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What is Business Intelligence? Everything you need to know

Proactive Insights

Table of Contents

Estimated reading time: 3 minutes

Business intelligence definition

Business intelligence (BI) is an umbrella term for solutions that enable data preparation, data mining, data management, and data visualisation. Business intelligence tools and processes allow end users to identify actionable information from raw data, facilitating data-driven decision-making within organisations across various industries.

There are a number of BI tools in the marketplace, which aid business users in analysing performance metrics and extracting insights in real time. These tools focus on self-service capabilities, reducing IT dependencies and enabling decision-makers to recognise performance gaps, market trends, or new revenue opportunities more quickly. BI applications are commonly used to make informed business decisions, advancing a company’s position within the marketplace.

How business intelligence works

There are four keys steps that business intelligence follows to transform raw data into easy-to-digest insights for everyone in the organisation to use. The first three data collection, analysis, and visualisation set the stage for the final decision-making step. Before using BI, businesses had to do much of their analysis manually, but BI tools automate many of the processes and save companies time and effort.

Step 1: Collect and transform data from multiple sources

Business intelligence tools typically use the extract, transform, and load (ETL) method to aggregate structured and unstructured data from multiple sources. This data is then transformed and remodeled before being stored in a central location, so applications can easily analyse and query it as one comprehensive data set.

Data mining, or data discovery, typically uses automation to quickly analyze data to find patterns and outliers which provide insight into the current state of business. BI tools often feature several types of data modeling and analytics including exploratory, descriptive, statistical, and predictive that further explore data, predict trends, and make recommendations.

Step 3: Use data visualisation to present findings

Business intelligence reporting uses data visualisations to make findings easier to understand and share. Reporting methods include interactive data dashboards, charts, graphs, and maps that help users see what’s going on in the business right now.

Step 4: Take action on insights in real time

Viewing current and historical data in context with business activities gives companies the ability to quickly move from insights to action. Business intelligence enables real time adjustments and long-term strategic changes that eliminate inefficiencies, adapt to market shifts, correct supply problems, and solve customer issues.

Business intelligence versus business analytics

The term business intelligence is commonly used in association with business analytics, and while there is significant overlap between the two areas, business intelligence focuses more narrowly on what is happening in your business and why, while business analytics more broadly includes solutions that help you leverage that insight to plan for the future. Business intelligence uses descriptive analytics to formulate conclusions about historical and current performance, providing context around changes in key performance indicators (KPIs).

Business analytics and business intelligence are inclusive of prescriptive and predictive analytics practices, which help advise decision-makers on potential future outcomes. Both BI and business analytics solutions enable stakeholders to make better decisions, and these should be viewed as complementary to one another.

Business analytics and data analytics tend to be used interchangeably. But business analytics is a merely a subset of data analytics, as the scope of data analytics can refer to any analysis of data. Business analytics focuses on discovering information which can improve business decision-making.