Businesses need to make sense of the personal, transactional, behavioral or attitudinal data they generate. Deciphering this information requires a robust understanding of business intelligence concepts and powerful software. Let’s explore these ideas for some clarity on how BI tools work.

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This Article Covers:

• What Is Business Intelligence?
• Business Intelligence Concepts
• Importance
• Application
• Benefits
• Components

What Is Business Intelligence?

Business intelligence processes analyze data and deliver actionable insights that help managers and executives make informed decisions.

BI involves:

• Collecting information from internal and external sources.
• Preparing data for analysis.
• Running queries.
• Creating intuitive visualizations, reports and dashboards.

Process

Let’s take a look at the business intelligence process:

1. Data warehouses store an entire organization’s data, while data marts hold information subsets for specific departments.
2. BI data includes real-time and historical information from different sources, including log files, text and sensor data consolidated into warehouses. You can analyze this information to unearth trends and patterns while making accurate forecasts.
3. This process filters out irrelevant information, weighs current and future risks, conducts cost-benefit analyses and discovers plausible actions.
4. Depict analysis results as robust visualizations while weaving convincing data stories.

Use Cases

Let’s try to understand business intelligence in depth with the help of the following use cases:

• Information and statistics reveal marketplace trends — compare quarterly sales figures to see if a particular product is growing or diminishing.
• Examine year-over-year sales in various geographical regions to identify the highest performing regions and understand what sales tactics or marketing campaigns amplify sales.
• Create visual representations like charts or graphs to reveal stock market trends while making data-driven decisions.
• What-if analysis lets you calculate the differences in outcomes when one or more variables change. For example, how discounts impact sales revenue over a month.

Business Intelligence Concepts

The four basic concepts of business intelligence are as follows:

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Extract Raw Data

The first component of a BI solution is data from sales records, profit and loss statements, salary details and more. An organization’s data exists in various systems, including CRM, ERP, flat files and more. Due to this fragmentation, BI solutions come with robust connectors to centralize everything for advanced analysis.

Consolidate Information

A data warehouse integrates different databases to create relationships. Data flows into the warehouse from various sources, including transactional systems, relational databases and more.

Access and Analyze Data

Once the data consolidates in a single location, it is vital to make sense of it. Here, BI solutions access the information, interpret it for trends and patterns, and present it intuitively.

Create Dashboards and Reports

Dashboards and reports take complex, unintelligible information and output it as digestible patterns, trends and insights. These tools facilitate collaboration within the organization to share findings and discoveries.

Create intuitive dashboards to gauge sales performance.

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Importance

• Provide Data-driven Insights: The above BI concepts help organizations enhance inside and outside communications, solve problems, analyze data and ensure business profitability with valuable insights crafted from internal data.
• Set Benchmarks: Set actionable goals and benchmarks to drive performance. Formulate effective strategies to achieve predetermined objectives. Evaluate progress through robust KPIs to boost revenue and ROI.
• Predict Trends: Predict trends and patterns accurately to mitigate risks and capitalize on advantages before your competitors.
• Create Powerful Visuals: Develop visualizations to convey a data story. Extrapolate usable information from complex datasets and present them to stakeholders and team members for discussions and planning.

Application

Analyze Sales Cycle

Leverage sales analytics to see sales rep performance. Gauge who is succeeding and failing while improving existing processes within the organization. Use sales dashboards to analyze the sales cycle and compare manager performance.

Identify Customer Behavior

Analyze customer activity on your website and how they respond to marketing campaigns. Examine which customer acquisition channels are driving revenue. Invest in high-performing channels to attract lucrative customers.

Plan Marketing Activities

Leverage predictive analytics to identify efficient campaigns. Gauge how different campaigns perform based on predetermined objectives.

Boost Customer Service Experience

Display customer service KPIs, including average response times, to boost customer service, internal training and development initiatives.

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Primary Benefits

Business intelligence offers immense benefits, like quicker response times to changing financial conditions, customer preferences and supply chain disruptions.

Some other important benefits of BI in various industries include:

• Identify profitable customers and devise strategies to mitigate churn. Create robust marketing plans to attract new customers.
• Conduct accurate credit scoring to gauge customer profitability and curb fraudulent behavior.
• Determine what purchases customers are willing to make and when they want to buy based on past activities.
• In the insurance industry, set precise rates for premiums.
• In the medical industry, analyze clinical trials for new drugs and compounds.
• Leverage predictive maintenance to reduce equipment downtime.

Components

OLAP

Query data across different dimensions to gauge various viewpoints. OLAP offers a summarized view of business data used for reporting, analysis, modeling and planning. Some different OLAP operations include roll up, drill down, slice and dice, and pivot.

For instance, a stakeholder can request a sales report on laptop bags in July in Southeast Asia and compare revenue for those products on a month-by-month basis.

Advanced Analytics

This component includes techniques like predictive modeling, machine learning, deep learning, business process automation and other statistical techniques to unearth trends, patterns, characteristics and anomalies from different data sources.

It ensures accurate forecasting, accelerates decision making, improves risk management and identifies new opportunities.

Corporate Performance Management

Dashboards weave several metrics related to business performance together to convey a data story. For instance, stock traders keep an eye on financial dashboards to track market fluctuations, analyze short and long-term trends in stock prices, and create investment opportunities.

Real-time BI

Real-time BI facilitates access to recent information for strategic decision-making. For example, customer care representatives at an eCommerce store that sell clothing and accessories need updated information about inventory. If the customer places an order through an app or a website, they should receive immediate notifications if a particular brand, size or color isn’t available.

Data Warehouses and Data Marts

Data warehouses consolidate information from different sources to derive valuable insights. A data mart contains department-specific information focused on a single line of business, such as sales, finance, operations and more.

For example, marketing analytics utilizes marketing-specific data marts to gauge performance without an enterprise-wide data warehouse.

An organization considering expansion to different markets incorporates data from various sources to make the right decisions. This setup requires a data warehouse that aggregates data from sales, marketing, finance, operations and supply chains.

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Conclusion

Practicing these basic business intelligence concepts helps you sift through the noise to discover valuable information and rise above the competition. BI tools offer advanced pattern recognition, artificial intelligence and machine learning capabilities to facilitate real-time sales tracking, discover consumer insights, predict revenue and more.

How do you apply BI concepts within your organization? Let us know in the comments below!