The importance of Business Intelligence
But first, what is business intelligence?
Business Intelligence (BI) is a term that encompasses a set of methodologies (Data Warehousing, Data Mining, OLAP) and software tools, which enable the use of data from different data warehouses and converting them into information needed to make business decisions.
Business intelligence system is a system that stores information and knowledge about competition, customers, suppliers and processes of an organization. It enables business negotiation and numerically reasoned approach to customers and business partners, the quality of operational planning, monitoring the behavior of competitors, the observation of certain market segments, and predicting future events. Also, through business intelligence system we better understand customers and business partners, and we recognize what inspires them to certain behaviors.
Such systems are extensively begin to develop when companies automate their business processes, implemented different transactional systems, which are quickly revealed as generators of large amounts of data. From a purely technical point of view, business intelligence is a process in which the raw data shape into structurally and visually acceptable information. Such information is then analyzed, possibly interpreted by the trends and key performance indicators (Key Performance Indicators, KPI), and in this form are used in the decision process.
BI promotes traditional way of reporting the following characteristics:
- Interactivity – the time during the analysis, we find new questions, then almost immediately we receive a response by manipulating data
- Hierarchical organizations (as most common in business structures) – provides us with a consolidated overview of the data at the highest level, but it also allows ‘drill down’ to the details when needed
- Multidimensionality – collected data is analyzed through different perspectives creating and using multidimensional BI cubes
Business Intelligence is a term that has become critical to the operations of any company. If people make important business decisions have the right information, then become much more efficient. Projects introducing business intelligence fail due to very clear, and achievable goals, business culture that is willing to accept change, leadership companies that adorns visionary and resourceful employees who are able to take advantage of all the benefits they derive from them.
Why BI systems are becoming an essential part of business?
Many large companies have been using business intelligence systems to help in the realization of benefits in today’s highly sensitive market conditions. However, the advent of cheaper and not so highly specialized BI products, such systems are becoming available to smaller companies.
From the moment it was founded, until its closure, the company produces the data. Previously, this information could be manually converted into reports which helps the company’s board in making decisions that are important for its function. Today, when modern technology is more accessible, the data we collect in daily operations are so extensive that their quality interpretation is possible only through the systematization of data collection and automate processing.
For example, you can collect data about your customers:
- What to buy?
- How to buy?
- When you buy?
- How do they pay?
- How quickly they pay?
- Which discounts they are using?
You can collect information about employees of the company:
- How many items per day company producing / processing / sales?
- How much time is spent on the particular type of work?
- What are their benefits?
- How much tax the company pays on their income?
- What are their qualifications?
- What kind of additional training they undergo?
- What are the costs of their training?
You can collect information about your products:
- What are the costs of production?
- What is the cost / retail / wholesale price of the product?
- The state of stock
- What are the characteristics of each product (shape, color, size, …)?
- How products are grouped?
These data are usually distributed among different departments (finance, marketing, sales, human resources, customer relations, …). Each of these departments has a different function within the organization, and collects their own groups of data (the data are separated from each other and it is very difficult to draw from them a general picture of the company’s business, as well as analyze the relationships between individual parts). A lot of money is spent on data collection, but there are few companies that are able to convert these data into a value. Business Intelligence systems have the mission of ensuring fast access to the most important information which management structure allows managers to make better business decisions.
In collaboration with Boston University, we enclose their infographic about why business intelligence is key for competitive advantage: