Business intelligence (BI) is a technology-driven process for analyzing data and presenting actionable information to help executives, managers and other corporate end users make informed business decisions. BI is practices for the collection, integration, analysis, and presentation of business information.
The purpose of Business Intelligence is to support better business decision making. Essentially, Business Intelligence systems are data-driven Decision Support Systems (DSS). Business Intelligence is sometimes used interchangeably with briefing books, report and query tools and executive information systems.
BI is used for multiple business purposes, including:
- Measurement of performance and benchmarking progress toward business goals
- Quantitative analysis through predictive analytics, predictive modeling, business process modeling and statistical analysis
- Reporting of departmental/divisional and enterprise perspectives of data visualization, EISs and OLAP
- Collaborative programs that allow internal and external business entities to collaborate through electronic data interchange (EDI) and data sharing
- Use of knowledge management programs to identify and create insights and experiences for learning management and regulatory compliance.
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BI also involves specific methodologies and procedures for implementing such interactive information gathering techniques, including:
- Identifying interview teams
- Researching organizations
- Selecting and preparing interviewees
- Developing interview questions
- Scheduling and sequencing interview
How business intelligence works
Although business intelligence does not tell business users what to do or what will happen if they take a certain course, neither is BI only about generating reports. Rather, BI offers a way for people to examine data to understand trends and derive insights.
“So many people in the business need data to do their jobs better,” says Chris Hagans, vice president of operations for WCI Consulting, a consultancy focused on BI.
Hagans points out that business intelligence tools streamline the effort people need to search for, merge and query data to obtain information they need to make good business decisions.
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For example, a company that wants to better manage its supply chain needs BI capabilities to determine where delays are happening and where variabilities exist within the shipping process, Hagans says. That company could also use its BI capabilities to discover which products are most commonly delayed or which modes of transportation are most often involved in delays.
The potential use cases for BI extend beyond the typical business performance metrics of improved sales and reduced costs, says Cindi Howson, research vice president at Gartner, an IT research and advisory firm. She points to the Columbus, Ohio, school system and its success using BI tools to examine numerous data points — from attendance rates to student performance — to improve student learning and high school graduate rates.
Business intelligence vs. data analytics
Sporadic use of the term business intelligence dates back to at least the 1860s, but consultant Howard Dresner is credited with first proposing it in 1989 as an umbrella phrase for applying data analysis techniques to support business decision-making processes. What came to be known as BI tools evolved from earlier, often mainframe-based analytical systems, such as decision support systems and executive information systems.
Importance of Business Intelligence tools or software solutions
Business Intelligence systems provide historical, current, and predictive views of business operations, most often using data that has been gathered into a data warehouse or a data mart and occasionally working from operational data. Software elements support reporting, interactive “slice-and-dice” pivot-table analyses, visualization, and statistical data mining. Applications tackle sales, production, financial, and many other sources of business data for purposes that include business performance management. Information is often gathered about other companies in the same industry which is known as benchmarking.
Self-Service Business Intelligence (SSBI)
Self-service business intelligence (SSBI) involves the business systems and data analytics that give business end-users access to an organization’s information without direct IT involvement. Self-service Business intelligence gives end-users the ability to do more with their data without necessarily having technical skills. These solutions are usually created to be flexible and easy-to-use so that end-users can analyze data, make decisions, plan and forecast on their own. Companies such as PARIS Technologies have taken an approach to making Business Intelligence an easily integrated tool for other end-user tools such as Microsoft Excel, Access, Web browsers and other vendors.