Business intelligence is often confused with business analysis, as both involve the analysis of certain components of business in order to make better decisions regarding the running of an organisation. They are, however, two very different processes.
The best way to differentiate between the two is to consider business intelligence as looking into past performance of an organisation, whereas business analysis seeks to determine future trends and needs of a business. Business intelligence is therefore reactive, whereas business analysis is proactive. Both are, however, used in order to plan for the future needs of the organisation.
The definition
Business intelligence is the process of analysing raw data (usually in vast quantities) in order to make informed and effective decisions concerning business needs. The technologies used in business intelligence have the ability to handle very large amounts of data (big data) and aids in the identification of new business opportunities.
The tools
The technologies utilised in business intelligence offer the following functions:
Analytics – finding patterns in data and interpreting them in order to improve business performance.
Reporting – providing regular reports to Corporate Executives and Business Managers to aid in decision making.
Online analytical processing (OLAP) – performing multidimensional data analysis in order to perform analysis of business trends and data modelling.
Data mining – Extracting information from data and converting it into a comprehensible structure.
Benchmarking – measuring the performance of an organisation to that of competitors.
Process mining – Utilising events logs for analysis of business processes.
Complex event processing – identifying meaningful events that may have an impact in the future of the business.
Predictive analytics – Using current events and events from the past in order to make predictions about possible future events.
Business performance management – measuring the performance of an area of an organisation against a predetermined goal.
Text mining – extracting meaningful data from text documents.
Prescriptive analytics – Using the analysis of data to suggest options to be considered when making business decisions.
The benefits
Once business intelligence has been successfully applied, the organisation will be able to use the information that has been sourced in multiple ways. If a gap in the market has been identified, a business will have a head start in supplying where there is a demand.
Information can also be used to find areas where costs can be cut. This can have a real impact on revenue as unnecessary expenditures can be avoided and rerouted to other areas where there may have been a lack of funding or resources.
Another competitive advantage gained from business intelligence is a quick response to market trends. Focussing on the habits of customers and clients will give the organisation a unique insight into adjustments that need to be made in order to cater to their target market, giving a company an edge over their competitors.
Having access to accurate and frequent financial, vendor, operational and customer reports when necessary is another plus point. Where reports need to be manually compiled, or where a unique report needs to be created, the necessary data is easily accessible and ready to be used almost effortlessly.
The most common benefit of business intelligence is the chance to gain insight into how operations can be streamlined. Problem areas are identified and can, therefore, be addressed as is necessary. This will have a positive impact on efficiency and, therefore, overall performance.
In closing
Business intelligence is an effective way to gain insight into your organisation’s past, learning from that information and applying it to the factors that need to be altered in order to make a real impact on future business. There is much to be gleaned from where your company has been, in order to steer it towards the path that it needs to follow.
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