Business Intelligence

What Is Business Intelligence (BI)?

Business intelligence (BI) refers to the procedural and technical infrastructure that collects, stores, and analyzes the data produced by a company’s activities.

BI is a broad term that encompasses data mining, process analysis, performance benchmarking, and descriptive analytics. BI parses all the data generated by a business and presents easy-to-digest reports, performance measures, and trends that inform management decisions.

Understanding Business Intelligence (BI)

The need for BI was derived from the concept that managers with inaccurate or incomplete information will tend, on average, to make worse decisions than if they had better information. Creators of financial models recognize this as “garbage in, garbage out.”

BI attempts to solve this problem by analyzing current data that is ideally presented on a dashboard of quick metrics designed to support better decisions.

BI must seek to increase the accuracy, timeliness, and amount of data.

These requirements mean finding more ways to capture information that is not already being recorded, checking the information for errors, and structuring the information in a way that makes broad analysis possible.

In practice, however, companies have data that is unstructured or in diverse formats that do not make for easy collection and analysis. Software firms thus provide business intelligence solutions to optimize the information gleaned from data. These are enterprise-level software applications designed to unify a company’s data and analytics.

Although software solutions continue to evolve and are becoming increasingly sophisticated, data scientists still need to manage the trade-offs between speed and the depth of reporting.

Some of the insights emerging from big data have companies scrambling to capture everything, but data analysts can usually filter out sources to find a selection of data points that can represent the health of a process or business area as a whole. This can reduce the need to capture and reformat everything for analysis, saving analytical time and increasing the reporting speed.

Types of BI Tools and Software

BI tools and software come in a wide variety of forms. Let's take a quick look at some common types of BI solutions.

• Spreadsheets: Spreadsheets like Microsoft Excel and Google Docs are some of the most widely used BI tools.
• Reporting software: Reporting software is used to report, organize, filter, and display data.
• Data visualization software: Data visualization software translates datasets into easy-to-read, visually appealing graphical representations to quickly gain insights.
• Data mining tools: Data mining tools "mine" large amounts of data for patterns using things like artificial intelligence, machine learning, and statistics.
• Online analytical processing (OLAP): OLAP tools allow users to analyze datasets from a wide variety of angles based on different business perspectives.

Benefits of Business Intelligence

There are many reasons why companies adopt BI. Many use it to support functions as diverse as hiring, compliance, production, and marketing. BI is a core business value; it is difficult to find a business area that does not benefit from better information to work with.

Some of the many benefits companies can experience after adopting BI into their business models include faster, more accurate reporting and analysis, improved data quality, better employee satisfaction, reduced costs, and increased revenues, and the ability to make better business decisions.