Business is still about strategy and proper management. Of course, revenues must still be higher than operating costs to be profitable. But do you know that aside from these commonly known principles, doing business has greatly changed over the past decade?
Technology has significantly advanced that it changed the way people manage their businesses. And technology is a major aspect to consider if you want your business to reach exponential growth.
A huge factor of a company’s success is data. Although you don’t often hear it, how a company collects, stores, and analyzes data could affect its success.
This is a vast subject. But let us start with the very foundation of a modern company’s decision-making process – Business Intelligence.
What is Business Intelligence?
Business Intelligence (BI) is a collective term that encompasses the vast process of using tools/software in collecting, storing, and analyzing data from business operations.
The main goal of BI is to transform and interpret large amount of unstructured or raw data acquired from normal business operations. After interpretation, these data become useful in measuring specific aspects of business. They become meaningful and actionable insights beneficial for the company.
It is done by creating a comprehensive view of a business that decision-makers can look at, to make an informed, measured, and intelligent decision.
Business Intelligence software or tools are necessary to provide insights based on available data stored in data warehouses. To measure and analyze data with correctness and accuracy, BI tools use pre-set KPIs (Key Performance Indicators).
Business Intelligence can also analyze historical data (provided that they are migrated into the storage) so decision-makers can have a better understanding of the current situation of a business. In short, it can give an analysis of the cause and effect of past business decisions that led to the company’s current state.
Additionally, companies can speedily identify new opportunities, problems, or even potential challenges based on insights generated from real data. Thereby putting the company in a more predictable situation to ensure long-term stability.
How is Business Intelligence used?
Business Intelligence revolves around the idea of accurate collection, analysis, reporting and interpretation of data to help businesses make decisions that promote stability whilst achieving growth. It makes it possible to create value (insights and actions) from big data.
Everything is presented in a comprehensive manner through visual story telling (data-visualization such as charts, graphs, and histograms) using BI tools as Microsoft Power BI. Therefore, BI provides ways for decision-makers to examine processed information to identify trends, problems, and opportunities. As a result, it can be used as a foundation in making business decisions – ranging from internal operations to possible strategies.
Business Intelligence collects data from inside the company (operations or internal data), and from the industry where a company operates in (external data). Logical interpretation is not possible by relying on a single source of data. Therefore, the efficacy of the “intelligence” relies on the combined interpretation of each source of data.
Purpose of Business Intelligence
There is a great number of uses of Business Intelligence, among these are:
- Sales projection
- Financial planning and forecasting
- Identifying ways to increase profit.
- Measure the impact of marketing campaigns to sales performance.
- Formulate marketing strategies based on trends.
- Gain insight about possible opportunities (new markets).
- Gain a deeper understanding in the buying patterns and behaviors of customers.
- Assess the suitability of a product in the market.
- Improve internal business processes and boost productivity by reducing time spent in manual data entry, interpretation, and reporting.
- Analyze historical data to formulate actions aligned with the appropriate business strategy.
- Generate instant answers to vital business queries.
- Improve overall supply chain management of the company to support target sales.
- Find ways to leverage data acquired from company website to improve customer experience and develop better products.
- Measure the risk involved in every decision based on the effects of past business decisions.
- Assess the cause and effect of every business decision.
- And more…
The Importance of Business Intelligence
In companies operating on a small scale, spreadsheets and standalone software can accomplish what BI does to huge companies. That is, because they do not deal with big data. But when companies grow, they need to deal with larger volumes of data to make decisions that support growth.
To make intelligent decisions, everything must be measurable, and everything must be measured. BI tools provide means to measure every aspect of the business to get better insights out of every data. This is why BI tools are important.
We now live in the Information Age. And no industry can better prove this than the business industry. Truly, data and information have now become a commodity that businesses can use to fuel growth.
Business intelligence is just the “tip of the iceberg” when talking about the technological ecosystem that runs businesses nowadays. We will dive deeper into the subject on our future articles.