Business Intelligence

Definition: Business intelligence (BI) is a business management term which refers to applications and technologies which are used to gather, provide access to, and analyze data and information about company operations.

Business intelligence systems can help companies have a more comprehensive knowledge of the factors affecting their business, such as metrics on sales, production, internal operations, and they can help companies to make better business decisions. Business Intelligence should not be confused with competitive intelligence, which is a separate management concept.

Business Intelligence can be defined as the analysis of information for operational (what is happening), tactical (what has happened and why) and strategic (what is likely to happen) purposes across an organization to enable and support proactive and fact-based decision-making.

Providing more robust information only offers the promise of better decisions and does not guarantee the execution of such decisions. Only the right combination of people (in terms of culture and behavior), processes (in terms of empowerment to act on information) and technology (in terms of the tools to access/deliver information) will make a BI Program effective in supporting corporate goals and objectives.

Quantifying the ROI of BI Programs is often challenging as BI can best be described as an enabling capability that contributes to the achievement of measurable returns. Until consolidated information is made available and/or the analyses are conducted, it is difficult to explicitly state which opportunities will present themselves or what decisions can be made

Rationale for using BI

Business intelligence applications and technologies can enable organizations to make more informed business decisions, and they may give a company a competitive advantage. For example, a company could use business intelligence applications or technologies to extrapolate information from indicators in the external environment and forecast the future trends in their sector. Business intelligence is used to improve the timeliness and quality of information and enable managers to better understand the position of their firm in comparison to its competitors.

Business intelligence applications and technologies can help companies analyze the following: changing trends in market share, changes in customer behavior and spending patterns, customers' preferences, company capabilities and market conditions. Business intelligence can be used to help analysts and managers determine which adjustments are most likely to affect trends.

BI systems can help companies develop consistent and "data-based" business decisions--producing better results than basing decisions on "guesswork." In addition, business intelligence applications can enhance communication among departments, coordinate activities, and enable companies to respond more quickly to changes (e.g., in financial conditions, customer preferences, supply chain operations, etc.). When a BI system is well-designed and properly integrated into a company's processes and decision-making process, it may be able to improve a company's performance. Having access to timely and accurate information is an important resource for a company, which can expedite decision-making and improve customers' experience.

In the competitive customer-service sector, companies need to have accurate, up-to-date information on customer preferences, so that the company can quickly adapt to their changing demands. Business Intelligence enables companies to gather information on the trends in the marketplace and come up with innovative products or services in anticipation of customer's changing demands. Business Intelligence applications can also help managers to be better informed about actions that a company's competitors are taking. As well, BI can help companies share selected strategic information with business partners. For example, some businesses use BI systems to share information with their suppliers (e.g., inventory levels, performance metrics, and other supply chain data).

BI systems can also be designed to provide managers with information on the state of economic trends or marketplace factors, or to provide managers with in depth knowledge about the internal operations of a business.

BI Technologies

For the BI technology system to work effectively, companies address the need to have a secure computer system which can specify different levels of user access to the data 'warehouse', depending on whether the user is a junior staffer, manager, or executive. As well, a BI system needs to have sufficient data capacity, a plan for how long data will be stored (data retention). Analysts also need to set benchmark and performance targets for the system.

Business intelligence analysts have developed software tools to gather and analyze large quantities of unstructured data, such as production metrics, sales statistics, attendance reports, and customer attrition figures. Each BI vendor typically develops Business Intelligence systems differently, to suit the demands of different sectors (e.g., retail companies, financial services companies, etc.).

Business intelligence software and applications includes a range of tools. Some BI applications are used to analyze performance, projects, or internal operations, such as AQL - Associative Query Logic; Scorecarding; Business activity monitoring; Business Performance Management and Performance Measurement; Business Planning; Business Process Re-engineering; Competitive Analysis; User/End-user Query and Reporting;Enterprise Management systems; Executive Information Systems (EIS); Supply Chain Management/Demand Chain Management; and Finance and Budgeting tools.

Other BI applications are used to store and analyze data, such as Data mining (DM), Data Farming, and Data warehouses;Decision Support Systems (DSS) and Forecasting; Document warehouses and Document Management;Knowledge Management; Mapping, Information visualization, and Dashboarding; Management Information Systems (MIS);Geographic Information Systems (GIS); Trend Analysis; Software as a service (SaaS) Business Intelligence offerings (On Demand)- similar to traditional BI solutions but software is hosted for customers by a provider.[1] ;Online Analytical Processing (OLAP) and multidimensional analysis; sometimes called "Analytics" (based on the "hypercube" or "cube"); Real time business intelligence;Statistics and Technical Data Analysis; Web Mining, Text mining and Systems intelligence.

Other BI applications are used to analyze or manage the "human" side of businesses, such as Customer Relationship Management (CRM) and Marketing tools and Human Resources applications.Web Personalization For examples of implemented Business Intelligence systems, see the BI screenshot collection at The Dashboard Spy.

The Future of Business Intelligence

In this rapidly changing world consumers are now demanding quicker more efficient service from businesses. To stay competitive, companies must meet or exceed the expectations of consumers. Companies will have to rely more heavily on their business intelligence systems to stay ahead of trends and future events. Business intelligence users are beginning to demand Real time Business Intelligence or near real time analysis relating to their business, particularly in front line operations. They will come to expect up to date and fresh information in the same fashion as they monitor stock quotes online. Monthly and even weekly analysis will not suffice. "Business users don't want to wait for information. Information needs to be always on and never out of date. This is the way we live our lifes today. Why should Business Intelligence be any different?" Charles Nicholls, CEO of SeeWhy, a Software company, Windsor UK.