Business intelligence (BI) is both ubiquitous and invisible in today’s world. For those who have heard of BI, the definition is either fuzzy, inaccessible or confusing. Those who have not heard of BI are oblivious to a powerful, complex process that is happening all around them.
If you’re watching election coverage on a popular news network, and the reporter is pointing to an infographic that is being updated in real time, it’s powered by business intelligence (BI) tools. If you receive an email from your favorite online retailer featuring several articles of clothing that are exactly your style, that’s BI tactics put to good use.
BI is no longer just used by large enterprises to gain a competitive advantage. It is employed by a variety of businesses and influences many parts of our daily lives. But, what is BI, really?
What Is BI?
One of the more popular definitions comes from Gartner: “[BI] is an umbrella term that includes the applications, infrastructure and tools, and best practices that enable access to and analysis of information to improve and optimize decisions and performance.”
This seems rather broad. Often, the confusion over what BI means lies in the breadth of its applicability and the components it may encompass. The lower layers of BI include data management, data warehousing and other components that fall within the information management category. However, some consider BI to only include the top layers – actions that utilize the data after it’s gathered and filtered, such as reporting, analytics and dashboards.
No matter the extent of what BI encompasses for a particular organization, its common purpose is to turn data into actionable information. At its most effective, BI merges historical, current and predictive data to gain insights – often combining data from sources both inside and outside of the business. This combined data set paints a comprehensive picture of a business and its environment – one that cannot be seen from looking at a lone data set.
Why Is It Important?
BI aids a company in making the smartest decisions regarding operations (such as product positioning and pricing) and business strategies (such as priorities, goals and directions), both broad and minute. As the world continues to become more data driven, employing BI solutions becomes more integral to staying ahead of the competition and ensuring your business is as efficient as possible.
Companies big and small, as well as marketers and even journalists, are using data to make informed decisions. Gone are the days of going with intuition or making decisions based on just looking at the numbers, and, in order to keep afloat, all businesses should be applying BI in one way or another.
What Insights Can It Provide? What Can It Achieve Long-Term?
BI infrastructure has a myriad of uses, but, for most companies, the end game is: gaining competitive advantage, boosting operational efficiency, enhancing customer service and driving revenues. Combined, these achievements will lead to competitive market advantage and long-term stability. However, these big picture goals cannot be reached without making data-driven decisions by properly applying the following insights:
- Enhance your sales strategy: By leveraging sales-related data, you can find ways to hone your sales plan that can yield bigger returns, as well as anticipate future issues. Interpret what is propelling revenue for your company and capitalize on it or find low-performing areas and troubleshoot.
- Segment customers: BI tools allow you to develop even more detailed classification of customers beyond typical demographics. This allows for highly targeted sales and marketing plans, better prediction of customer behavior and keener focus on higher profit customers.
- Check out your competition: If competitors’ performance data is available, you can analyze it to determine where you are outperforming and underperforming other businesses in your market. With BI mapping tools, you can visualize how you compare in shared geographical areas. These insights can help you decide whether or not to expand to a new area and where to focus marketing efforts.
- Pinpoint and remedy bottlenecks: BI helps analysts and decision makers see where ventures are working and sheds light on problem areas. Overstock, slowed production and low employee satisfaction all lead to declines in efficiency. BI provides a way for leadership to turn random data into measurable trends and concrete metrics that spotlight and help resolve bottlenecks. As a result, they can prevent short-term bottlenecks from becoming bigger problems.
- Manage inventory: Through predictive analytics, retailers can forecast demand for their products. Putting these numbers in the hands of analysts and leaders may lead to decreased inventory costs, increased sales and boosted turnover rate.
- Assess customer demand: BI software can map where products are being sold in the highest volumes, suggesting where to funnel your efforts. Also, soaring demand for other products and services within your industry can suggest which new endeavors are smart for your business.
- Measure effect of marketing efforts and find ways to improve: Through BI, you can assess the return on investment of your marketing strategy and discover what motivates consumer behavior. By utilizing market segmentation, you can better build your brand, voice and message.
- Understand social media: By measuring traffic, likes, shares and engagement, you can see who is giving your company attention and why. This information may not just determine how to make improvements within your company but where to focus online marketing efforts.
This is not a comprehensive list of all that BI can do. Depending on the type of business and its goals, there are many other ways that data sets and BI tools can be used to improve efficiency and gain market advantage.
Whatever your understanding of BI and whatever your strategy, the common purpose for BI in the business environment is: gaining insight and applying it properly to your decisions. BI is not only about the data but how it’s used. Through strategic gathering, filtering and visualizing, a seemingly irrelevant piece of data, viewed from the right vantage point, can become a powerful piece of information.
Interested in learning more about how Piraeus Consulting can help you with you BI needs? Check out our Business Intelligence Services Page to find out.