BI, or Business Intelligence is a relatively new concept for most businesses. Although you may have heard of the term before, there are many nuances and specificities that are either misunderstood, or under-utilized. BI originated from a concept that managers/executives/owners with incomplete information will on average make worse business decisions than counterparts who have more or all information accessible to them. The definition of BI is ‘The procedural and technical infrastructure that collects, stores, and analyzes the data produced by a company’s activities’.
In layman’s terms, BI allows companies to utilize the data they gather to make business decisions based off the concrete data that they have collected throughout business operation. This could be anything from previous sales to promotion metrics, and everything in between. This terminology is specifically broad as it can help any business, with any product or service, if they have the data needed. I understand that ‘data’ is a broad term, but it encompasses the different facets of data accumulation, including data mining, process analytics, performance benchmarking, and descriptive analytics.
How does Business Intelligence Work?
BI requires a few different things before it can help your organization. First and foremost, BI needs accurate, and timely data to be successful. A business could have all the data in the world, but if they have no way to organize and filter the data they own, it is relatively useless without the ability to splice and combine different data points in meaningful ways. All data that is captured should be checked for errors and structured in a way that makes analysis on a broad spectrum possible.
Once data capture and collection are up to the standards that a good BI practice requires, the business creating a BI strategy needs to initially hone in on a small number of metrics that complement one another. For example, a retail storefront could utilize datapoints like sales per day, and dates of promotions to see how effective their promotions are. Once they have the ratios of sales to promotions, they will be able to see in black and white terms whether the promotions were worth their value. If they are, the company may consider offering better promotions or having them more often. If not, the company now knows that there is no reason to run that specific promotion in the future.
Performance management is the step that allows corporate-level decision making to begin. It harnesses the tools, applications, and data involved in decision making, helping to align the strategies, people, and processes to larger and broader corporate goals. If a company’s initial BI goal is to lower their costs, they can do so through their purchasing data. Data is acquired from buyers, invoices for business applications, services, and more, and is then combined to show where extremities lie. Maybe the business has several licenses for a business application that they don’t currently use or can get a discount with X amount of licenses purchased. Without all data available, the company may be aware that there are cost inefficiencies but might not know where said inefficiencies rear their heads.
What are the Benefits of Adopting BI?
BI can improve companies’ methods and cultures, not just their financials. Many businesses use BI to support a variety of functions, including but not limited to production processes, marketing, and even creating a more diverse hiring process. BI can be integrated into any sector of business, as it is a core process. It is difficult to identify a business or business area that is not able to benefit from a good BI practice.
Broad benefits of BI include higher accuracy in reporting, analysis, and data quality, improved employee satisfaction, reduced costs, and increased sales/revenues; not to mention the ability to make better business decisions.
Example: You oversee production schedules for several factories and sales are showing strong monthly growth in a specific location. Using the data that you are cultivating through BI, you can quickly approve extra shifts for production employees in that location to ensure that you can and will meet the growing demand. In the same manner, you can idle down production if necessary. The ability to manipulate production efforts in almost real time can increase profits and reduce costs when properly executed.
BI can assist business decisions at any level, whether it be storefront employees, management, or corporate. Knowledge of all data acquired is critical for businesses to grow and advance in todays marketplace, and with the help of BI, can benefit companies of any type tremendously. For a better insight into the real-world successes of BI, read some of the statistics here.
Your Business, BI, and Finchloom
Are you interested in learning how to create a successful BI strategy and engrain it into your business? Finchloom can help! We are working with Ph.D. professionals to help our customers incorporate BI strategies that will give your business the edge it needs. Do you have questions about BI? To learn more about starting your BI journey, contact us using the form found here.