What is business intelligence?
What is business intelligence?
Business Intelligence (BI) is a broad term that encompasses the technologies, applications, strategies, and practices used by organisations of all sizes to collect, analyse, integrate, and present relevant business information.
The goal of BI is to support and improve decision-making based on data-driven insights. It involves the use of data mining, process analysis, performance benchmarking, and descriptive analytics. BI tools can analyse data from various internal systems like financial software, customer relationship management (CRM) tools, and supply chain information, as well as external market data. By converting vast amounts of raw data into meaningful and actionable information, BI helps organisations identify trends, spot business problems and seize new opportunities.
How does it work?
Just like any raw material, data needs to be collected and processed through meaningful analysis to become useful. By collecting up-to-date data from multiple sources in your business, BI can present days, weeks or even years’ worth of information back to the user in an easy-to-digest format. Whether that’s through tables, graphs or reports, this data can be used to dictate the long-term and everyday decisions of your business.
Features of business intelligence
- Quick access to company, customer and product data
- The ability to drill down into reasons for underperformance
- Instant analysis of quantities sold, values and margins
- Identify the impact of customer interaction on sales
- Compare territory or performance of different reps
- See what’s selling and other customer spending habits
Why is it important to your business?
In today’s economy, where even the smallest of marginal increases to bottom-line profitability can make a difference, companies are always searching for insight into where improvements can be made. BI provides businesses with a distinct competitive edge with the potential to:
- Improve data accuracy
- Increase the speed of decision making
- Increase business visibility
- Enhance transparency
- Eliminate waste
Examples of business intelligence
Let’s start with (what’s likely) your biggest pool of data – your customer activity. Using Business Intelligence, your business can drill down into customer activity from every angle. Whether that’s investigating products, category groups or individual item performance, you’re able to investigate the ‘why’ of your results.
Discover which customers are buying one type of your products but not others closely related to them. Or, how one method of customer communication is outperforming others – whether that’s contact type, timing, or the sales rep getting in touch.
Other scenarios where you might want to investigate your data?
- A sudden drop in finances
- Planning marketing strategies
- Allocating budgets for the year
- Problems with your supply chain
- Analysing employee performance
- Monitoring significant events
- Sharing progress with stakeholders
- Forecasting and procurement
Discover more about making great business decisions with the support of BI here.
A focus for retailers might range from evaluating ‘what if’ scenarios, estimating project costs and deciding on budgets to creating reports about web-based sales compared to in-store purchases.
Similarly, retailers might also benefit from built-in dashboards that summarise critical performance data such as customer retention rates, inventory turnover and year-on-year growth.
For wholesalers, BI might be used to measure the success of sales, order fulfilment and profitability. Building strong relationships with customers is critical for wholesalers, so breaking down the sales of an individual customer can provide opportunities to convert small long-term buyers into more valuable buyers.
To ensure the best service, it’s also important for wholesalers to optimise their inventory. Tracking product performance with the help of BI will ensure top-performing products are being identified, and the low sellers are being evaluated.
For manufacturers, monitoring components and purchasing is a critical part of running a successful operation. With BI, production quality can be monitored, dashboards can offer visibility into production lines, and forecasting reports can determine what materials are required to keep up with customer demand.
What’s the difference between business intelligence and business analytics?
When we talk about business analytics, we refer specifically to the process of using data to find trends. Business analytics is interested in what’s likely to happen next. Business intelligence, on the other hand, is interested in what’s happening now, and why.
Both business intelligence and business analytics give companies the ability to analyse data to make more informed decisions. Whether those decisions affect current or future operations depends on which one is used.
The best strategy is often starting with an ERP system and then incorporating business analytics to make projections aimed at improving efficiency, revenue generation, etc. moving forward.
Curious to learn about how business intelligence could be used in your own operations?