Business Intelligence 101: Your Thorough Definition
Data provides more reliable insight into organizational outcomes than intuition alone can. That’s why most managers build dashboards to monitor their sales pipeline, revenue generated, and churn rates: to get real-time updates on their team’s overall progress. While those are important metrics, reliance on just high-level summaries may cause leaders to miss out on crucial opportunities to grow their business smarter.
To bridge the knowledge gap between what executives see and what an in-depth analysis of the data reveals, companies increasingly leverage business intelligence (BI) software to help orient their next steps. Business intelligence considers the impact and influence certain actions have on various organizational outcomes and surfaces the best recommendations your team can take to drive key metrics and long-term success.
In this article, we explore what business intelligence is, ways in which it can benefit your company, and how to select the best BI tool for your organization.
How to Define Business Intelligence
One way to define business intelligence is to say it’s an automated and smart process that leverages technology to analyze the relationships between different company metrics and their underlying causes. This helps users identify organizational inefficiencies, opportunities for improvement, and areas for sustained growth. BI makes it easier to turn information that would otherwise be abstract into tactical business strategies. In order to accomplish this, business intelligence integrates data from internal and external sources to highlight these hidden correlations.
Often, organizations use business intelligence software to create real-time dashboards that summarize their team’s overall performance, along with segmented reports that describe past and current trends in order to predict future behaviour. Advanced BI solutions also incorporate artificial intelligence (AI) to help you get a thorough understanding of the effects and implications of certain actions. The conclusions developed from BI systems help to power better-informed decision making, which can facilitate improvements in productivity and faster company growth.
Why Your Organization Needs Business Intelligence
Business intelligence can give your organization the edge it needs to outperform the competition. While basic data-driven insights are good, a more in-depth look at the relationships between process variables can optimize the way you do business.
Nine benefits business intelligence can offer your organization include:
Anticipate potential problems. The right business intelligence software recognizes when new actions and inputs may negatively impact long-term outcomes and alerts users about the potential pitfalls.
Create performance benchmarks. Using historical data and competitor analysis, business intelligence tools can establish the minimum goals you need to reach for this month, this quarter, and this year, while accounting for seasonal trends, industry growth, and more.
Determine the effectiveness of previous and ongoing initiatives. A quantified understanding of campaign-level return on investment (ROI) makes it easier for managers to prioritize efforts that drive the biggest organizational impact.
Develop forecasts for future sales. This can inform cash flow management, hiring decisions, and inventory replenishment, among other things.
Find contextual answers. While the data can point to the results of a campaign, the cause may sometimes be unclear. BI tools can help you uncover the underlying reasons why something happened so you can avoid it — or exploit it.
Identify sales inefficiencies and opportunities. Business intelligence can highlight unseen bottlenecks in the sales process for you to address, as well as growth opportunities to upsell clients or close more deals.
Merge related data points. When you house all your data in one place, you save time. You no longer have to toggle between different dashboards for information and can get a consolidated look at your team’s overall performance.
Segment your audiences and customer profiles. This helps you determine which audiences are profit drivers and which client relationships are costly to maintain.
Surface cost-cutting measures. While BI insights can direct company leaders to target new growth opportunities, business intelligence can identify ways to save money, too. Business intelligence can compare employee performance against sales, software licenses against productivity increases, and purchasing needs against seasonal pricing to give managers a quantified sense of relative ROI.
What to Look for In the Ideal BI Solution
By 2020, the research company Gartner predicts the market for business intelligence and analytics tools will reach $22.8 billion. Indeed, enterprises everywhere have begun to recognize the potential and power of a strong BI system, and a number of companies now produce their own platforms for analyzing your data. Now that you have a thorough understanding and can answer the question, “What is business intelligence?” as well as break down the advantages it offers, you can start your search for the perfect BI software to suit your organizational needs.
Before you commit to a new business intelligence software, there are seven important criteria to consider.
A low learning curve. Historically, business intelligence was managed by IT departments. However, the individuals most likely to leverage BI insights for decision making usually are not developers or IT specialists. As BI increases in popularity, many platforms have become far more user-friendly. Among most organizations, it’s important that the BI solution purchased is intuitive enough that anyone can use it. Research from Gartner suggests that employee adoption rates for business intelligence tools are around 30 per cent. To offset the cost of BI software, managers should only select a tool a majority of their team members can and will use.
Cloud-based hosting. To share access, reports, and insights easily with other team members, get a BI tool that works seamlessly in the cloud. That way, you can also use it on the go and ensure you always have the data you need to make a confident and informed business decision as soon as new opportunities arise.
Excellent account support. In addition to a low learning curve, you also want to license a business intelligence software that offers video walkthroughs; built-in explanations for different features; email, phone, and live chat support; and a client-friendly service level agreement.
Firm analyses, conclusions, and explanations. The best business intelligence platform can develop a fully integrated understanding of how things work in your business and which actions, initiatives, and resources help accelerate or stymie organizational progress. The reports and data visualizations should also be easy to read so managers can quickly recognize the consequences certain processes have on your business and the potential impact of specific changes on your long-term success.
Ongoing development initiatives. While most individuals purchase software to solve today’s problems, it’s wise to learn about the upcoming features that developers will build into their business intelligence tools. That way, you can ultimately license a BI solution that constantly improves and increasingly accommodates your various business needs.
Seamless integration with existing and future technologies. Some BI platforms require custom integrations with the applications and technologies you use as part of your current analytics stack. To save resources and time, especially as business needs evolve, choose a BI software that is compatible with all the tools in your arsenal as well as software you may add later.
The ability to accurately and rapidly process millions (potentially billions) of data points. As your business grows and your information-gathering processes mature, you will need a business intelligence solution that can comfortably handle all the data you feed it.
In the past, business intelligence solutions were best suited for big enterprises that could afford to collect and store large amounts of customer and organizational data. These days, even small businesses can benefit from a solid BI platform as they begin to generate lots of data points worth analyzing, especially since the insights you derive can have a meaningful impact on your bottom line. Of course, it’s crucial that your organization maintains good data collection practices, since bad or limited data can lead to false conclusions.
When you gather the right data and apply business intelligence to it, you unlock huge potential to build an even bigger business. In fact, Nucleus Research found that for each dollar companies spent on analytics, on average, that investment generated a $10.66 return in 2011 and $13.01 in 2014. Between the potential revenue gained, costs saved, and efficiency improvements you can tap into with the right BI insights, it’s clear that every organization should at least consider if they are ready to license and leverage a new business intelligence software.