The technology-driven process of analyzing data and delivering actionable information that helps managers, executives, and workers make informed business decisions is called Business Intelligence (BI). This process comprises the strategies and technologies used by enterprises for data analysis and management of business information, and some of the typical functions of BI include reporting, analytics, analytical processing, dashboard development, data mining, process mining, predictive analytics, benchmarking, text mining, etc.
Making sense of the generated data and deciphering the information and insights behind it requires a robust understanding of BI concepts and powerful software. In this article, we’ll cover BI concepts, the importance of BI, applications, benefits, and general use cases.
Definition of Business Intelligence
The process of analyzing data and delivering actionable insights that help managers, executives, and workers make informed decisions is called Business Intelligence (BI).
The process involves:
– Collecting information from internal and external sources
– Preparing the data for analysis
– Running queries
– Creating reports, designing dashboards and visualizations
Business Intelligence Process
Even though individual companies utilize BI individually for different purposes, the process is fairly constant throughout all industries and typically tends to follow this flow:
– Collecting, integrating and storing data from various sources, including internal company data and external data. The data then is commonly stored in a data warehouse, created by a data engineer.
– Creating data sets that are prepared for data analysis, often by creating data analysis models. BI data includes historical and real-time information from different sources.
– Running queries against the data sets/models, which results are used to create visualizations in the form of graphs, charts, histograms, or other visualizations, accompanied by BI dashboards and reports.
– The reports and visualizations help in the decision-making process and can be used to gather additional information from the dashboards.
Business Intelligence Concepts
The following are the four fundamental concepts of business intelligence:
Extracting Raw Data
Data from profit and loss statements, salary details, sales records, and many more is the first component of a Business Intelligence solution. Organizations have data stored in different systems such as CRM, ERP, flat files, etc. Because of this fragmentation, BI systems include robust connectors to consolidate everything for deeper analysis.
Consolidation of Information
Different databases are integrated into a data warehouse to create relationships. Data flows into the warehouse from different sources, including relational databases, transactional systems, and more.
Accessing and Analyzing Data
When the data is consolidated into a single location, it is critical to understand it. This is the location where BI solutions access the information, look for patterns and trends in it, and finally, present it.
Creating Reports and Dashboards
The reports and dashboards transform incomprehensible and complex information into recognizable trends, insights, and patterns. These type of tools makes the cooperation process easier inside the organization and more possible for the discoveries to be shared.
Importance of Business Intelligence
Having a great business intelligence system is crucial for the growth and management of any business, and here are some of the reasons why that system is necessary, according to towardsdatascience.com
Business Intelligence (BI) facilitates a better overview of the organization’s business processes and improved visibility of what’s going on in the organization. Being prepared and not reactive, as well as having active control over the processes and procedures helps to rapidly correct any errors.
With BI it’s more convenient to get actionable insights, rather than using traditional reporting. As we established before, having enough data to back any business decision is the most important thing, and actionable insights are those metrics that enable decision-makers to take any action.
Among many other benefits, Business Intelligence enables businesses to gain insights into what their competitors are doing, as well as make informed decisions for their plans. It is important to note that a company that tracks all internal data at all times stays ahead of a company that doesn’t.
Effective BI processes can help businesses understand their customers better by creating user profiles and analyzing their buying habits and patterns. Consequently, organizations can improve or make better products and improve their customer experience. Customer segmentation is a great example of leveraging the power of BI, creating a situation where both the customer and business can benefit from it: the business can understand what type of products the customer buys, when and how often they buy, and the segmentation gives the customer custom-tailored experience through better product placement.
Business Intelligence Trends
With the ever-growing needs and importance of BI to the business, there are new business intelligence and analytics trends that are appearing every day. These are the most important ones:
– Artificial Intelligence – AI and Machine Learning now take on complex tasks done by human intelligence, according to Gartner, a capability leveraged to come up with real-time data analytics and reporting with dashboards.
– Collaborative BI – Business Intelligence software that combines with other tools, such as social media, and other different latest technologies that enhances collaborative decision-making by teams.
– Embedded BI: Embedded Business Intelligence allows full or feature integration of BI software into another business application, which enhances and extends reporting functionalities.
– Cloud Analytics: Many global enterprises are expected to shift towards cloud analytics, and in the future is expected for many BI applications to be offered in a cloud environment.
Content reviewed by: Nikola Arsovski, Data Analyst @ Data Masters