What is business intelligence and why is it important?

business intelligence

Business intelligence means to utilize data analysis for business operations. The “intelligence” part stems from the fact that effective BI collects and analyzes both internal data and external market factors.

While the best data analysis (analytics) developers are indeed math and coding geniuses, you do not have to be a fan of calculus to utilize analytics. In the past, you might have at least a spreadsheet whiz to accumulate and model data in your field, but now there are software tools for nearly every field, depending on what you hope to do. BI doesn’t replace decision-making, it aids your decisions.

What is business intelligence?

Business intelligence is a technical term that refers to the set of data and calculation and analysis functions in the context of business processes. More than indicating a specific "thing", it is an all-encompassing term that concerns the processes and methods for collecting, storing and analyzing data taken from operations or business activities to improve performance. All these elements create an overall picture of the company, helping people make better and more incisive decisions.

The following are some business intelligence techniques:

- Data mining

- Reporting

- Performance metrics and benchmarking

- Descriptive analysis

- Query

- Statistical analysis

- Data visualization

- Data preparation


This term "includes the applications, infrastructure, tools and best practices that enable information to be consulted and analyzed". It was invented in the 1960s in the context of decision support systems; it was further reworked and developed in the 1980s. Business intelligence has emerged as a method to transform data into concrete results, hand in hand with IT models for planning and decision-making processes. Despite having changed over time, it has always played an important role.

What can Business Analytics do?

One does not have to jump feet-first into BA. You can examine the possibilities and employ the tools and strategies that will first make the greatest impact on your business. For example, if you are looking for hard data regarding the effectiveness of marketing strategies, you would focus your business analytics in marketing.

Analytics can also:

- Create a visualization of data to aid decisions

- Generate insightful historical reporting of past data

- Set up predictive models that allow you to see the likely outcome of desired changes

- Model prescriptively, which can allow for optimization of factors impacting your business

For example, with a model of a business, you can see how small changes in supply, pricing, or marketing might make the greatest impact on revenue, allowing you to concentrate efforts and resources on the most effective solutions.

Why is business intelligence important?

In simple words, business intelligence shows the data present and passed in the business context to help people make better decisions. Thanks to the performance benchmarking, it makes possible a more efficient and easier company management. It also facilitates the identification of market trends, aimed at increasing sales or revenues. Exploited profitably, it can also be useful in compliance procedures and hiring. With business intelligence, it is possible to optimize any aspect of business management.

The digital revolution has created a massive influx of information, which shows no signs of slowing down. Data is everywhere, it is generated continuously, and it is deeply rooted in the processes of small and large companies. Today everyone expects to be able to access new information and use it for daily decisions, as well as to satisfy their curiosity about new opportunities to be seized.

Companies can use business intelligence to:

- Identify areas or ways to increase profits

- Analyze customer behavior

- Compare the data with the competition

- Monitor performance

- Optimize operations

- Predict the success of new initiatives

- Identify market trends

- Identify any problems

The example of a dashboard of economic indicators shows the long-term drivers of the US economy.

How business intelligence works

Companies have many questions and many goals. To answer these questions and monitor performance against these objectives, they collect the necessary data, analyze it and determine the actions to be taken to grow their business.

For example, Charles Schwab, a financial consulting firm, used business intelligence to get an overview of all branches in the United States and to evaluate performance metrics and identify areas of opportunity. Having access to a centralized business intelligence platform enabled Schwab to obtain a single view with all branch data. Now branch managers can identify customers who would like to change their investment plan.

In turn, executives can see if the performance of a geographical area is above or below average and see branches with the best results in the same area with a click. All this translates into greater opportunities for improvement and more targeted assistance for customers.

From a technical point of view, the raw data is collected by the company activity, to then be processed and stored in the data warehouses. Users can then access the data and move on to the analysis to answer the questions regarding the company.

Difference between business intelligence and business analytics

Business analytics, or business analysis, is a branch of business intelligence. According to Gartner's glossary of IT terms, "business analytics includes data mining, predictive analysis, applied analysis, and statistics". In other words, it is part of a company's broader business intelligence strategy.

The business analysis does not have to be a linear process, because the answer to a question will most likely lead to developing new questions and so on. On the contrary, it must be considered as a cyclical process, which includes the phases of data access, identification, exploration, and sharing of information. 

Business intelligence tools

Many self-service business intelligence tools simplify the process of analyzing and understanding the data autonomously even for those who do not have a technical background. Business intelligence is often presented in the form of data visualizations. People are attracted to visual stimuli and immediately notice patterns or color differences. The visualizations illustrate the data in a more accessible and understandable way.

Collected in dashboards, they allow you to tell a story and highlight trends or patterns that would not be easily recognizable with manual analysis of raw data. This accessibility makes possible further reflections on the data, leading to a greater impact on the company.

Difference between traditional and modern business intelligence

In the past, business intelligence tools were based on a traditional model. It was a top-down approach in which business intelligence was managed by the IT department and static reports were used to answer most of the analysis questions, if not all.

Therefore, if someone had a further question about the report received, his request was put at the bottom of the reporting queue and the process had to start all over again. As a resultbusiness intelligence, reporting cycles were slow and frustrating and people could not take advantage of current decision data.


1127 Words


Nov 15, 2019


3 Pages

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