It’s becoming increasingly crucial for businesses to have a clear view of all their data to stay competitive, which is where business intelligence (BI) tools come in. After all, nearly 50% of all businesses already use BI tools, and projections show continued growth in coming years. But for those who haven’t adopted a tool or are simply looking to learn more, it can be challenging to understand precisely what BI is. We created this complete guide to educate people on what BI is, how it works, and more.
Introduction to Business Intelligence (BI)
Business intelligence (BI) refers to the technical & procedural infrastructure that collects, processes, and analyzes the data produced by an organization’s activities. BI is an all-encompassing term that encompasses data mining, analysis, descriptive analytics & performance benchmarking. BI dissects all the data generated by a business and presents easy-to-understand reports, performance measures, and trends that inform management decisions.
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Types of BI Tools and Software
BI tools and software come in a broad variety of forms. Let’s take a quick look at some standard types of BI solutions.
- Reporting software: This software is used to report, filter, organize & display data.
- Spreadsheets: Some of the most widely used BI tools are Microsoft Excel and Google Docs.
- Data mining tools: Data mining tools gather large amounts of data for patterns using things like artificial intelligence(AI), machine learning, and statistics.
- Data visualization software: Data visualization software translates data into visually appealing graphical representations to quickly gain insights.
- Online analytical processing (OLAP): OLAP tool allows its users to analyze datasets from various angles based on different business perspectives.
Business intelligence vs. Business analytics
Business intelligence is descriptive and tells you what’s happening at the present and what has happened in the past to get us to a particular state. Business analytics, on the other hand, is a broader term for data analysis techniques that are predictive that is, they can tell you what’s going to happen in the future. They give you insights into what you should be doing to create better outcomes. Business analytics is usually thought of as that subset of the larger data analytics category specially focused on business.
The difference between the descriptive powers of BI and the predictive or descriptive powers of business analytics goes beyond just the timeframe we’re talking about. It also gets to the crux of the question of what business intelligence is for. BI aims to deliver candid insights into the current state of affairs to managers. While the predictions & advice derived from business analytics require data science professionals to analyze and then interpret. One of the important goals of BI is that it should be easy for non-technical users to understand and even dive into the data and create new reports.
Benefits of Business Intelligence
The benefits of an accurate, well-maintained BI platform are significant. These range from concrete concepts like accurate reporting and data visibility to more magical side effects such as boosts in productivity, streamlining processes, and identifying ways to increase revenue. Let’s look at some of the ways that BI benefits businesses:
1. Easy data visibility
The first is probably the most obvious. A good BI platform allows you complete visibility into your essential data. And it’s not just seeing your data – it’s gaining a granular view of your data, so you can understand in near real-time what is happening and why. With this insight, you can adapt to changes as they happen. BI dashboards allow you real-time visibility into every aspect of your business, all in one place. This allows you to adapt to changes as they happen.
2. Accurate reporting
This goes hand-in-hand with data visibility. BI allows you an accurate view of all your key performance indicators (KPIs) for accurate reporting on all levels. Using data visualizations, you can analyze your trendlines, including historical data and some predictive analytics for your future. You can also build specific views for your key stakeholders so they can see their critical data in one place.
3. Streamlines operations
When implementing a BI system, sometimes businesses discover practical side benefits, such as this one. The complete and accurate view of all your data and easy, real-time reporting allows for a clear understanding of all your processes. And, more specifically, what might be causing inefficiencies somewhere along the line. Using BI, you can identify those problem areas and either improve them or eliminate them.
4. Decision-making clarity
We’ve alluded to this benefit in previous points, but it’s worth restating. Since BI enhances data transparency and allows business stakeholders to gain insights they would otherwise not have, the quality of decision-making improves. Instead of blindly walking into the future or simply educated guesses, BI can provide accurate predictions based on historical data. With BI, future decisions become less intimidating.
Challenges of Business Intelligence
With such clear benefits, it’s time to discuss some disadvantages. Not because they should dissuade you from implementing BI, but because they’re vital considerations when considering your decision.
1. Evolving regulations
Currently, there are not many regulations around BI and data, but that doesn’t mean the landscape won’t change. As the field of BI and data privacy legislation evolves, it will impact how BI platforms handle data and may make it more difficult for companies to handle data. If your BI platform is not flexible enough to comply with evolving privacy and security laws, your organization may be vulnerable to legal action if there’s a breach.
2. Implementation is costly and difficult
The first thing to consider is the difficulty of implementation. After all, your BI platform needs to connect to your data to show a complete view of your data sources. It can take a lot of time and effort to set up the platform to your needs, even with the help of a specialist. And if you go the entirely self-service route, it may take even longer. Many BI platforms can be a substantial investment, so the cost may be prohibitive.
3. Gap in data skills
Not all of the drawbacks of BI come from software or regulation issues. One of the most considerable difficulties comes from individual people who are resistant to adopting new software or do not understand the software operations. If businesses can’t count on all of their employees to use the software correctly, then it won’t be as effective of a tool. This can be helped by ensuring that all the users of the BI platform are adequately trained and educated on how it works.
Lastly!
BI software is set to become more user-friendly as the domain grows. This growth will parallelly grow a knowledgeable user base. Along with these improvements, business leaders have taken on the responsibility of educating their workforce. All of this describes the modern advances in BI as we continue to progress in the era of Big Data. The future of BI is likely to be much more automated with lesser bottlenecks with respect to interface limitations and the free flow of data. Future BI trends are part of a quickly evolving model that is essential to the progression of modern businesses.
