What is business intelligence?
Business intelligence (BI) is a frequently used phrase, but what does it really mean? Business intelligence is the collection of business analytics, data mining, data visualization, and other processes, skills and applications used to inform data-driven business decisions. It is a catchall phrase that covers anything that falls into the data-driven process for analyzing and understanding business processes and decisions. Business intelligence starts with data mining and collection across an organization’s operations, including the creation of data warehouses and data lakes and the identification of critical data channels. This leads to a deeper, more informed understanding of the business. In today’s world, this can involve collecting terabytes of both structured and unstructured data from a massive number of data sources. Aggregating and normalizing this data is another part of BI. This can be incredibly useful in discovering trends and patterns in these large datasets.
Another important process is data analytics, including performance metrics, benchmarking, and descriptive, predictive, and prescriptive analytics. Pulling these various forms of analytics together for the same dataset can further enhance the insights discovered by data mining. Performance metrics and benchmarking enable the business to track current performance against both historical data and predicted goals in the same dashboard. Descriptive analytics also give a detailed view into the historical data that has been collected, which can inform future decisions based uncovered patterns or insight. Predictive analytics take historical data a step further and use historical data in forecasts and predictive models to calculate what could happen. These potential outcomes can provide insight and influence business decisions across the organization. Prescriptive analytics use optimization models and AI to find the optimal outcome and can inform decisions in order to reach that outcome. All of these forms of analytics are crucial aspects of business decision making and business intelligence.
Why is BI important?
Now that we have defined and expanded on what business intelligence is, why is it important? BI can inform business decision makers by showing current and historical data within their business context. For example, customer data can be used to analyze customer behavior, and identify customers that are most likely to churn. This could influence retention policies, and enable customer service teams to rectify any issues, therefore retaining more customers. Another way BI can help is by discovering opportunities and issues in the business. A clear view into operating systems can uncover issues such as inefficient scheduling, overly long hold times, and ineffective IVR menus. Other ways business intelligence enhances organizations include identifying ways to increase revenue, customer behavior analysis, competitor analysis and comparison, performance tracking and benchmarking, operation optimization, driving down operating costs and identifying market trends.
Business intelligence is absolutely vital to running a successful business, especially today. Most organizations are constantly collecting data, but that is only part of the process. Analytics is equally important when it comes to discovering new insight and forecasting future trends. All the different parts of BI work together to break down datasets into valuable, understandable, actionable insight. Business intelligence informs and educates decision makers, enabling smart, data-driven decisions based on facts. BI is important for any industry and can have an immediate ROI. As more companies focus on data, siloes will continue to be destroyed, promoting the sharing of data and collaboration. This will make business intelligence indispensable for the entire organization.