure performance and success.
Set Up a Governance Model
Develop a governance model that outlines the rules and processes for managing and using data.
Align the BI Strategy with the Organization’s Core Strategy
Ensure that the BI strategy is in line with the company’s overall strategy.
Define the Roles and Responsibilities
Assign roles and responsibilities to each team member involved in the BI strategy.
Create a Data Visualization Plan
Design a plan for how the data will be presented and interpreted.
Monitor and Evaluate Progress
Monitor progress and evaluate the success of the strategy to ensure objectives are met.
Categories of Business Intelligence Analysis
The four major types of business intelligence analysis, which cover several different needs and uses, are:
The descriptive analysis involves gathering and analyzing data to describe the past performance of a business. It provides insights into trends, patterns, and activities. It can also be used to identify what has worked in the past and what hasn't.
The diagnostic analysis is used to identify the root causes of a problem. It involves drilling down into data to find out why something is happening. It can be used to identify correlations between different variables and gain a better understanding of the underlying dynamics at play.
The predictive analysis takes the descriptive and diagnostic analysis one step further by using data to predict future outcomes. It can help businesses make informed decisions about the future by using algorithms and statistical models to forecast future trends and behaviors.
The prescriptive analysis is the most advanced form of business intelligence analysis. It involves taking the data gathered from predictive analysis and making recommendations on how to best act on it. This can involve recommending specific courses of action that can be taken to achieve desired results.
What are the Advantages of Business Intelligence?
As with any major business decision, business intelligence’s implementation has its own set of advantages, particularly in its implementation stage. These are:
One of the biggest advantages of implementing business intelligence is that it will impart data visibility across your organization and in every department.
This will keep everyone on the same page, ensure that they know exactly what they are supposed to do next to meet their targets and enable end-to-end traceability. This, in turn, will improve the overall efficiency of your organization.
Considering that implementation of business intelligence will ensure that data is updated in real-time and human errors are minimized, you or your team members will be able to make accurate reports for your organization.
With the implementation of business intelligence, communication between different departments of your organization will be made faster, easier, and more efficient.
This will also ensure timely and accurate coordination between them, which, when combined with data visibility, will help you streamline your processes.
What are the Disadvantages of Business Intelligence?
Just like any adoption, business intelligence does come with its own set of disadvantages, especially during its implementation stage. These disadvantages are:
It is quite likely that adopting a business intelligence system for your organization will lead to high initial costs. However, this initial cost would be worth it because it will give you high returns on your investment through increased revenue and operating income and decreased operating expenses.
Data Skills Gap
It is quite likely that you and your team members are not equipped with all the data skills necessary for the implementation of business intelligence. However, this gap can be filled with the help of training sessions for the same.
Once filled, the implementation of business intelligence will help you in availing of several benefits like a healthier profit and loss statement and ensure the success of your business.
How to Choose a Business Intelligence Platform?
The key to successfully implementing business intelligence in your organization is to choose the right platform for the job. While choosing the right platform, some of the key features that you must ensure are present as they will be the most helpful to your business are:
- Intuitive to use
- Variety of visualization and dashboard options
- Smart Insights
- Built-in artificial intelligence (AI)
- Alerts for good and bad metrics
- Deployment flexibility
- Integration with other platforms and applications
- Embedding in business applications
- Data connectivity
Business Intelligence and Dashboards
One of the most useful tools in business intelligence is dashboards. This is because it allows all the complex data of your organization to be aggregated and viewed in one place.
However, what you must keep in mind is that these dashboards can have different purposes, such as for stakeholder buy-in or complex analysis. Thus, the challenge lies in building the best dashboard for your needs.
The key features of a business intelligence dashboard are:
- Customizable interface
- Real-time data
- Standard templates
- Sharing ability
Business Intelligence and Big Data
As the gathering, storage, and analysis of data becomes more complex, it is essential that you understand the relationship between business intelligence and big data. Big data is defined by experts through the four Vs.: volume, velocity, value, and variety.
Considering that the amount of data is ever-increasing and relatively easy to store for long periods of time, the volume has become one of the main defining factors of big data.
Thus, it is important for business intelligence that businesses like yours create more and more data by the year and that the BI platforms are able to keep up with the increasing demands made on them.
A good BI platform is one that grows with increasing demands and, thus, ensures that your dashboards and data sources do not fall behind.
The Future Role of Business Intelligence
Every year, we identify current trends to keep consumers up to date on developments because business intelligence is constantly changing to keep up with corporate needs and technological advancements.
Recognize that machine learning and artificial intelligence will continue to advance and that firms may incorporate the insights from these technologies into a larger BI strategy.
Companies will work more to exchange data and collaborate as they attempt to become more data-driven. Using data visualization to collaborate across teams and departments will become even more crucial.
With the use of BI's capability for almost real-time sales tracking, users may learn more about client behavior and estimate revenues, among other things. A growing number of diverse businesses, including retail, insurance, and the oil industry, have embraced BI. BI platforms adapt to new technology and the innovation of their users.
FAQs Related to Business Intelligence
- What is business intelligence?
Business intelligence (BI) is the process of transforming raw data into meaningful and useful information for organizational decision-making.
- What is the purpose of business intelligence?
The purpose of business intelligence is to support better business decision-making by providing timely, relevant, and actionable information to decision-makers.
- What are the components of a business intelligence system?
The components of a business intelligence system typically include data warehouses, data marts, OLAP tools, reporting tools, and data visualization tools.
- What is data warehousing?
Data warehousing is the process of collecting and organizing data from multiple sources into a single repository.
- What is OLAP?
OLAP stands for Online Analytical Processing and is a technology used to analyze multidimensional data.
- What is data mining?
Data mining is the process of extracting useful information from large datasets.
- What is predictive analytics?
Predictive analytics is the use of data and statistical models to predict the likelihood of future outcomes.
- What is natural language processing?
Natural language processing (NLP) is a branch of artificial intelligence that enables computers to understand and process human language.
- What is a dashboard?
A dashboard is an interactive visual display of key business metrics and performance indicators.
- What are the benefits of using business intelligence?
The benefits of using business intelligence include better decision-making, improved operational efficiency, enhanced customer service, and increased competitiveness.
- How can business intelligence be used to improve customer service?
Business intelligence can be used to analyze customer data and identify trends. This can help organizations understand their customers better and provide more personalized and relevant services.
- How is business intelligence different from data analytics?
Data analytics focuses on analyzing data to identify patterns and trends, while business intelligence focuses on providing insights to support decision-making.
- What is the difference between descriptive analytics and predictive analytics? Descriptive analytics provides insights into what happened in the past, while predictive analytics provides insights into what might happen in the future.
- What is the role of data visualization in business intelligence?
Data visualization is used to present data in a visual format, such as charts and graphs, which makes it easier to understand and interpret.
- What are the best practices for implementing a business intelligence system?
The best practices for implementing a business intelligence system include setting clear objectives, understanding data sources, defining data requirements, and selecting the right technology.
How can Deskera Help You in the Implementation of Business Intelligence?
Deskera can help you in the implementation of business intelligence by providing you with a comprehensive suite of business intelligence solutions. This suite consists of Deskera Books, Deskera CRM, Deskera People, and Deskera MRP.
Deskera's business intelligence solutions provide you with the ability to analyze data, uncover insights, and make informed decisions. Deskera's solutions enable you to analyze data from multiple sources, create interactive dashboards, and generate detailed reports.
Additionally, Deskera's solutions offer powerful predictive analytics capabilities, allowing you to identify trends, assess the impact of decisions, and forecast future outcomes.
In fact, Deskera has also made it easy and convenient for you to export your existing data from different sources to its platform.
Business Intelligence (BI) is a set of strategies, processes, applications, and technologies that transform raw data into meaningful and useful information used to enable more effective strategic, tactical, and operational insights and decision-making.
Some of the methods of business intelligence are:
- Data Mining
- Data Warehousing or Data Preparation
- Online Analytical Processing (OLAP)
- Data Visualization
- Visual Analysis
- Business Process Management (BPM)
- Predictive Analytics
- Text Mining
- Natural Language Processing (NLP)
- Location Intelligence
- Performance Metrics and Benchmarking
- Descriptive Analytics
- Statistical Analysis
Some of the benefits that you will be able to avail from the implementation of business intelligence are:
- Improved Data Accessibility and Data Clarity
- Enhanced Decision Making
- Improved Business Performance
- Cost Savings
- Improved Risk Management
- Improved Customer Service
- Streamlined Reporting
- Increased Productivity
- Improved Competitive Advantage
- Increased Visibility
- Improved Collaboration
- Improved Forecasting
- Increased Efficiency
- Improved Security
- Improved Compliance
- Improved Employee Satisfaction
The steps for developing your business intelligence strategy are as follows:
- Establish Your Business Objectives and Goals
- Understand the Data Needs
- Select the Right Technology
- Develop a Data Architecture
- Identify the Right Metrics
- Set Up a Governance Model
- Align the BI Strategy with the Organization’s Core Strategy
- Define the Roles and Responsibilities
- Create a Data Visualization Plan
- Monitor and Evaluate Progress
The four major types of business intelligence analysis are:
- Descriptive Analysis
- Diagnostic Analysis
- Predictive Analysis
- Prescriptive Analysis
The main advantages of business intelligence, especially during its implementation stage, are:
- Data Visibility
- Accurate Reports
- Streamlined Processes
The main disadvantages of business intelligence, especially during its implementation stage, are:
- Initial Cost
- Data Skills Gap
Thus, implementing a business intelligence solution like Deskera will make your business more productive, competitive, and profitable.