Business Intelligence is a common term in today’s business jargon. And yet, some have misconceptions about business intelligence – thinking it’s a sales analytics tool that spits out sales reports with the press of a button. This blog goes back to the basics of Business Intelligence to help business leaders understand the real value of BI for their business.
A: About BI
While the term ‘Business Intelligence’ was only popularised in 1997, the concept of BI has always been prevalent, in most instances, with regards to analytics. In 1958, IBM researcher Hans Peter Luhn defines BI as “the ability to apprehend the interrelationships of presented facts in such a way as to guide action towards a desired goal”. 30 years later, in 1989, a Gartner analyst defines BI as “concepts and methods to improve decision making by using fact-based support systems”.
Now, Forrester Research captures Business Intelligence in its entirety with its definition: “Business Intelligence is a set of methodologies, processes, architectures and technologies that transform raw data into meaningful and useful information used to enable more effective strategic, tactical and operational insights and decision-making”.
B: Business case for BI
Minimise uncertainty about the future
Benjamin Franklin once said there were only two certainties in life – death and taxes. This is especially true in the business world. As business leaders, we are constantly faced with unstable economic conditions, increased competition and changing buyer behaviour. What we know for certain is that nothing is certain. Business Intelligence gives you one way to overcome this uncertainty.
In the case of a new product development, every business needs to know the market’s stance, the buyer behaviour and the performance of competitors before they go into the product development stage to ensure the product can succeed in the market. With BI, you have the ability to analyse market conditions, your business performance and competition to project future conditions, which will enable you to leverage this knowledge to make strategic business decisions that benefit your organisation.
Improve performance to achieve objectives
Every business has its own set of goals and objectives. Many of you would like to 20% growth year on year, and many of you would be putting in all the resources to achieve it. But how will you know the exact elements to improve on in order to achieve those goals?
Business Intelligence allows you to analyse past performance and review inputs and outputs to help you determine the changes you need to make to your inputs to achieve the desired outputs. These will become the actionable items that will directly contribute to achieving the previously set objectives.
Due to its contribution to strategic decision-making, a BI tool is sometimes known as a decision support system (DSS).
C: Comprehend BI
The image above is a simple depiction of the three layers of Business Intelligence. It begins with the source system layer which comprises data from several sources, then continue to the data warehouse layer and finally end with the reporting layer where data is presented in sections for analysis and reporting.
Within the source system layer of BI, there will be several different formats and types of data. This type of data is more commonly known as unstructured data. In the presence of unstructured data, compiling it becomes challenging. BI then comes in with metadata capabilities to assess and draw real information from unstructured data. Current BI tools are equipped with these capabilities to overcome the challenges of unstructured data.
When it comes down to it, the ultimate goal of any Business Intelligence tool is to empower you with information to make better strategic, tactical and operational decisions. And this is what you need to survive in a constantly changing business environment.