What is Business Intelligence?
In 1989 Howard Dresner, the founder and chief research officer at Dresner Advisory services is noted as the first to use the term business intelligence as an umbrella category for supporting and accelerating business decision making processes using data analytics techniques.
According to CIO business intelligence refers to a variety of software applications used to analyze an organization’s raw data. CIO also states that BI as a discipline is made up of several related activities including, data mining, online analytic processing, querying, and reporting.
In layman’s term, BI is simply using methods and programs to collect and structure data into relevant and reliable information that can be presented to directors within a company. This information is very meaningful to directors and helps them to take actions towards achieving goals as well as making important decisions, such as understanding what drives revenue for your private investigation business.
Hitachi Solutions describes BI as a grocery store of business data because all of the data is organized in such a way that you can find information on your own and not rely on anyone else. However, you would first need to speak to the relevant experts to gather raw data and then pass it onto someone who would then compile everything for you in a business intelligence system.
No longer do employees have to sift through complex spreadsheets and analyze data manually in order to put together reports. Now, organizations can simply use a business intelligence system to request the required information.
Data Mining
Data mining is the incorporation of mathematical methods such as equations and algorithms to extract trends and patterns.
According to the criteria, a business may need data mining in BI systems can provide predictive analysis of several growth potentials that can be used to determine the best market to enter, resulting in saving countless man hours.
In order to maximize the benefits of data mining, it’s important that managers and directors apply the knowledge obtained from BI systems. BI makes it easy with neat reports instead of scattered notes and files.
Online Analytic Processing (OLAP)
According to their website, OLAP performs multidimensional analysis of business data and provides the capability for complex calculations, trend analysis, and sophisticated data modeling. It is the foundation for many kinds of business applications for Business Performance Management, Planning, Budgeting, Forecasting, Financial Reporting, Analysis, Simulation Models, Knowledge Discovery, and Data Warehouse Reporting. OLAP enables end-users to perform ad hoc analysis of data in multiple dimensions, thereby providing the insight and understanding they need for better decision making.
A great real world example of how OLAP may be useful to a business comes from Network World, where they speak of requesting information about company sales in Europe over the year, then drilling down to the sales of computers in September to calculate year-to-date sales or compare revenue figures with those for the same products sold in January, and then seeing a comparison of TV sets sales in Europe in the same time period.
Querying and Reporting
Querying and reporting consists of three steps:
1. Querying – retrieving data from a database (OLAP for example)
2. Formatting – making the results readable for analyses
3. Distribution – administering reports to users
In strict terms, the formatting and distribution are both considered reporting. From the business intelligence, BI systems may form business reports. Business reports are created by the business users and may be created without any knowledge of programming eliminating the need for involvement with the IT department.
Why Use Business Intelligence
BI can be a great advantage when making strategic decisions such as a merger with another company. A decision like this has many potential risks and would require detailed information on the company’s history, ethics, affiliations and undisclosed liabilities to name a few.
Since BI is organized data that can be accessed freely whenever one desires, it could also be used to access the internal state of a business or organization by providing data on areas of strength and weakness, hidden patterns, ineffective business operations, and can even point out new opportunities for the firm. It can also be used to determine the return on investment of your marketing strategy for a private investigation business for instance.
A great example from Hitachi Solutions is using a loyalty card to track everything a customer buys within a store or online, which will then go into your database. This data can then be used to run analytical reports on the customer’s information enabling you to comprehend specific details about your target audience, such as the products the purchase and how often the purchase them, and which preference the have when it comes to shopping online, versus shopping at a brick and mortar.
All of this information would be very valuable to a retail manager as he would be able to predict the customers’ habits, needs, and preferences and create new opportunities to sell. But it’s clear to see how having a BI could benefit other business owners allowing them to deliver better services and create marketing campaigns specifically tailored to their clientele.
Firms can also use BI systems to gain information on your competitor by gathering the demographics of their client base, the number of products they offer, and the age range of their customers. With that data a company can then gear towards differentiating their brand and offer higher quality products and/or services.
Of course, there are many more benefits to having a Business Intelligence system, such as collection information in the Human Resource Department for combatting income loss and retaining employees, creating easy to understand graphs and charts for important meetings, and identifying areas of the business that need re-engineering.
Business Intelligence Software
“Lack of trust is one of the greatest barriers to success in business intelligence programs.” – Howard Dresner
Finding a trustworthy BI software is essential to the success of your business and with the many choices there are out there it’s important that you purchase the right one.
Top BI software and tools include IBM Cognos Analytics, Microsoft SharePoint, and YellowFin. Some of these softwares offer a free trial before you have to commit to paying. And so you can get a good gauge of which tools would work best for your business.
Conclusion
In short business intelligence refers to a group of tools and techniques that collect and organizes data then presents it in a way that is useful when making important business decisions.
Business intelligence makes turns data into understandable accurate information that you can take action on.