To some, the term “business intelligence” may seem like a hilarious oxymoron, but the term is actually not used to describe how smart a business or its owner is. Instead, it’s used to describe a number of different computer programs that are used to gather, analyze, and report on a business’s data. Business intelligence, or BI as it’s often called, is made of things such as data mining, data querying, reporting, and analytical processing. But while this may answer the question of what is BI, the actual applications of business intelligence aren’t as clear without further description. Let’s take a look at how BI is used today and why it’s become a necessity in the business world.
Business intelligence as a concept has been used for quite some time, but it was almost always outsourced to professional analytical teams that had the necessary computer equipment to manage large amounts of raw data. However, thanks to advances in technology, now even small businesses can implement some business intelligence practices. There are a number of software applications that can be run on standard computers, so sending data to IT experts is no longer necessary, making BI the order of the day. That said, it's critical that your team is trained on the latest BI tools.
BI is used to help improve the decision making process. With the information gathered from the data, executives and other decision makers have a solid foundation to use as the base of their decisions. The reports generated from BI can be used to make internal processes better, make the business operate more efficiently, identify new revenue streams, and more. It’s often also used to identify new trends in the market and can even help shine a light on problems the business is having.
BI is used by businesses of all sizes and in all industries. Fast food chains are actually some of the biggest users of BI because they use the information gathered from their sales data to decide which products should be added to the menus, which should be removed, and how their marketing campaigns need to be changed. However, they also use the information when making decisions about their suppliers, cooking and serving processes, and more. Many similar businesses that are also very operations-driven now heavily rely on BI in their decision making.
There are a few challenges in BI. First, data has to be collected, and the more data, the better. Without a good amount of data, it may be hard to really draw any good conclusions from it, no matter what BI process is used.
Second, the data has to be relevant, consistent, and clean. Data that was collected inconsistently or has been edited in any way won’t provide true results. It could end up showing one situation when, in reality, the numbers should indicate something else. That’s why you always have to make certain any data you collect is clean and accurate. This is often much easier to do when gathering new data since you have full control over the methods used. If you’re using older information, however, you do have to remember that you don’t necessarily know how the data was collected.
Finally, it's too easy to overwhelm your stakeholders with numbers. Some data best practices will keep your business partners happy, keep your workflow smooth, and make you look.... well, intelligent!