Everyone makes decisions every day. From the CEO of a company to its lowest level manager, everyone has to make choices. However big or small, these choices impact the company’s performance and determine its fate.
For this reason, businesses have always tried to invent new methods and tools to enhance their decision-making.
Humans have traveled a long way from ancient Mesopotamians, who recorded their transactions on clay tablets, to modern Managers, who upload into the CRMs.
The most recent step in this effort is Business Intelligence. It is the most advanced and optimized way to help decision-makers make good decisions. However, its confusing nature and complex definitions on the internet have made it ‘another-buzzword’ among many.
This article intends to familiarize it with you, provide a proper definition, and explain the world of Business Intelligence in simple English.
Business Intelligence: A proper definition
People often misunderstand Business Intelligence or BI, and there is no one to blame for this. Different industries see it differently, use it differently, and thus explain it differently. As a result, the internet has been filled with confusing definitions that leave readers scratching their heads.
Therefore, we have tried to provide this article with a complete but non-technical definition of BI. Here it goes:
Business Intelligence (or BI) refers to using past and present data to generate valuable insights that allow companies to make better decisions for the future.
The marketplace today is ever-changing. It would have been great if companies had limitless resources to try and evaluate every possibility. However, the reality is nothing like that. Companies have limited resources, and their data is all they have to experiment on.
They cannot predict all market changes, nor can they make decisions based on their gut feelings. They need data and insights regarding all the aspects of their market to make better decisions.
This is where BI comes in. It allows companies to have all the relevant data and valuable insights to make crucial business decisions.
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Two Faces: Business and technology
Even though BI works on the massive computational powers of modern computers, It is not just about zeroes and ones. It is a mechanism that brings Intelligence to the business and its data.
Business intelligence, to be successful, requires the cooperation of both worlds.
Business managers must be ready for rational-decision making, data-backed management, and calculated insights.
The IT crew must be well prepared to support the business managers and BI culture in the workspace.
BI and Data Warehousing: Best Friends Forever
The basic purpose of Business Intelligence is to transform raw data into workable knowledge. Good data warehousing is the core element for any BI Software — take out the data, and you have no BI left.
The advancement in Data warehousing has allowed BI to grow and become what it is today. In this new era of information, companies have been piling mountains of data into their systems for a long time. They use BI to utilize this data to get the upper hand over their competitors.
However, these data mountains are useful only when companies can produce valuable insights out of them. And producing valuable insights out of data is what BI is all about.
Characteristics: What makes a great BI great?
Trusting machines has never been easy for humans. They have always been mysterious to us. Therefore, machines have always had to prove themselves by their accuracy, efficiency, and other attributes.
The same is true for BI. To earn its place in any organization, It has to prove itself by making the decision process fast, precise, and efficient.
But the question still remains: “What makes a great BI great?”.
There may be numerous ways for numerous companies to figure that out, but fundamentally it all boils down to four fundamental factors. And every BI Software must have these four fundamental characteristics:
1)Timely Insights
Providing on-time insights is one of the most important characteristics of a good BI Software. Insight is valuable only when it is obtained in real-time.
The marketplace keeps changing fast, and the decision-makers have to keep up at its pace. They need to make their decisions both effectively and quickly at the same time.
To accomplish this, they need a BI System that provides them with Insights exactly when they need them.
2)Accurate answers
One of the most important (if not the most important) metrics for judging an Insight is its accuracy. It can decide the fate of a decision.
A big decision based on accurate data can do wonders for a company. However, doing the same thing using inaccurate data can bring disasters to the company.
To sum up, It is a real job of any BI to produce accurate and authentic insights.
3)Worthwhile Insights
Imagine if a BI determines, after executing billions of calculations, that razors and blades sell better when marketed together. What use would this insight be to a company?
Businesses do not need complex mechanisms to state the obvious facts. Any insight that comes out of a BI is valuable only when it is worth the time and attention of the decision-makers.
It needs to provide worthwhile insights that were previously a mystery to the company.
4)Actionable Insights
Even after being timely, accurate, and valuable, the insights will remain worthless if they are not actionable.
Imagine if a BI Software determines, again after executing billions of data calculations, that the sales of razors will increase if the adult population increases in the country. What will decision-makers do with this data? After all, they cannot do anything to increase the population of adults in a country.
To sum all the above points up, a BI can be considered good only when it produces timely, accurate, worthwhile, and actionable insights.
Value Proposition: Why BI?
Why do companies use Business Intelligence? What value does it add? Well, A good BI can be a game-changer for any company. It allows them to have machine capabilities that humans can only imagine.
A BI system comes with many possibilities. Here are some important ones to consider:
1) Increases Knowledge
BI helps companies collect data from new market dimensions that were previously left unexplored.
In the FMCG industry, BI implementation necessitates it for companies to collect not just their data but also the data of their suppliers, distributors, and retail outlets.
These new streams of knowledge open a substantial number of opportunity windows for the companies using BI.
2)Effective decisions
In the 21st century, information is the basic requirement for any organization to make any decision. And the advancement in data analytics has allowed the MNCs to spread across the globe and acquire foreign markets.
BI is the next step. It gives businesses more than just data; it provides them with timely, accurate, valuable, and actionable insights.
Companies can make fast, effective, and data-based decisions with a good BI system installed.
It eliminates the chances of human error during the data analyzing process and allows users to be sure about their data and decisions.
3)Organized data
Companies have huge lumps of data buried under their drives and servers. It is almost impossible for a decision-maker to access all of them, find the relevant ones, and study them before making every decision.
It is possible now. BI organizes data for the companies and visualizes them in charts and graphs. They can access all the insights on a single platform in their dashboards.
4)Operational efficiency
A functional BI helps companies not only in increasing their profits but also in cutting their unnecessary costs. It saves all the time and resources previously wasted for evaluating and choosing different alternatives.
It helps companies perform their operations more efficiently as they spend less time making decisions.
BI and Other Tools
As mentioned above, different companies have distinct sets of requirements. BI has multiple definitions for all these companies.
For instance, In FMCG, Business intelligence may include Distribution Management Systems(DMS), Route Optimization systems, retail intelligence platforms, etc. However, BI in the IT industry includes none of them. This distinction stays true for all other industries.
BI systems can work with numerous tools, and companies can customize them according to their requirements.
Conclusion
Business intelligence is the process of recording data from the different dimensions of a market, analyzing them, and producing valuable insights for better decision-making. These Insights must be on-time, accurate, worthwhile, and actionable to be of any use.
It has two faces—the first one as a tool, which is all about bits, bytes, and computation. And the second one is a business device that has all to do with business decisions, markets, and insights.
A good BI adds enormous value to the company. It allows them to have more knowledge about their market, make better decisions, organize their pre-existing data, and improve the efficiency of their operations.
The reader must also note that BI does not refer to some specific set of tools or technologies. Different companies and industries use BI with distinct sets of tools.
Over to you
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