What Exactly Is Business Intelligence? Types, Advantages, and Illustrations – Business intelligence (BI) is a technology-driven process that analyzes business data to provide actionable information so executives and managers can make more informed business decisions.
Business intelligence is a broad term that includes data mining, process analysis, performance benchmarking, and descriptive analysis. BI breaks down all the data generated by a business and presents easy-to-digest reports, performance measures, and trends that inform management decisions.
What Exactly Is Business Intelligence? Types, Advantages, and Illustrations
What is Business Intelligence (BI)?
IMPORTANT POINT
Business intelligence represents the technical infrastructure that collects, stores, and analyzes corporate data.
Business intelligence sorts data and produces reports and information that help managers make better decisions.
Software companies produce BI solutions for companies that want to make better use of their data.
BI tools and software come in various forms such as spreadsheets, reporting/query software, data visualization software, data mining tools, and online analytical processing (OLAP).
Self-service BI is an analytical approach that allows individuals without a technical background to access and explore data.
Understanding Business Intelligence (BI)
The need for BI stems from the concept that managers who have inaccurate or incomplete information will on average tend to make worse decisions than if they had better information. The creators of financial models recognize this as “garbage in, garbage out.”
BI seeks to solve this problem by analyzing up-to-date data ideally presented on a dashboard of fast metrics designed to support better decision making.
Most companies can benefit from implementing a BI solution; Managers who have inaccurate or incomplete information will, on average, tend to make worse decisions than if they had better information.
How BI Can Be Useful
To be useful, BI must strive to improve accuracy, timeliness, and amount of data.This requirement means finding more ways to capture unrecorded information, checking for misinformation, and structuring information in a way that allows for broad analysis.
However, in practice, companies have data that is unstructured or in various formats, which does not make collection and analysis easy. Therefore, software companies provide business intelligence solutions to optimize the information obtained from data. It is an enterprise-level software application designed to unify enterprise data and analytics.
Even though software solutions continue to evolve and become more sophisticated, data scientists still need to manage the balance between speed and depth of reporting.
Some of the insights emerging from big data make it difficult for companies to capture them all, but data analysts can usually sift through the sources to find a selection of data points that can represent the overall health of a process or business area. This can reduce the need to capture and reformat everything for analysis, save analysis time, and increase reporting speed.
Types of BI Tools and Software
BI tools and software come in many forms. Let’s take a quick look at some common types of BI solutions.
Spreadsheets: Spreadsheets like Microsoft Excel and Google Docs are some of the most widely used BI tools.
Reporting software: Reporting software is used to report, organize, filter and display data.
Data visualization software: Data visualization software translates data sets into graphic representations that are visually appealing and easy to read to gain insights quickly.
Data mining tools: Data mining tools “mine” large amounts of data for patterns using things like artificial intelligence, machine learning, and statistics.
Online analytical processing (OLAP): OLAP tools allow users to analyze data sets from various angles based on different business perspectives.
Benefits of Business Intelligence
There are many reasons why companies adopt BI. Many use it to support functions such as recruiting, compliance, production, and marketing. BI is a core business value; it’s hard to find an area of business that wouldn’t benefit from better information to work with.
Some of the many benefits that companies can experience after adopting BI into their business model include faster, more accurate reporting and analysis, better data quality, better employee satisfaction, reduced costs, increased revenue, and the ability to make better business decisions.
If, for example, you are responsible for the production schedule for several beverage factories and sales are showing strong month-over-month growth in a particular region, you can approve additional shifts in near real-time to ensure your factory can meet demand.
Likewise, you can quickly halt the same production if a colder-than-usual summer begins to impact sales. These production manipulations are just a small example of how BI can increase profits and reduce costs when used correctly.
BI example
Coca-Cola Bottling had a problem with its daily manual reporting processes: they limited access to real-time sales and operations data.
However, by replacing manual processes with an automated BI system, the company actually simplified the process and saved 260 hours per year (or more than six 40-hour work weeks). Now, enterprise teams can quickly analyze metrics such as delivery operations, budget, and profitability with just a few clicks.
What is PowerBI?
Power BI is a business analytics product offered by software giant Microsoft. According to the company, it enables individuals and businesses to connect, model, and visualize data using a scalable platform.
What is Self-Service BI?
Self-service BI is an analytical approach that allows individuals without a technical background to access and explore data. In other words, it gives people across the organization, not just those in the IT department, to have control over the data.
What are the Disadvantages of Self-Service BI?
Disadvantages of self-service BI include a false sense of security for end users, high licensing costs, lack of data granularity, and sometimes too much accessibility.
What Are IBM’s BI Products?
One of IBM’s key BI products is the Cognos Analytics tool, which the company touts as a comprehensive, AI-powered BI solution.
IBM. “IBM Cognos Analytics with Watson.”
Underline
One of the responsibilities of executives and managers is to make their companies more efficient, profitable, and competitive, as well as improve the work environment for employees. Companies can do this with technology-based processes, known as business intelligence, that enable them to achieve these goals more quickly and precisely.
By JAKE FRANKENFIELD Updated March 11, 2024
Reviewed by MARGARET JAMES
Fact checked by YARILET PEREZ
