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.