Many companies these days talk about using or improving business intelligence. Silicon Valley has created a whole industry of companies trying to sell it back to their customers. But what exactly is it? And how should you be using it? Today, let’s get rid of some of the buzzwords and confusion surrounding business intelligence and examine what it really is, and how it may be able to help your business.
What is business intelligence?
The term “business intelligence” refers to the tools and systems that play a key role in the strategic planning process of a business or corporation. Working together, these systems allow a company to collect, stockpile, access and analyze corporate data to help boost decision-making and improve the company’s return on investment. In general, these systems show the leadership of a company a picture of the company’s operations in areas like customer demographics, customer support, market research, market segmentation, the profitability of various projects, and inventory and distribution analysis, to give just a few examples.
How do companies “read” business intelligence?
Most companies in any given industry collect a large amount of data from their business operations. To keep track of that information, a business usually needs to use a wide range of software programs (think: Microsoft Excel, Access, various SQL databases) for various departments throughout their organization, depending on their function. Using multiple software programs makes it difficult to retrieve information in a timely manner and to perform analysis. True business intelligence systems integrate these functions into a single system that can parse out multiple functions including:
- Knowledge Management
These are often known as “business intelligence portals,” and essentially serve as the interface between a data warehouse (where a company keeps all of its precious data) and the user. Note that many companies that produce and manage business intelligence portals have moved to a “software as a service” platform, also known as SaaS. This simply means that the company providing the business intelligence portal hosts the data, giving the client versatile and virtual access to their data while maintaining important functions like backup and redundancy. Recent studies show that users are more likely to engage with cloud-based tools than traditional applications.
There are several characteristics that are considered essential to business intelligence portals. A good portal should be:
- Usable: people should be able to easily find what they need in the business intelligence portal.
- Content Rich: The portal must be able to do more than simply print reports. Other functions should include advice, help, support information and documentation.
- Clean: The portal should be easily understandable to users at any level and minimize complexity in its interface.
- Current: The portal should be updated regularly.
- Interactive: The portal should encourage a user to utilize it, and ideally be scaled and customized to fit each user’s needs.
- Value Oriented: The user should feel that the business intelligence portal is a valuable resource and not a waste of time.
How is business intelligence used?
The ultimate goal of business intelligence is to improve decision-making. Companies need to extract the data, analyze trends, uncover opportunities, find new customer segments, and so forth. This process is known as analytics and is the most important step in the business intelligence process. You can think of business intelligence as having three major components
- The Data Warehouse: Where we keep our data.
- The Business Intelligence Portal: This is where we slice and dice and print up our reports.
- Analytics: This is the step where we apply business intelligence to gain insight into a company’s performance and make decisions that improve operations or boost profit.
When analytics is added to the business intelligence platform, the application becomes much more powerful. Analytics empowers companies to go deeper than reporting and move into a more complex decision-making and questioning mode. It delves into more important aspects of a business, such as the effectiveness of marketing campaigns, the effects of pricing on a market, customer treatment, supply chain optimization, risk management, and sales effectiveness.
Analytics is widely considered to be the next value-adding stage for major corporations. The businesses that embrace business intelligence and analytics are growing, while the IT organizations that are driving its innovation are thriving. It’s definitely worth exploring the mechanics of business intelligence to see if it can add value to your business.