Business intelligence is becoming more and more important by the day. Businesses that fail to take advantage of the data that they have may be losing competitive advantage to organisations that are working smarter to capture their own data and have it help them to make decisions. Understanding what business intelligence is, is an essential part of business these days, and in this review, business intelligence will be introduced and explained.
With regard to the purpose of business intelligence, Joerg Reinschmidt and Allison Francoise of IBM explain this to be:
“Making better decisions easier and making them more quickly”.
One of the things about business intelligence is that businesses frankly, are not particularly intelligent with their data in many cases. While a staggering and unimaginable amount of data is collected every day, in many cases this is never used. Data is collected across a whole range of different areas such as point-of-sale transactions, accounts payable, customers, inventory and orders, as well as demographics and mailing lists. However, as Reinschmidt and Francoise point out, in 93% of cases, corporate data is not able to be used in decision making today.
There are many reasons why businesses might engage in business intelligence. One very important one is increasing revenues or reducing costs. By being able to make better decisions based on real data, organisations are becoming more effective in what they do. Another important factor is the simple fact that the business environment in which businesses now have to operate has become increasingly complex, and having data available to be able to manage different facets of that more effectively is helpful.
There is so much data available, and some of it is useful and some is not. Sorting out the wood from the trees is one of the biggest problems that business intelligence professionals face in organisations today. The best way to get to the bottom of finding out what is actually important is to talk with the people who need reports. They usually have a good understanding of what they would like to see and what they want to be able to measure. Then the challenge is figuring out how that is achieved and then presented in a format that is useful and understandable to business executives. Certain types of data are more obviously important than others, and some information may need to be available more quickly, or even in real time, while other information is acceptable to be received only monthly. Some types of reports or information may only be needed on an ad-hoc basis, but are still critical to business decision making and need to be accessible. Defining all of these types of parameters to make data actually useful to business executives is critical to the success of any business intelligence programme.
Looking for more efficient ways of working is a part of building up useful business intelligence, and cutting back on the number of people that have to enter data into spreadsheets (especially if that data has already been entered elsewhere and they are just rekeying) is a helpful outcome of business intelligence activities. By liaising with all of the main functional areas of the business such as marketing, sales, operations, production, finance and others it is possible to find these efficiencies and also understand the different kinds of reports that people need to be able to make good decisions and do their jobs effectively. A good business intelligence programme will include consideration of all aspects of the business so that nothing is left out.
Finally, there are many different terms involved in the world of business intelligence, some of which might be quite baffling to a beginner. Some of the most helpful are:
OLTP – this stands for online transaction processing which describes the handling of data by a system or person.
Data warehouse – this is simply a database where data is collected and stored so that it is possible to analyse it. The data warehouse will also organise the data and make it available to users.
Data mart – a subset of data that is useful to a particular business unit or team.
External data source – data that is not derived from online transaction processing but that is still required to be within the data warehouse for data to be useful.
OLAP – online analytical processing is software that provides views of data in a form that users can best understand.
Guide to Business Intelligence (part 1): An Introduction
Guide to Business Intelligence (part 2): Implementations and Warehouse Concepts
Guide to Business Intelligence (part 3): Project
Guide to Business Intelligence (part 4): Data Sourcing/Movement
Guide to Business Intelligence (part 5): Solutions Architecture
Paula Newton is a business writer, editor and management consultant with extensive experience writing and consulting for both start-ups and long established companies. She has ten years management and leadership experience gained at BSkyB in London and Viva Travel Guides in Quito, Ecuador, giving her a depth of insight into innovation in international business. With an MBA from the University of Hull and many years of experience running her own business consultancy, Paula’s background allows her to connect with a diverse range of clients, including cutting edge technology and web-based start-ups but also multinationals in need of assistance. Paula has played a defining role in shaping organizational strategy for a wide range of different organizations, including for-profit, NGOs and charities. Paula has also served on the Board of Directors for the South American Explorers Club in Quito, Ecuador.