Business Intelligence: The Absolutely Complete Guide for Your Business
The broad concept of Business Intelligence was summed up by Forrester Research, one of the world’s most influential research and consulting firms, as “a set of methodologies, processes, architectures, and technologies that transforms raw data into meaningful and useful information used to enable insights and strategic, tactical, and operational decisions.”
In this article, in addition to presenting an overview of Business Intelligence, showing what its role in business management is, we will show what it is good for, how it works, how it can be used as a strategic tool, and more. Check it out!
What is Business Intelligence and what is it for?
As we have already mentioned, the term Business Intelligence refers to the methods, tools, technologies, applications, and practices used to collect, integrate, analyze, and present the raw data of an organization to create insightful and actionable business information.
When we talk about BI software, we are talking about a solution made up of a combination of data and data analysis applications of various types typically used to provide the ability to make intelligent and timely decisions.
Thinker Benjamin Franklin said there were only two certainties in life — death and taxes. This is especially true in the business world. Business leaders are constantly faced with unstable economic conditions, rising tax complexity, increased competition, and changing consumer behavior. What is known for certain is that nothing is certain.
In this sense, BI as a strategy — more than just technology — offers a way to overcome this uncertainty.
With BI, managers have the ability to analyze market conditions, the performance of their business, and the competition to design future conditions, allowing them to leverage that knowledge to make strategic business decisions.
So, if we were to summarize Business Intelligence use in just a few topics, we would say that it is useful for:
- accelerate and improve decision making;
- optimize internal business processes;
- increase operational efficiency;
- create conditions for generating and driving new revenues;
- gain competitive advantage over market rivals;
- identify trends (consumer behavior, competition actions, etc.);
- identify business problems that need to be addressed.
Other key BI operational elements consist of data warehousing, transformation load processing, data warehousing, and analytical presentation. The more an analytical culture is absorbed by the business director, the better the Business Intelligence platform is used to generate action plans, measure results, and predict the future.
How does Business Intelligence work in practice?
All organizations can benefit from a business intelligence solution, but here are some clear situations that indicate managers should implement it as soon as possible:
- when you need to integrate data from multiple business applications or data sources;
- when there is a lack of visibility in operations, finances, and other areas of the company;
- when there is a need to access relevant business data quickly and efficiently;
- when you need to increase the volume of users who require and access information and more end users who need analytical resources;
- when the company is growing fast or a recent or pending merger/acquisition has happened;
- when introducing new products and/or services in the portfolio;
- during updates within the IT environment.
When some companies start using BI tools and methodologies, they make a common mistake — they think they will find and measure only what is working well. However, BI appeared just to find what’s wrong, bottlenecks, and extraneous information.
It is very useful for measuring what is good, but it is even more important in measuring and understanding what is not working.
Generally, there is something wrong if technology tools provide only information that managers already know. They need to find what they can improve at — a truncated information flow, an interrupted process, a problem with their employees, etc.
By crossing information from different databases, you can get this data and the BI application becomes even more critical.
But once the failures have been detected, what to do? Using Business Intelligence to know and analyze risk is very important in making the right decisions. If the manager has already been able to list its main risks, it’s time to check the likelihood of their occurrence and, if so, the impact on the company.
How can Business Intelligence be used as a strategic tool?
Every company has its own set of goals and objectives. From this, plans of actions, projects, and projections are drawn. In short, every organization has a strategy, although not all of them elaborate it in a very sophisticated way.
Think of a company that estimates to grow 20% a year. Its managers put a lot of resources (human, technological, financial, etc.) to achieve this goal of expansion. But how do you know what the exact elements to be improved to achieve this goal are? And how to make sure that it has been reached in the desired period (monthly, quarterly, annual, and so on)?
Business Intelligence enables senior business hierarchies to perform past performance reviews and review inputs and outputs to determine the changes needed to reach a specific goal. It also favors future projection, since its tools make it possible to simulate situations and statistics and, in the end of the process, favor the measurement of results.
The great trump card of a BI platform is that it greatly reduces the analysis time. With easy-to-interpret graphs and reports, business administrators can interpret the data effortlessly — it’s much simpler than consolidating certain Excel spreadsheets, for example.
Think of BI as an image that represents three layers:
- the source of data from various sources;
- the data warehouse;
- the visualization and/or insights layer, in which the data is presented in sections for analysis and reporting.
Within the BI source layer, there will be several different data types and formats. Compiling them is a challenge. BI then comes with metadata capabilities to evaluate and extract real information from this giant set of data. The end of the process, then, would be the graphical presentation, or, quite simply, the answers to the questions asked by the managers.
How are Businesses Using Business Intelligence?
Business Intelligence is primarily used to drive decision making, from daily tactical tasks to strategic business direction. To further understand how it works in practice, here are some examples of applicability.
Contact analysis and contact center interaction
Customer interaction analysis is a key Business Intelligence initiative in many call centers. It is used to monitor 100% of calls made and automatically identify key audio patterns to highlight common behaviors and phrases.
Business leaders then have access to BI in real time to analyze data that shows how high-performing employees are making successful calls. The flip side of this is that the interaction analysis also identifies the patterns and phrases used in calls that have not performed well, alerting them to problems and behaviors that need to be changed. An additional benefit is compliance — by monitoring and analyzing 100% of calls, supervisors can ensure that they can identify what needs to be improved.
Closed business analysis in the commercial area
Another important Business Intelligence initiative is to perform sales gains/losses analysis. Many BI systems come with integrated analyses that can help you create detailed reports about past transactions. These reports may highlight similarities between past won and lost business.
Thus, commercial managers are able to highlight the reasons why offers are closing or not, such as questions of geography, gender, consumer age, and so on.
Close-ended bid analysis can answer important questions and help management improve its approach to market entry and facilitate integration with the marketing arena. With up-to-date and accurate information, it is possible to create more accurate actions for lead capturing, relationship and preparation for a more accurate sales approach.
Web traffic analysis to improve marketing strategies
BI solutions are also very useful in the marketing field, especially for companies that have already transformed their strategies and are taking advantage of the digital environment.
One of the most common BI tools for anyone in digital marketing is probably Google Analytics. This solution provides some important information about visitors to your company website. With it, you can set up email reports and alerts to see data such as time spent on the page, reference page and the type of traffic, that is, whether it’s organic or whether it comes from paid advertising, for example.
Google Analytics and other similar tools can also show the visitor’s web domain by helping marketers see which companies are going to the portal and which pages they’re interacting with.
In summary, BI tools, such as Google Analytics, provide invaluable data that helps you understand the performance of each web page designed to drive consumers through a fast and efficient buying journey.
In what areas of business can Business Intelligence be applied?
The “panoramic power” of a Business Intelligence solution is real. Typically, companies are implementing it precisely to integrate analytically all of their departments, which facilitates a 360-degree data-driven view.
Here are some ways to explore the potential of BI in different areas of an organization!
In the commercial area
A BI solution improves the profit margins of thousands of retail, manufacturing, and distribution companies. It allows you to identify where sales are going well and where it needs improvement.
Commercial data tracking at an individual customer level can reveal trends and opportunities to better position the business in terms of growth and stability.
By understanding what consumers are buying and what they are not, the manager can direct more effective action plans to their sales team. This will help you identify potential areas to increase profitability within an existing customer base or portfolio of prospects.
In Inventory Management
Having stored goods is usually detrimental to any business. A good BI solution enables the use of data to analyze the supply chain and ensure minimum levels of storage. It also helps navigate the seasonal changes and identify variations in consumer demand.
See how BI helps in inventory management:
- Stock at hand: Allows you to quickly and easily visualize how much stock of a given product is available;
- Surplus measurement: You can use historical sales data and compare it with the available stock. If the historical data shows that the company is not selling an item, but that there are many units in stock, it is possible to act quickly (to make a promotion, for example);
- Imminent failure detection: If historical data shows that specific sales are increasing or a product has a long supplier waiting time, the company risks underestimating these items. This can lead to problems with customer orders. BI can alert in a timely manner for the purchasing team to negotiate with suppliers;
- Dead stock: The stock that is on the shelves, not being sold, can be expensive. Using BI to analyze the available versus the units sold over a year can alert the team about the “dead stock.” BI helps you quickly make data-based decisions about how to minimize inventory swelling.
In financial management
Well-used Business Intelligence software helps simplify financial data analysis. Financial statements are just the tip of the iceberg. The right BI solution can combine and interpret them in real time to improve revenue and manage expenses.
Profits and losses, balance sheets, and cash flow can be analyzed using dashboards, charts, and tables to better manage the financial health of the business.
BI is also useful in helping managers solve the challenge of managing rebates. What was once a chaotic process is now facilitated. The solution eliminates painful spreadsheets and points to profit margins in a few clicks.
In the area of IT
A good BI solution is one that is easy to use. Anyone can create their own reports and detail exactly what is needed. It is simple to understand, even for people without technical knowledge.
This is a great advantage for the IT department, which is traditionally the only one capable of running complex reports. As more data is available to businesses, IT departments are under more pressure to generate faster reports, leading to errors.
With self-service BI, leaders in the various areas control their data. Thus, the IT department can focus on efficiency and performance and contribute more effectively to business.
What are the advantages of investing in Business Intelligence?
Here’s a breakdown of the key benefits of investing in a BI solution.
Make decisions based on facts
Enterprise-wide BI technology can help leaders read and analyze detailed customer and production data, financial information, and many other aspects of the business in different ways.
The generated reports and graphs help management make fact-based decisions, such as which products/services should focus development or manufacturing efforts, for example.
Improve sales and negotiations
The BI systems and the reports they generate can be a great asset to the sales force. They can provide access to real-time data on volumes of closed deals, trends, and improvements along with customer preferences.
The system is also ideal for identifying unexplored markets. Getting insights into customer behavior is important because it can help with marketing actions, assist salespeople with clear directions, and so on.
Identify new opportunities
BI systems can help the company identify market trends and compare its strengths and weaknesses against competitors. They also help decision makers respond to opportunities more effectively, identify the most profitable customers, and evaluate the most frequent and relevant consumer complaints.
Develop business competitiveness
Many organizations spend time and resources looking for the right information from different sources. This becomes even more challenging when management seeks a deep understanding of business trends.
And as soon as you find the relevant information, management will still need to convert, merge, and report the data accordingly. However, with the BI system, information comes from a single place and can be quickly evaluated and converted into reports. This saves time and energy; in short, it increases competitive intelligence.
How to implement Business Intelligence in your company?
A BI implementation works best when done in a step-by-step manner. Normally, experts recommend five points that need to be addressed in this process. Check them out next.
Gather your review and reporting requirements
A best practice is to involve all stakeholders in the executive team in defining the analytical and reporting requirements needed in the business intelligence process.
When the organization has a good strategic planning, half the job is already done, because the directions traced help to list the questions that BI needs to answer.
Break the implementation project into several phases
Splitting a project into a multi-phase implementation allows for a more consistent interaction process with stakeholders. This not only generates more feedback that can help the manager guide and correct the progress of the implementation, it also prevents him or her from taking hasty decisions and then finding out that the wrong direction has been chosen.
Select the phase priority
Scheduling the phases depends greatly on the dynamics and internal politics of the organization. But when figuring out the timelines and priorities, consider the following:
- Which areas of the company can benefit more than a specific phase?
- Which phases will affect the organization the most?
- Are some phases more complex or can they have additional challenges?
- Which departments tend to adopt BI more easily?
- What areas have the time and flexibility to learn how to use the system quickly?
- Which areas have clearly defined metrics that can be implemented successfully immediately?
Validate the data
In the BI world, data integrity is crucial. The BI implementation project manager can easily lose the trust of their end users if the data is considered inaccurate during the initial release.
Therefore, it is important to carefully analyze the data coming from solutions such as ERP, CRM and others, classify them correctly, discard what is not useful, and so on.
Gradually distribute to your departments
Instead of trying to force the entire enterprise to undergo a complete paradigm shift at once, deploying BI in some departments little by little may be a smarter choice.
Make sure the release is smooth and successful. The positive word of mouth about successful implementation and tool utility can make other departments more excited and more involved when their turns arrive.
So, have you understood everything a Business Intelligence solution can do for your business? To receive more content like this directly in your email box, subscribe now to our newsletter!
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