What is Business Intelligence (BI)?

BI is a simple concept, but not one that's always understood

Businessman looking at board with writing

Business Intelligence (BI) is perhaps one of the most effective ways to use data in the modern world. It can provide businesses with key insights to help them make better decisions about how to foster a more productive and efficient organisation, analyse how they can keep up with competitors and grow their revenues above and beyond projections.

BI can help organisations determine whether it will achieve its business goals, how it can improve its current IT infrastructure and what resources it will need to provide better business outcomes.

The term BI can be misleading, though. It does suggest that there's a way to plan for the future without using intelligence at all, which would be pretty irresponsible.

It's therefore important that you explain to other parts of the business what the term actually means and how it's related to your specific organisation. You should stress that it means to use data in order to find insights that aren't possible without processing data and what data types are looked at to inform strategy.

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The majority of businesses can pool data from a variety of sources, whether that's how customers use your services, sales data, employee information and how people coming to your company's website are behaving. You can also gain crucial insights from other areas of your business that may not seem directly related to business growth or operations but can expose strengths and weaknesses.

Some of this information is collected anonymously, such as a customers age, gender, location and social group, which websites they've visited before they arrived on your website and what they've been searching for.

This information can then be used to better target a company's marketing strategy to turn bystanders into loyal customers. Because so much of this can be automated, business intelligence is actually a very resource-effective way of refining a strategy to make sure it's targeting the right people with the right messages.

What makes business intelligence a slippery concept is that there is such a wide variety of different disciplines involved. There is the gathering of the data itself, its storage and availability, and the manipulation and the interpretation. It sounds simple but it's a process that involves different disciplines within the IT department, a range of skills and the participation of finance, sales, and marketing all coming together to produce an accurate picture.

In particular, the problem has been that much of the relevant data was trapped in legacy systems, accessible to the technical staff but not to the business managers who needed the information and did not possess the requisite knowledge to make sense of the data. There was a yawning gap to be bridged.

Executive Information Systems were all the rage for some time, with some executives thinking that they finally had the magic formula that would allow them to gather all the relevant information. Unfortunately, the rigidity of the mainframe-based systems that were in use then rather limited the use of EIS products.

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However, in recent years, business intelligence (and its close relation, data analytics) has once again become part of the business repertoire. Every modern executive is fully aware of the potential of accurate BI offerings and companies are transforming themselves to take advantage of all the latest products.

What has changed?

There is now a growing emphasis on the accessibility of information, and a democratisation of information gathering. The availability of more powerful business software has driven a more tech-savvy generation of business executives.

There has also been the emergence of cloud computing and the ability of business executives to select their own products, without the intervention of an IT department. This has led to a new generation of BI products, where old methodologies have fallen by the wayside. The cloud is proving to be an attractive option for many executives: 45% of respondents to a recent Gartner survey were prepared to put mission-critical BI apps into the cloud.

Gartner goes further. In its recent Magic Quadrant reports, it comments on the extent of the transformation, pointing out how techniques reserved for the IT personnel have gradually been discarded. The report points out that while analytical capabilities were deployed, for example, online analytical processing (OLAP) and ad hoc data queries, " they were never fully embraced by the majority of business users, managers and analysts, primarily because most considered these too difficult to use for many analytical use cases."

Advancing BI tools

What Gartner makes plain is that the world is changing and executives call on a range of new techniques to interrogate the data. One example is the rise of AI; Gartner has predicted in a recent study that by 2020, natural-language generation and artificial intelligence will be a standard feature of 90% of modern BI platforms.

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One of the key elements of change is in the rise of visualisation the presentation of data in graphical format illustrating complex points through the use of colour, brightness and shapes. In previous decades, the move to visualisation would have included concepts such bar charts and Venn diagrams but there's a whole new lexicon of graphs available now, heat and tree maps, for example, or scatter plot diagrams.

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Business Intelligence, therefore, is not merely about restating the obvious. It's the name given to an increasingly sophisticated selection of tools, using an increasingly sophisticated range of disciplines. Information about customers is far too important to be left to the technical community but they traditionally have been the ones with access to the relevant data. The last five years have seen a complete swing within businesses, as the managers with the ability to ask the right questions finally have the tools at their disposal to get all the right answers.

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