Leaders once relied on their intuition to guide their company’s strategies. But now, the rise of digital data has taken the guesswork out of corporate leadership. Business intelligence (BI) has become the keystone for organizations trying to outpace competitors — who are themselves leveraging technology to render staggering increases in efficiency.
The concept of business intelligence incorporates a wide range of streamlining activities that can touch on all operational aspects, including sales, customers and financial data. Through its reporting process, BI provides insights into operations that leaders can then use as an actionable and detailed guide to both granular and wide-scale improvements.
When it comes to business operations, the inherent potential improvements BI can bring are all-encompassing. So, leaders must understand business intelligence and its role in modern business operations to see its full potential.
What Is Business Intelligence?
Business intelligence provides the tools, comprehensive data analysis and forecasting necessary to produce targeted increases in productivity. This added efficiency can ultimately result in improved profits.
Through the business intelligence process, leaders can craft questions regarding customer preferences, resource allocation, supply chain management, internal initiatives or any other number of operational concerns. They’ll then receive tangible answers rooted in company data. Reports, charts or graphs make comprehensive information analysis easy to read. Complex data sets become meaningful presentations.
Predicative analysis within a BI system can forecast trends based on an algorithmic evaluation of past performance. It also provides an actionable roadmap for real-time improvement by studying existing behavior patterns.
The benefits of the BI process are extensive. For instance, leaders can use the answers found in reports to improve their return on investment (ROI) by honing in on the best way to allocate resources or by uncovering hidden costs. Companies can also better understand their customers’ needs, behaviors and desires. Plus, the increased insight boosts the overall efficiency with which an organization can make smart decisions.
Ready to apply business intelligence to your company? Here’s what you need to know.
1. Key Components of Business Intelligence
The entire point of business intelligence is to provide company leaders with greater clarity when it comes to their operations. However, the complexity of data analysis can often cloud an individual’s understanding of what the process actually entails.
With this in mind, let’s walk through the workflow of the BI process to clarify the broad strokes of how it works.
- First, a BI solution will extract raw data from various disjointed company systems. This can include flat files, customer relationship management (CRM) software or enterprise resource planning (ERP) software.
- Then, the extracted information is consolidated into a centralized warehouse. This warehouse is integrated with existing systems so there’s a flow of data in real time.
- The data is then analyzed or interpreted based on the specific questions leaders are asking.
- Finally, the findings are put into a report that lays out the data in a comprehensible pattern or trend that can then be acted upon.
Of course, a true understanding of the BI process requires a more in-depth understanding of each step of the workflow. So, let’s go through the process in greater detail.
Data Collection and Integration
The insights companies generate through the business intelligence process reflect the quality of the data being evaluated. As such, the generation and integration of the information must be accurate and carefully managed.
The technical acumen necessary to foster quality data and effectively transfer it to a warehouse to complete the next step of the process can be difficult for companies to find in-house. As a result, many companies find that partnering with data analytics consultants is the best way to ensure the quality of the produced information.
Data analytics consultants can ensure that the generated data reflects the reality it’s trying to capture. They also manage critical factors like data security and regulatory compliance. Although, the organization and structuring of data is perhaps one of their most fundamental functions. This enables more meaningful analysis.
When businesses do all these functions right, they can use BI to guide their decision-making in real time.
Data Warehousing and Storage
Data warehousing allows companies to combine their data generated from distinct sources into a single repository using cloud technology. Solutions such as Snowflake enable companies to send their data to a centralized location where it can be organized and structured for analysis and eventual reporting. This offers organizations greater insight into their operations.
Companies can augment daily decision-making with up-to-date reporting. Or, in other words, leaders will be able to see the latest operational facts to allow for responsive strategy creation.
Essentially, through a centralized and cloud-based data warehouse, decision-makers can access reporting in real time and take action. For instance, in a healthcare setting, different departments are able to monitor critical factors such as readmission rates or staffing shortages and respond more effectively.
Data Analysis and Reporting
The first two steps culminate in the true value that the BI process brings to businesses. Analytics and reporting allow companies to make sense of the information that’s been gathered and warehoused.
Generally, a company will have a business intelligence dashboard. This user interface will update with the latest graphics, reports or findings from real-time analysis.
Business intelligence infrastructure that incorporates intuitive reporting features can trigger the automatic distribution of findings. This automatic reporting can happen either on a timed basis or when specific conditions are met within the data. This helps key individuals within a company stay on the same page and up-to-date with the latest operational insights.
In addition, organizations with more complex questions can use advanced analytics to pose what-if scenarios. Based on past data, BI systems can determine the potential outcomes of these scenarios.
2. Leveraging BI for Competitive Advantage
The insights generated through business intelligence have exponentially boosted organizational performance across sectors. For instance, companies gain visibility into the hidden correlations or causations that are driving outcomes and would otherwise remain unaddressed.
BI also enables smarter decision-making at the highest levels. As a result, companies can tailor products and services to more effectively meet customer needs. Not to mention the fact that predictive analytics enables leaders to play out strategies before initiating them.
The competitive advantages brought on by these capabilities have raised the operational standards for many sectors. In fact, at this point, it’s becoming increasingly difficult for companies that aren’t fully leveraging their data to keep up with competitors that are growing more agile through business intelligence.
To understand why these benefits are so essential to modern operative capacities, let’s examine some of the leading competitive trends in business intelligence.
Customer Segmentation and Behavior Modeling
One of the most advantageous uses of business intelligence analytics is customer segmentation. Companies can use their warehoused customer data to break up their customers into distinct groups.
These unique personas are based on key factors like purchase history or relevant behavior. This, in turn, allows the marketing department to cater offerings, messaging, channels and promotions to unique personas and — as a result — improve their campaign ROIs.
Similarly, behavior modeling can help businesses offer more tailored and effective services in a variety of different capacities. For example, fintech companies can analyze the past financial behavior of customers to predict which product strategies would be the most impactful for individual personas. They can also use this same behavior analysis to predict customer lifetime values (CLVs) and risk levels associated with individuals.
Competitive Analysis and Business Strategy
Competitive intelligence is another key use of BI. It describes the process of gathering data on a competitor’s key metrics, reports, strategies, products, websites, social media channels and any other accessible information. Through data engineering, companies can merge and analyze this information to determine how their competitors are performing and what’s driving these metrics.
Leaders can use this information to differentiate products and services. Or they can uncover valuable trends in the industry that are intriguing to customers. Competitive intelligence can also be performed on multiple organizations to determine, for instance, how two different companies’ product offerings compare in terms of sales.
3. Emerging Trends in Business Intelligence
While there are already some established competitive uses of business intelligence, the rapidly evolving technology sector is yielding further trends in the process. At this point, data is quickly becoming central to the operations of most companies, regardless of which industry they’re in. As such, the diverse ways that companies use data reflect the potential trends in business intelligence.
However, the basic premise of increasing both internal and external visibility into key aspects of operations is still at the core of all these trends. But new technologies such as artificial intelligence (AI) or machine learning (ML) are enabling greater insights into productivity and profit drivers.
To learn what the future of business intelligence holds, let’s look into the emerging trends in the process.
Self-Service BI and Data Democratization
The BI process aims to make the insights hidden in complex sets of data accessible. Ideally, this accessibility will extend to those without extensive analytical training. So, the idea that business intelligence has to be filtered through a team of data professionals is antithetical to its use. This is why the idea of data democratization in BI — which refers to providing data accessibility and ownership to everyone within an organization — has taken off.
Self-service BI interfaces are intuitive enough that most people can use them. Data enables employees to actively answer their operational questions. In other words, there’s no need to ask a data team member to find answers. The BI process is so simple that the average company employee can do it.
This, of course, allows for data-driven decision-making from the bottom up. Increased accessibility can greatly increase the speed and ubiquity with which insights can be turned into action. Plus, because everyone works from the same data warehouse, it helps all members of an organization get on the same page.
Real-Time Analytics and Big Data
The ability to respond quickly to shifting customer attitudes and needs or flagged potential issues can help a company set itself ahead of competitors in fast-paced markets. This is why real-time data has recently emerged as one of the leading trends in business intelligence.
When combined with big data analytics, real-time capabilities reveal otherwise hidden trends in different data sets. This can help companies see cost-saving opportunities more quickly. What’s more, the impacts of poor decision-making can be mitigated by allowing data to guide daily operations. Companies can also track ever-changing factors like customer sentiment more effectively.
Artificial Intelligence and Machine Learning in BI
AI and ML are ushering in a paradigm shift in many different digital spaces, and BI is no exception. AI tools and ML technology enable vastly faster and more comprehensive analysis of large data sets than was possible when humans performed the same tasks. These tools can flag trends and anomalies for review and make sense of data sets for employees.
In addition, natural language processing (NLP) technology is increasingly making it possible for employees to submit their BI queries in colloquial language. This furthers the aim of increasing the accessibility of data across different organizational levels. Language tools make data analytics easy to conduct. Essentially, employees can interact with the company’s BI interface in a natural way, while AI and ML tools conduct complex analyses to provide data-based insights.
Finding a Strategic Solutions Partner for Business Intelligence
Business intelligence has already become an essential component of strategy development across sectors. Companies that leverage their data to streamline operations have significant competitive advantages that can help them drive greater productivity and profitability.
However, the complexity of setting up a BI system often requires specific technical skills and knowledge that can’t be found in-house.
Luckily, you can access the talent in world-class software engineering teams through strategic technology solutions consultants like Growth Acceleration Partners (GAP). We have extensive experience in building business intelligence systems with advanced solutions like Snowflake.
GAP can help you make the most of your data. Learn more about how we help companies scale smarter today.