Modern companies are compiling a huge amount of data on a daily basis. Answering the question of what to do with all this information is the domain of business intelligence. BI covers a large range of functions within a firm, including everything from database compilation to the creation of presentation materials. BI tasks typically center on using powerful software suites to quickly analyze and present a company’s data to stakeholders in a fashion that allows them to readily make decisions. The ultimate goal of business intelligence is to render the decision-making process as efficient, accurate and fast as practicable.
Business intelligence processes should allow a company to speedily address five key concerns:
- Show what happened
- Track what is currently happening
- Explain why these things happened
- Offer insights into what may happen
- Inform decision makers about specific beneficial options
Most companies have pretty good raw data regarding what has happened. Even small businesses with little BI infrastructure can point toward sales receipts and inventory totals to frame a reasonably constructive narrative about the past.
Where real competitive advantages are emerging is in tracking what’s currently happening. A company with a serious BI system in place has the ability to analyze sentiment and trends in real time, allowing them to respond faster when critical inflection points have been passed. For example, a company can monitor social media outlets and its own customer service records to detect consumer discontent before it blows out of proportion. Similarly, companies can observe trends in real-time and task team members to explore them before competitors jump on them. A solid BI process can give a business a huge first-move advantage even in highly competitive niches.
Benefits of BI
Anything a company does has the potential to be done better with the benefit of business intelligence. Some operations have entire business models that are based on crushing their competitors by simply streamlining essential processes within their operations. Imagine operating in a market where margins are very thin and inventory requirements are huge. It’s easy to see where a company that can use BI systems to economize its processes for handling inventory could outpace a less nimble competitor quarter by quarter.
Big data’s a big deal, right? It’s not enough, however, to have a lot of data. Lots of companies are sitting on databases full of information, and very little of is actionable if it’s never properly compiled and presented. The main benefits of BI arise from how data is compiled and translated into actionable information. There’s already an arms race among the biggest companies in the world to produce the best BI, and corporations are spending billions of dollars to gain millisecond advantages over their competitors.
Business intelligence can be applied to a lot of highly specific problems. For example, many financial institutions now profile who their ideal customer is. They make a point of sending offers to those individuals who they feel will form long-term relationships with their companies. This requires having BI processes in place to filter through existing information about current customers in order to produce accurate predictions regarding who will be the best future customer. It also demands a commitment to running new experiments all the time to see what insights are waiting to be gathered.
Importance of BI
Business intelligence is increasingly becoming a swim-or-die proposition. The analytics boom in Major League Baseball, for example, allowed several perennial losing teams to rapidly ascend by making smarter decisions. Teams could gain an edge in a variety of ways, including how they scouted prospects, which free agents they spent money on and how they managed players’ health. The biggest name in the sport, the New York Yankees, is still struggling to catch up in the analytics game against several previously weaker opponents.
Failing to build a solid Bi infrastructure in the modern business world is tantamount to unilateral disarmament. If one convenience store chain is monitoring the total customer experience while its competitors aren’t even tracking equipment failures, it’s easy to predict who’s going to thrive. If one retailer is fumbling around trying to standardize its data while another company has a smoothly implemented system in place, the company with the better implementation is going to be able to respond faster to problems and opportunities.
Good BI isn’t just elemental. It’s evolutionary.
Business intelligence requires a broad dedication to processes across an entire operation. It requires putting in software systems and standards with the intent of compelling everyone to conform to their use. It also demands a willingness among higher management to listen to the insights that are bound to bubble up from below. Building a BI infrastructure is no longer a choice for many companies because competitors are either already doing it or bound to start soon.