What is 'Business Intelligence (BI)'

Business intelligence (BI) refers to the procedural and technical infrastructure that collects, stores and analyzes the data produced by a company’s activities. Business intelligence is a broad term that encompasses data mining, process analysis, performance benchmarking, descriptive analytics, and so on. Business intelligence is meant to take in all the data generated by a business and present easy-to-digest performance measures and trends that will inform management decisions.

BREAKING DOWN 'Business Intelligence (BI)'

Business intelligence grew out of the conviction that managers with inaccurate or incomplete information will tend, on average, to make worse decisions than if they had better information. Creators of financial models will recognize this as a “garbage in, garbage out problem.” Business intelligence is meant to solve that problem by bringing in the most current data that is ideally presented on a dashboard of quick metrics designed to support better decisions.

The Growing Field of Business Intelligence

To be useful, business intelligence must seek to increase the accuracy, timeliness and amount of data. This means finding more ways to capture information that isn’t already being recorded, checking the information for errors, and structuring the information in a way that makes broad analysis possible. In practice, however, companies have data that is coming in unstructured or in diverse formats that do not make for easy collection and analysis. As a result, software firms provide business intelligence solutions. These are enterprise level software applications designed to unify a company’s data and analytics.

Even though the software solutions continue to evolve and are getting easier to use, there is still a need for specialists like data scientists to make sure the trade-offs being made between speed and reporting depth are reasonable. Some of the insights coming out of big data have companies scrambling to capture everything, but data analysts can usually filter out sources to find a selection of data points that can represent the health of a process or business area as a whole. This can reduce the need to capture and reformat everything for analysis, which saves analytical time and increases the reporting speed.  

Benefits of Business Intelligence

There are many reasons why companies adopt business intelligence. Many use it to support functions as diverse as hiring, compliance, production and marketing. When collecting and growing business intelligence becomes a core business value, it is difficult to find a business area that does not benefit from having better information to work with.

Some of the many benefits companies can experience after adopting business intelligence into their business models include faster, more accurate reporting and analysis, improved data quality, better employee satisfaction, reduced costs and increased revenues, and the ability to make better business decisions. 

If, for example, you are in charge of production schedules for several beverage factories and sales are showing strong month-over-month growth in a particular region, you can approve extra shifts in near real time to ensure your factories can meet demand. Similarly, you can quickly idle down that same production if a cooler than normal summer starts impacting sales. This is a limited example of how business intelligence can increase profits and reduce costs when used properly. 

RELATED TERMS
  1. Data Science

    Data science is a field of Big Data that seeks to provide meaningful ...
  2. Descriptive Analytics

    Descriptive analytics refers to the interpretation of historical ...
  3. Data Mining

    Data mining is a a process used by companies to turn raw data ...
  4. Customer Relationship Management ...

    Customer relationship management (CRM) is a term for the principles, ...
  5. Data Warehousing

    Data warehousing is the electronic storage of a large amount ...
  6. Business Model

    A business model is a company's plan for generating revenues ...
Related Articles
  1. Investing

    Business Intelligence for Dummies

    An overview of the Business Intelligence industry and what opportunities it presents for investors.
  2. Investing

    Zuckerberg and Musk Clash Over the Future of AI

    Zuckerberg is against doomsday scenarios, while Musk wants more regulation of the technology.
  3. Tech

    Mastercard Dives Into Artificial Intelligence (MA)

    Faster transactions times that offer increased security to consumers remains a key aspect of Mastercard's many long-term growth initiatives.
  4. Tech

    How Big Data Has Changed Finance

    The vast proliferation of data and increasing technological complexities continues to transform the way industries operate and compete.
  5. Tech

    Investors Turn to Artificial Intelligence (GOOGL, FB)

    Since the Alan Turing developed the Turing Test, scientific researchers have worked to develop a computer with the ability to function like a human brain.
  6. Trading

    2 AI Stocks Set to Break Out to New Highs

    These two artificial intelligence stocks appear set to breakout to new highs.
  7. Tech

    Hedge Funds Turn Toward Artificial Intelligence

    Beyond simply automating elements of the investing process, hedge funds are increasingly focused on incorporating AI into their strategies.
  8. Tech

    The Big Play In Big Data

    Given just how technology oriented our lives are becoming, the amount of data we are creating is staggering. But in that staggering amount of zeros and ones, there are opportunities for investors. ...
  9. Personal Finance

    Financial Data Analyst: Job Description & Average Salary

    Learn about the average salary for a financial data analyst position and the skills, education and experience employers require of candidates.
  10. Tech

    Data Analyst: Job Description & Average Salary

    Learn about a data analyst career and how much money you can expect to make. Understand the skills and education needed to become a data analyst.
RELATED FAQS
  1. What is the difference between business intelligence and competitive intelligence?

    Understand the difference between business intelligence and competitive intelligence. Learn why both are important for the ... Read Answer >>
  2. What are some common functions of business intelligence technologies?

    Understand the common functions of business intelligence technologies, and learn how business intelligence is used to increase ... Read Answer >>
  3. What are some common methods of gathering CI (competitive intelligence)?

    Read about some common methods of acquiring competitive business intelligence, and discover what a good intelligence analysis ... Read Answer >>
  4. What is the most important type of data used in business analytics?

    Consider what makes data useful in business analytics, and why companies should search for the types of data that provide ... Read Answer >>
  5. How much working capital does a small business need?

    Learn about the three primary factors that determine how much working capital is needed by a small business, including business ... Read Answer >>
  6. Why is Average Collection Period important to a company?

    Discover why the average collection period can be a particularly important accounting ratio for a company that relies heavily ... Read Answer >>
Hot Definitions
  1. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
  2. Intrinsic Value

    Intrinsic value is the perceived or calculated value of a company, including tangible and intangible factors, and may differ ...
  3. Current Assets

    Current assets is a balance sheet item that represents the value of all assets that can reasonably expected to be converted ...
  4. Volatility

    Volatility measures how much the price of a security, derivative, or index fluctuates.
  5. Money Market

    The money market is a segment of the financial market in which financial instruments with high liquidity and very short maturities ...
  6. Cost of Debt

    Cost of debt is the effective rate that a company pays on its current debt as part of its capital structure.
Trading Center