Business Intelligence (BI) refers to the procedural and technical infrastructure that collects, stores and analyzes the data generated by the activities of a company. Business intelligence is a broad term that encompasses data mining, process analysis, performance benchmarking, descriptive analytics, and other methods.
Business intelligence should record all data generated by a company and present easily understandable key figures and trends that support management in its decisions.
Business intelligence grew out of the belief that managers with inaccurate or incomplete information tend, on average, to make worse decisions than if they had good quality information. Financial modelers will recognize this as a “garbage in, garbage out problem”. Business intelligence aims to solve this problem by providing the most up-to-date data on a dashboard with quick metrics to support better decisions.
The growing field of business intelligence
To be useful, business intelligence must try to increase the accuracy, timeliness, and volume of the data.
That means finding more ways to capture information that is not already captured in other processes and tools, review the information for errors, and structure it so that it can be analyzed in depth. In practice, however, companies often have data that is unstructured or in various formats that do not allow easy collection and analysis. Therefore, software companies offer various business intelligence solutions. These are software applications for companies that aim to standardize a company’s data and analysis.
Even though software solutions are constantly evolving and becoming easier to use, there is still a need for specialists such as data scientists to ensure that the tradeoffs between speed and reporting depth are appropriate. Some of the insights that can be gleaned from big data have led companies to collect absolutely all kinds of data.
But data analysts can usually filter out specific sources to find a selection of data points that can represent the state of a process or business area as a whole. This can reduce the need to capture and reformat everything for analysis. This saves analytical time and increases the speed at which reports are created and available.
Benefits of business intelligence
There are many reasons why companies use business intelligence. Many use it to support functions as diverse as hiring, compliance, manufacturing, and marketing. When data gathering for business intelligence becomes a core business area, it is difficult to find a business area that doesn’t benefit from better information.
Some of the many benefits companies can experience after adopting business intelligence into their business models are:
- faster, more accurate reports and analysis,
- improved data quality,
- better employee satisfaction,
- lower costs and higher revenues
- as well as the ability to make better business decisions.
For example, if a manager is responsible for several beverage factories and sales in a given region are growing rapidly month-to-month, they can approve extra shifts in near real-time to ensure factories can meet demand. He can also quickly shut down the same production if a cooler summer than normal affects sales. This is an example of how business intelligence, when used correctly, can increase profits and reduce costs.