Business Intelligence
The insights that business intelligence fueled by big data now offers up would have been hard to imagine not a decade ago.
Today businesses can collect and distribute more information more efficiently than ever before, and they use that to their advantage. They study their customers, their internal operations, their vendors, and their competitors to optimize every facet of their business. They can predict their sales and the outcomes of potential decisions, tightly optimize their spending, assess competitors’ performance and strategies, and know exactly what strategies translate to increased sales and why.
According to a NewVantage Partners 2019 study, 91.7% of firms said their primary driving factor for investing in big data was to perform more competitively by using big data for transformation and greater agility. And McKinsey Global Institute reports that data-driven organizations are 23 times more likely to acquire new customers, 6 times as likely to retain customers, and 19 times as likely to be profitable. Data is now the key to success.
Companies that invest in using data effectively have a significant advantage and can run their business more efficiently and effectively than ever before. As a result, businesses that fail to leverage and get value out of data risk becoming obsolete or overshadowed by competitors who use data to make the most of every opportunity.
With the right information at their fingertips, businesses can move forward faster. So how do businesses easily access their data and gain these strategic insights?
Enter business intelligence systems. Business intelligence (BI) encompasses all of a business’s efforts to turn insight into action, and an effective business intelligence strategy is the key to getting value out of your data. In this article, we’ll share everything you need to know about business intelligence, including resources to help you decide if your company could benefit from implementing a new business intelligence strategy or solution. We’ll specifically share what business intelligence is, the benefits of using BI for your business, how BI systems work, and how to assess if your company needs a BI solution.
What is Business Intelligence?
You’ve most likely already heard of the term “business intelligence,” but despite its popularity it can be a difficult term to pin down. It’s an evocative, if somewhat nonspecific, term. So, what exactly does it mean?
Business intelligence is a broad umbrella term that encapsulates the technologies and strategies used to collect, analyze, integrate and present all forms of business information. Business intelligence systems are designed to transform business data into actionable intelligence, educating an organization about its own operations and enabling it to make better decisions. In this way, business intelligence can be thought of as a decision support system.
Business intelligence systems do this by offering three different types of analytics: descriptive, predictive, and prescriptive. Together, these analytics provide historical, current and predictive views of a business’s operations.
Descriptive analytics explores the past to reveal what happened in your business. For example, descriptive analytics might help you find out up-to-date information like “How many claims were made today?” “How many customers bought this item last year?” or “What is our best performing product from year to year?”
Predictive analytics combines these stats with forecasting techniques to reveal what could happen in your business in the future. Predictive analytics can be as involved as creating models and simulations or as simple as using historical trends in your data to predict what might happen in the future. Predictive analytics help you realistically envision what might be ahead for your business.
Lastly, prescriptive analytics uses simulation techniques to offer advice on these predictions. Prescriptive analytics has a focus on decision-making. It uses data to forecast outcomes and consequences of possible decisions that a business could make, so that they can choose their course of action with a full understanding of the potential effects. Whereas predictive analytics can help a business determine what might happen if things continue as they are now, prescriptive analytics shows how a business will be affected if they choose different courses of action.
Now that you understand what business intelligence systems are and what types of data they can provide, here’s a look at what they can do for your business when you put that data to good use.
The Benefits of Using Business Intelligence
Today’s digital world means that all business dealings are recorded in data in some way, shape or form. The resultant ‘big data’ – a totally overwhelming seas of zeroes and ones – is impossible to understand and interpret without the proper tools. Business intelligence systems provide those tools. They are capable of either organizing or sifting through the sea of data that modern day businesses generate and offering up insights that are hidden within.
This enables organizations who utilize business intelligence systems to do a number of things that other businesses simply cannot.
BI can help your company:
Quickly Identify and Cultivate New Opportunities
BI can position your business for opportunity by helping you understand the demographics of a potential region and if that aligns with your target customer base, strengthen a pitch to an investor by sharing accurate data on your company and previous performance, or identify new customers within your market and analyze their greatest needs and interests. Data can help you hone in on potential customers and sales regions with more accuracy and intentionality.Recognize and Improve Areas of Inefficiency
BI can help you identifying systemic and procedural issues. Without a BI system to make sense of the data, it is very hard for a business to identify that there in fact is a problem to solve, let alone what the problem is, how extensive it is, and how it might be solved. For example, a shipping company might know that their delivery process could be fine-tuned because they’re receiving complaints from customers. With the help of BI, however, the company might discover that the delay is always for a particular product or that a particular transport company is responsible for the majority of delays. They can then use that information to resolve the problem area and proactively find ways to improve their delivery system. Additionally, they could proactively track data on delivery times in order to avoid a poor customer experience in the first place.Have Proactive Visibility and Control Over Day-to-Day Business Operations
With access to business intelligence, you can easily and regularly assess branch, regional, and market performance to keep a pulse on any issues that arise or areas of opportunity.Gain Deep Insights Into Customer Behavior
By better understanding how your customers interact with your organization, you’ll be better placed to cater to those customers. For example, BI can help you understand if certain pages on your website or forms have a higher abandonment rate, if your customer demographic has changed, or their preferred way to contact you. Analytics about your customer can teach you about all of these things and more to increase loyalty, spend, and to optimize your customer experience. By better understanding how your customers interact with your organization, you’ll be better placed to cater to those customers.Make Decisions More Quickly
Having access to real-time data through business intelligence systems helps you minimize the guesswork and gambles that are often involved in decision-making for your business. If it’s in the data, you don’t have to debate it. The right business intelligence system will be able to respond quickly and accurately to almost any business-related query so that you can gain buy-in by sharing the data with your team and make decisions more quickly and confidently.Identify Areas for Cost-Cutting
BI helps businesses cut costs by improving inventory efficiency by identifying low turn-over or idle products, optimizing purchasing, and measuring inefficiencies in procedural systems or employee costs. In NewVantage Partners’ 2018 study 60.9% of companies surveyed said that they successfully reduced costs using BI.Set and Track Goals More Effectively
BI helps you set and track your goals for any department or employee more accurately and efficiently. Before setting a goal, you can have a clear idea of the KPIs involved in order to give a department or employee specific areas where they can improve or grow. With access to very specific data around your goals, you can chart the course for your company more intentionally, giving employees more direction, ownership, and understanding of how to take action toward your company’s vision.Improve Data Collection, Storage, and Governance
Instead of drowning in your data, business intelligence systems allow for centralized and uniform data collection, storage, and access. With a well governed business intelligence system, more of your data is available for analysis, and processes can more easily be put into place to manage access to your data and mitigate risk.Access Current, Accurate, and Uniform Data
BI systems allow you to have access to current data that can be trusted by all employees. With an effective business intelligence system that has self-service access, you won’t have to rely on your IT department to complete a report for you before you can make a decision. You can have timely reports at your fingertips with assurance that the data will be accurate and uniform across the organization.Easily Visualize Data
With data visualization capabilities in BI systems, employees can more easily understand and communicate the meaning behind the data (even employees who aren’t data analysts). The brain processes visuals 60,000x faster than text and visuals prove to be more convincing to people. By using data visualization, people will understand the data more easily and be more motivated than ever before to take action. The best BI systems make business data available in the form of graphs, charts, reports, maps and dashboards. If your employees don’t currently have the ability to explore and manipulate your data through the use of data visualization tools, this is a game-changer for getting the most value possible out of your data. (Read our blogpost called “How and Why Visualizing Data Makes it Actionable” for more on why visualizing data makes a difference.)Analyze and Improve Employee Performance
BI systems give employees instant access to the data they need to do their jobs, and to do their jobs better. Just like BI helps you set more specific goals for your business, BI systems can also help employees track their own performance and set more specific goals. For example, your sales department could use analytics to understand what current sales methods are most effective and all reps could be asked to implement those methods and track the effect that has on their performance. BI can also help in simple ways like giving employees a way to tell with data if they have contributed to less customer complaints or better customer experience.
Business intelligence won’t make the big business decisions for you, but it will give you the information you need to make those decisions more confidently and accurately.
How Business Intelligence Systems Work
So how do business intelligence systems work and provide these useful insights? BI systems are usually made up of a range of BI tools – software applications that work together to report, analyze and present the data. These tools must work in concert with a data storage system, which captures and stores the data that the business intelligence system will work with. Data storage systems take one of the following three forms:
Data Warehouse: A database storage solution which can host transformation processes and apply structure and modeling to all of an organization’s data. Operational source data can be put into the warehouse in easily digestible packages (a process called ‘schema-on-write’). Data warehouses are organized to offer fast, accurate, and relevant insights.
Data Mart: The same concept as a data warehouse, but smaller and more targeted for end-use analysis. Data marts often hold data which pertains to a single specific department within an organization. Data marts provide efficient access to data for that department’s specific needs so they don’t have to waste time sifting through a larger data repository.
Data Lake: A storage area that simply holds all of an organization’s data in its natural, unstructured state. A structured form is applied to the data when it is actually used (a process called ‘schema-on-read’). Data lakes allow businesses to store more data at a lower cost and then structure it for analysis only when they know they need it. This is helpful when a business doesn’t yet know if the data will prove useful yet, saving valuable preparation time.
From these data storage systems, business intelligence tools will extract, analyze and present the data, making it comprehensible. These tools are generally offered as standalone applications, but must be used collectively to create an effective and comprehensive BI solution.
BI systems also include key application categories like:
Data mining
Data cleansing
Spreadsheets
Reporting and querying
Operational dashboards
Business activity monitoring
Online analytical processing
Local information systems
There are also a number of ways that a business intelligence system can be deployed. The three most common modes of deployment are:
On-Premise: BI that is deployed entirely in-house using owned or leased equipment. Data must always be backed up off-site, however.
SaaS (Software as a Service): The BI system is hosted by the application service provider.
Cloud Storage and Computing: Data and tools are all hosted in private, hybrid or public cloud infrastructure, and can be accessed by credentialed users from anywhere with an internet connection.
A quality BI engineer will use a combination of these forms of storage and applications to build and deploy an optimal BI solution for your business. It’s important to note that any business intelligence system will only be as good as the data it uses. Organizations must have strong framework aimed at controlling the quality, the governance and the employment of data. Without this framework, any insights gained through a BI system will be met with skepticism.
To learn more about what to expect when building a custom BI solution, download our BI ebook here.
How to Assess if Your Company Needs a BI Solution
Despite all the benefits, not every company needs a new BI solution. In some cases your company may be able to gain the information they need without implementing a BI solution, or your current solution may be sufficient. With that in mind, we wanted to share some questions to help you assess what you might do with a BI solution as well as some tell-tale signs that your company does indeed need BI.
Questions to Ask When Assessing Your Company’s BI Needs:
Businesses are recognizing the many perks that come with having limitless information through data but prioritizing what to do with that data can be a difficult task. By answering these questions with leadership you’ll have a clear idea of how much of a priority BI is for your business:
What do I want to accomplish for my company?
Before deciding whether or not you need BI, make sure that you have a clear understanding of your business’s overarching goals so that you can assess how BI will fit in with the larger plan for your business.How do I plan to utilize BI?
Discuss specific goals and areas you could use it to improve your business processes. What problems are being experienced on a regular basis that need resolution and that we need more information about in order to find a solution? These are areas where BI could help.What types of data can I collect to use to my advantage?
This often looks like noting all of the questions that you can’t answer or can’t find supporting data for as relates to your company’s performance, customers, competitors, or market.What are the pros and cons of investing in BI for my company?
Will I get a return on my investment?
If this question seems difficult to answer, your company can start tracking key statistics like- How many hours does IT currently spend fulfilling requests for reports? How often do employees have to navigate through multiple applications in order to seek out certain information and act on it? What abilities and opportunities are we currently sacrificing by not investing more in business intelligence? Or what might be lost if your company doesn’t improve in certain areas? If you’re looking for more on assessing ROI of a BI solution, download our e-book with more on the basics of BI here.Is my company focusing more currently on data defense or data offense?
Data defense is all about minimizing risk and maximizing data security, whereas data offense focuses on using data proactively to grow the organization. With that in mind, would investing in BI be worth it and help you accomplish your data strategy? (89% of companies surveyed by NewVantage in 2020 are investing in BI offensively, rather than defensive reasons like cost cutting or regulation.)What will every level of employee use BI for?
Consider mapping out how a BI solution could be used in each department and by every employee, from leadership to sales to customer representatives. Discuss what tasks specifically could benefit from using BI on all levels of your organization.Is your company culture conducive to making decisions based on the data, not relying on gut-feel, intuition, or rank alone to make decisions?
Is leadership already advocating for more data-driven decision-making and implementing better analytics strategies, or are they resisting becoming more data-driven? Beginning to rely heavily on data instead of gut-feel or experience is reportedly a struggle for many companies, but the best way to approach this change is to view it as adding insight to experience, not replacing experience with data. Data will only help you clarify what you need to do next and why, and your experience will help you think of possible solutions based on the data. If leadership is ready to focus on BI, our blogpost here shares concrete steps on how to lead your company toward a data-driven culture.
If you can’t clearly pinpoint what value your data is currently providing to your company, you most likely could be doing more with your data and would benefit from a BI solution. Here are a few other signs that your data could be doing more for you or you could be doing more with your data:
Signs Your Company Needs a BI Solution
Only a few people have access to the data. If only a few people have access to the data, then only a few people can use it to make more informed business decisions.
You have some data but still have a lot of questions that you can’t answer with it. For example, your data might tell you what the problem is, but you might not be able to dive deep enough to find what's causing that problem.
Requests for data or reports are still going through your IT department. This puts more responsibility on IT and increases the amount of time employees have to wait to have access to actionable insights. It also greatly reduces the likelihood that employees will ask for reports or information as often as they would if they had self-service access to your data.
Your data requires manual processing. Up-to-date BI systems are designed to automate data processing, saving countless hours spent on manual processing.
Your company has changed or grown significantly. Your BI solution might not address all of the components of what your company does now that you have grown or changed direction. A new solution could help you reduce inefficiencies and unify any new tasks and functions of your business under one program.
Creating a company that relies on data and truly uses data to their advantage with BI starts with a clear commitment from leadership and is only successful with a clear vision and accountability for how the solution will be used.
Have Questions About BI or Ready to Get Going?
If your company is ready to take the next step and invest in a BI solution, team CSG would love to help develop and implement a BI solution that will clearly help you establish a competitive advantage and optimize every facet of your operations. Click below to get started or to ask a question about how BI could benefit your company.