Business intelligence includes a selection of software that transforms data into insights and business decisions using financial analytics. You can either choose to perform these analytical procedures in-house or opt for outsourced financial analytics for your predictive analyses.
However, business intelligence and business or financial analytics are different from each other and you must understand the differences between these two principles if you want to take advantage of both at their full potential.
Business intelligence tools use software and other tools to access and analyze data sets to present analytical findings in reports, summaries, dashboards, graphs, charts, and maps to give users the intelligence they need to make informed business decisions. Business intelligence must also provide quick and easily understood insights about companies’ current status.
This [peresents the other chief aim of Business Intelligence: data analysts must provide insights in visualized forms so executives and stakeholders can quickly derive the information they need from the analysis. If data analysts failed to do this, business intelligence only accomplishes half of its aim.
Business Intelligence Examples
Reporting is one of the most critical parts of business intelligence because, without it, decision-makers won’t be able to make sense of the analytics being conducted. An easily-interpreted dashboard simplifies the data analyst’s job of presenting data to shareholders and executives.
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Without a user-friendly dashboard, data analysts will have to spend more time trying to devise methods to present their data. For this reason, the dashboard’s user experience is a crucial selling point.
Dashboards are software applications that pool data into charts and graphs for data analysts to derive an overview of their company. These applications don’t offer predictive analyses. They tell the data analyst their current state.
To uncover financial analytics, companies must incorporate a different program. While business intelligence doesn’t offer predictive analytics, it offers both analysts and executives a window into the occurrences of their company.
Companies also won’t have to search for, merge, and query the data they find if they have a business intelligence program.
You can conceptualize business intelligence at work by envisioning a company trying to uncover its supply chain issues. BI can give you access to the variabilities that occur in your supply chain so you can make changes accordingly. However, Bi will not give you predictive analyses based on the proposed solutions to the supply chain issues.
You can also use BI capabilities to uncover the products that are most commonly delayed in the supply chain or which modes of transportation offer the most cost-effective shipping methods.
Despite its limitations regarding predictive analyses, BI doesn’t only apply to business applications. It can be used in various administrative solutions, such as school systems, to track attendance, and school performance, and to improve graduation rates.
How Does Business Intelligence Work?
There are four key steps to business intelligence that transform the raw data into actionable insights. You must start with data collection, then analyze the data, and finally visualize the data. The final step is the decision-making step, which depends heavily on the visualization process.
Before BI, businesses had to collect, analyze, and visualize this data manually. The time it took to do so was simply not feasible for most companies. BI not only saves time. It also simplifies data analysis and decision-making.
Step 1: Data Collection
The first role of business intelligence tools is to collect data from multiple sources and aggregate it. This is known as the ETL method (extract, transform, and load).
Analysts must transform and remodel this data before storing it in a centralized location. Creating one location for your data allows analysts to analyze and query the data as if it were one data set instead of multiple, conflicting data sets.
Step 2: Uncover Trends and Inconsistencies
Data discovery or data mining incorporates the process of quickly analyzing data to find patterns and outliers that provide insight into your current state of business. Data modeling and analytics include exploratory, descriptive, and statistical data analysis to make recommendations on the findings.
Step 3: Visualized Data
BI uses reporting methods that simplify data reporting so company-wide officials can make decisions. This reporting method makes sharing and understanding data easier and results in a more streamlined approach to data analysis.
Reports, dashboards, charts, graphs, and maps, help the users create explainable solutions to the data.
Step 4: Actionable Insights In Real-Time
Current and historical data in contextual data connected with business activities gives companies the ability to move with precision and speed. Real-time adjustments give companies an advantage over their competition.
It also gives them a long-term strategic advantage since they have strategies to act upon based on data. Companies without business intelligence are essentially operating blind. Real-time adjustments eliminate inefficiencies, help them adapt to market shifts, and solve supply chain problems.
How Do Companies Benefit From Using BI Tools?
Business intelligence tools accelerate information analysis and help businesses with performance evaluation. Armed with an efficient BI program, companies can reduce inefficiencies, identify potential problems, and identify future growth areas.
Some more sp[ecific areas of improvement that come with BI include:
- Increased operational efficiency
- Customer behavior insight and identification of shipping issues.
- Sales, marketing, and financial performance tracking.
- Benchmarks are based on historical and current data.
- Real-time reports and analysis of anomalies and customer complaints.
- Real-time shareable analyses across departments.
In the past, BI was used primarily by data analysts and IT users. Now, BI can be used in a company-wide capacity.
BI Can Help Your Company Uncover Valuable Insights
Business intelligence software can serve as a valuable resource on a company-wide basis. Before, these tools were reserved for those who understood the complexity of analytics and how to derive key data points. Now, business intelligence automates what was once done manually.
However, it’s important to understand that business intelligence and financial analytics are two very different concepts. Business intelligence describes the data analysis that helps companies uncover current objectives while financial analytics give companies access to predictive analytics such as sales and profitability metrics.