Business Intelligence (BI) and Business Analytics (BA) are both used to interpret business information and create data-based action plans. The two terms are frequently used interchangeably, and many people consider one to be a subset of the other (there’s some disagreement about whether BI is a subset of BA, or BA is a subset of BI). However, it might be more accurate to describe them as two arms of successful business planning: BI tells you the current state of operations, while BA focuses on future trends.
Business Intelligence uncovers past and present patterns and trends, using that information to make better decisions for day-to-day business operations. On the other hand, Business Analytics (which Harvard Business School calls “…a newer, trendier term than business intelligence”) uses data mining, statistical analysis, and predictive modeling to predict future patterns.
Types of Questions Answered
Business Intelligence answers questions like:
- “What has happened in the past?”
- “What is happening right now?”
- “How can we stay focused on our current target?”
- “What do our current customers look like?”
It can tell you what is working, and what isn’t working. BI is the person at the meeting table, informing you of the current state of operations. They are the person armed with a collection of facts and figures in the guise of descriptive statistics: bar graphs, pie charts and the like.
Use business intelligence if:
- Your goal is to make fast, data-driven decisions about the present situation,
- You want to produce informative reports about your current status.
- You are a small company, lacking staff with a data science background.
- You want insight into employee performance or organizational performance.
- You want to improve workflow or reduce operating costs.
Business Analytics answers very different questions:
- “What is the probability that this will happen in the future?”
- “What are our future customers doing?”
Your BA doesn’t care much about the current state of operations; they are more concerned with what’s going to happen in the future. Your BA guy might have a chart or two showing where your bottom line is likely headed, but they are more concerned with predictive analytics: the outcomes from data mining, machine learning and similar tools.
Use business analytics if:
- You have access to big data, and want a competitive edge.
- You want to predict where your company is headed.
- You’re looking to change or improve current operations with a view to the future.
Technical Know How
Your business intelligence specialist has in depth knowledge about current business operations. Their technical know-how includes business activity monitoring software, reporting software, and spreadsheets. Positions include project managers, consultants, and business intelligence analysts. Where an overlap with BA typically happens is that a BI sometimes uses tools more often associated with BA, including predictive and statistical tools.
The more scientific arm is the business analyst. Business analysts use a variety of tools, including correlational analysis, regression analysis, and text mining. The area includes a wide range of technical positions, including database administrator, database developer, data scientist, and data engineer.