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Understanding the Value and Best Practices of Business Intelligence

Understanding the Value and Best Practices of Business Intelligence

Business Intelligence, or BI, takes its name from its better-known cousins, military and national intelligence. While the Central Intelligence Agency, to choose an aptly-named analog, exists to keep the US governed informed about the plans, strengths and weaknesses of America’s enemies, BI is about understanding your own plans, strengths and weaknesses. Ironically, we often don’t really know what’s happening right in our very own companies. BI solves this problem, using your own data—sometimes adding in external data as well—to help you see how you are doing and what problems are on the horizon.

What is Business Intelligence (BI)?

The term “Business Intelligence” is flashy, and it sounds cool, but it’s actually been around for over 150 years, believe it or not. The idea of a business owner using information in the same way a general would use military intelligence dates back to 1865.  IBM was publishing papers about it in the 1950s. Early versions of today’s BI solutions existed as far back as the 1960s. They were called Executive Information Systems and Decision Support Systems. They required a lot of highly specialized knowledge to set up and operate.

The first major breakthrough for BI came with the emergence of what is known as Online Analytical Processing, or OLAP. OLAP leverages standards in database design and compatibility to extract business data from multiple sources. It then presents a multi-dimensional data model for analysis. Also known as a “data cube,” the multi-dimensional model contains correlated but separate data sets. For example, the cube might comprise data about sales as well as web site traffic. In this simple example, BI tools could let you compare the two data sets to see if there is a correlation between web traffic and sales.

Why Do You Need BI?

Do you need BI? If you run a very small business, you could probably live without it for a while. To grow, though, most companies need to have a firm sense of how they are doing. This takes consistent presentation and review of data. It takes BI.

BI, at its most fundamental level, is about staying informed about how your business is performing. Simple BI use cases include things like reporting on key success metrics. For example, if you set sales targets for each of your regions, how are they performing against those targets? Now, you might think, well, I don’t need any specialized software for that! What BI offers in this case is fast results through the automation of reporting. Having readily-available performance data gives you instant awareness of your business and relieves your people from the chore of regularly preparing performance reports.

Going a step further, BI is useful in decision-making. Making decisions requires guesswork about the future. BI can be helpful here by presenting historical data that hints at future events. For instance, with BI, you might learn that your sales go down when interest rates go up. If interest rates are heading up, you might be able to anticipate a sales slump and hold off on any major investments for the time being.

The Differences Between BI and Data Analytics

The terms BI and “Data Analytics” often get used interchangeably. They overlap, for sure, but the practices are indeed different. BI has to do with reporting and interpreting existing data sets. Analytics is a more advanced process. It includes the use of artificial intelligence, data science and predictive modeling to make inferences and predictions based on data.

Examples of BI in Action

Business Intelligence toolsets are becoming easier to use. Now, non-expert users can employ BI to aide in the execution of a wide range of business tasks. These include:

  • Budgeting and planning – using past expense data and future sales and expense forecasts to identify realistic, optimal budgets for upcoming business cycles
  • Forecasting – interpreting past sales data, correlated with other factors, to forecast revenue
  • Consolidations – pulling together data from multiple sources to present a consolidated view of a given business situation
  • Dashboards – offering “at a glance” performance information in graphical form for use by senior managers, e.g. sales performance in red/yellow/green charts that show how the business is meeting its objectives. A dashboard may take the form of a “Scorecard” that offers quick visibility into how an employee or business unit is executing on its Key Performance Indicators, or KPIs

Brittenford offers solutions for BI. We have experience in identifying the right solution for your business and then working with you to implement it successfully. For more information, visit http://www.brittenford.com/software-solutions/business-intelligence/

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