What Is Business Intelligence?

Business intelligence is a technology-driven process that collects, analyzes and visualizes your company’s data. BI tools pull raw data from a wide range of sources and transform it into valuable insights you can use to guide strategy, increase revenue and improve operations.

How Business Intelligence Works

To define business intelligence, it’s helpful to understand how it works. Here’s what happens when you incorporate a business intelligence platform into your company’s workflow:

• Data collection: BI tools pull data from internal and external sources, including databases, software programs, customer relationship management (CRM) platforms and social media.
• Data integration: The BI platform cleanses the data to remove redundancies and correct errors. Then, it consolidates the information into a unified view.
• Data analysis: Since BI can vast amounts of data and identify patterns quickly, its systems process use analysis models, artificial intelligence (AI) and machine learning (ML) to find relationships, draw conclusions and make predictions. .
• Data visualization: This process transforms data into formats that are easier to understand and use, such as graphs, charts and tables.

Core Components of Business Intelligence Systems

Business intelligence systems are comprised of a collection of tools and technologies, including:

• Data warehouses: BI systems usually store all collected data in a central warehouse. Keeping data in one place makes it easier to analyze.
• Data mining tools: These tools search through the data in the warehouse, looking for hidden patterns and relationships.
• Data analysis tools: Using tools such as online analytical processing (OLAP) software, the BI system interprets the data, analyzes it from different perspectives and makes recommendations and predictions.
• Reporting tools: Many BI systems have built-in reporting functions that can prepare presentations, reports and dashboards. Each can be customized to the specific needs or priorities of a department or individual.

Advantages of Implementing Business Intelligence

Incorporating business intelligence can benefit your organization by:

• Simplifying complex data: A BI platform consolidates and organizes diverse streams of data, improving access and visibility. It makes it easier to get value from the vast amount of unprocessed information available to your organization.
• Generating timely insights: BI systems process and analyze data quickly, enabling them to provide real-time insights. You can use this information to adapt efficiently to changing market conditions and maintain its competitive advantage.
• Improving decision-making: Business intelligence increases data visibility and empowers company leaders to make informed decisions and strategic plans.
• Identifying issues and opportunities: Because BI platforms can identify patterns in large repositories of data, they can help your organization find opportunities and underlying problems early.
• Increasing efficiency: With a BI system, you can use data to optimize workflows and resolve inefficiencies.
• Streamlining performance management: Executives can use BI dashboards to monitor performance more easily by viewing real-time data across departments. These dashboards help track key metrics, identify trends and spot potential issues early.
• Reducing the risk of error: Manual data handling can lead to mistakes that affect reporting and decision-making. Business intelligence tools help minimize this risk by automating how data is gathered, organized and processed. This can help maintain accuracy, consistency and reliability across reports and dashboards.
• Raising data quality: Business intelligence tools help improve data quality by identifying and correcting inconsistencies, filtering out duplicate or irrelevant entries and organizing information into a usable format. As a BI tool refines and organizes data, it helps prevent decisions based on outdated or inaccurate information.

Applications of Business Intelligence

Every organization may have a different concept of what business intelligence is as the applications vary based on your industry and operation.

Some businesses use a BI platform to streamline and automate reporting. With BI, you can generate reports quickly to create visualizations or prepare documents.

Business intelligence platforms can also help you understand the external conditions that impact your operation. For example, you might use the system to process data such as inflation rates, market sentiment, shipping timelines and consumer spending. The analysis could provide clarity into current market dynamics and inform your decisions about growth, marketing or purchasing.

Essential Business Intelligence Tools

If you’re considering a business intelligence platform, it’s crucial to find one that suits your budget and scalability requirements, such as:

• Microsoft Power BI: User-friendly and robust, this platform provides real-time visualization and reporting tools.
• SAP Business Objects: This comprehensive platform offers a range of features, including reporting and custom dashboards.
• Tableau: Made by Salesforce, Tableau comes with robust analytics, powerful visualization tools and built-in governance and data management features.
• Qlik Sense: This platform combines AI, ML and embedded analytics to offer deeper insights and self-service visualizations.
• AWS QuickSight: Affordable and accessible, AWS QuickSight is a streamlined and scalable solution for organizations with small or medium data sets.
• Looker: Looker is a Google product that integrates multiple data sources. It includes a semantic layer for structuring data and Gemini AI assistant for visualization and reporting.

Best Practices for Effective Business Intelligence

Consider these tips to get the most value from a business intelligence system:

• Define your goals. Determine what you want to accomplish with BI, and define those objectives clearly. Then, you can identify relevant data sources and establish key performance indicators (KPIs) to monitor progress.
• Focus on data quality. Create a policy for collecting and storing data. To ensure the accuracy of the information, establish a process for extracting data, transforming it into a unified format and loading it into a data warehouse. Updated, error-free data produces more reliable insights.
• Train employees. Teach employees how to use your chosen BI platform and integrate it into their existing workflows. For example, show sales staff how to pull weekly performance reports or help operations teams track supply chain metrics in real time. Hands-on training can improve adoption and ensure the tool supports day-to-day decision-making.
• Revisit BI strategies. Conduct a review of your BI strategy and goals once or twice per year. Examine the results and make adjustments as needed to ensure your team maximizes the technology.

Future Trends in Business Intelligence

Business intelligence platforms are constantly evolving to accommodate new technologies and meet the needs of modern companies. Some emerging trends include:

Self-Service BI

BI platforms are rapidly adding self-service features that can help nontechnical users access key features. These tools make it easier to generate insights, create custom visualizations or build personalized dashboards.

The self-service approach is a deviation from older BI platforms, which required technical experts, such as data scientists, to control the information. Newer platforms enable companies to expand access to data while maintaining security and reducing IT dependency.

Artificial Intelligence

As artificial intelligence becomes more sophisticated, it’s an increasingly common component of BI platforms. AI can be used to automate manual processes, visualize information and offer predictive insights.

AI is also a critical component of augmented analytics, a system that uses AI and ML to make complex analytics more accessible to nontechnical users. For example, employees could use an AI assistant to ask plain-language questions like “What were last month’s sales?” or “Which product has the highest return rate?”

The AI queries the data behind the scenes and returns an answer instantly. This makes data accessible to more team members, even those without technical or coding skills.

Cloud BI

Traditional business intelligence programs generally require a robust technical architecture. Emerging BI programs operate in the cloud, allowing companies to access the platform from any device, at any time. These solutions may make BI technology available to businesses that don’t have large IT departments.

Data Governance

As BI programs allow more employees to interact with company data, governance is likely to become a top priority. Robust cybersecurity systems may be necessary to protect sensitive information and meet evolving regulations. You may also need to invest in employee training to increase data literacy and help employees use BI effectively.

Overcoming Challenges in Business Intelligence Implementation

A business intelligence platform is a complex system that brings together multiple apps and data sources. Use these tips to simplify the process and ensure a successful integration:

• Maintain high data quality to support better decision-making
• Request feedback and integrate suggestions when possible
• Implement data security protocols for cloud-based and mobile BI
• Build a data-driven company culture to encourage employee adoption

Choosing the Right Business Intelligence Software

The right business intelligence platform can increase your data access, empowering you to utilize it for decision-making and operational improvements. By choosing a solution that aligns with your users, technology and company needs, you can increase the return on investment and streamline integration.

FAQs About Business Intelligence

What are some business intelligence examples?

BI use varies by industry. For example, restaurants might use a BI platform to analyze previous years’ order data alongside local events or holidays to see how seasonal shifts affect business. However, a financial team could use it to optimize reporting and forecast expenses as a way to predict the health of the organization.

Does every company need business intelligence?

Business intelligence isn’t necessary for every company, but it’s often useful. Even small businesses can use BI platforms to understand market trends, improve financial health and build a better customer experience.