The goal of every business is to be successful by gaining new customers and retaining old customers. A crucial way of achieving this end is through Business Intelligence, or simply BI.
Business intelligence can be defined as a process of collecting information in the area of business. An essential idea of business is that data is enhanced into information and then into knowledge. Business use BI to gain an advantage in the marketplace by understanding their customer’s needs, customer’s decision-making processes, and economic, cultural, and technological trends. Business intelligence involves analyzing not only the customer but the entire industry as a whole. Finally, business intelligence is driven by a goal set by the company. The goal can be short term or long term.
History of Business Intelligence
Business intelligence was first referred to in Sun Tzu s Art of War. Tzu claimed that in order to win a war you had to have complete knowledge and understand of your strengths and weaknesses as well as those of your enemy. This is the core idea behind modern business intelligence. A company must know itself better than anyone else, and know its customers and competitors better than anyone else. It is ironic how much business and warfare are alike. In BI, one must sift through heaps of data (both external and internal) for management to then device strategies for marketing and where to take the business.
Key Performance Indicators
In BI, the present state of business is assessed by the use of Key Performance Indicators (KPI). Data is becoming available to businesses faster as more organizations implement KPI. In the past, data was available after one or two months, which did not help businesses adjust their strategies in a timely manner. More recently, however, banks have tried to make data available sooner and with shorter intervals, especially for businesses that have higher operational/credit risk loading (I.E. wealth management and credit cards). Some companies can get data weekly, which helps them adjust their strategies more efficiently than ever before.
Business Intelligence Tools
Business intelligence involves collecting quite a bit of information and analyzing it. Many business use tools to achieve this. A few of the data tools are data modeling, data warehouses, and data mining. Data tools help employees collect the data and analyze it efficiently. Data tools are for organizational purposes mostly. Online Analytical Processing (OLAP) is used in the analyzing process. OLAP is sometimes simply referred to as Analytics, which is based on the hypercube or cube and dimensional analysis.
Some businesses also use software vendors for BI tools. There are quite a few enterprises offering BI technology. If a business does not get the BI tools themselves, then software vendor will provide a business with tools, and sometimes software support and BI professionals who will help the company analyze results and collect data. Some companies providing BI software are Siebel Systems, Microsoft, Altius Consulting, Business-Soft, and SAS Institute.
How Business Intelligence Can Help Your Business
Businesses understand that knowing the customer is the key to success. Business intelligence is the path through which a business can collect data about the customer and analyze it. Business intelligence is also about knowing the market, including competitors and market trends. A business that has the most accurate understanding of its marketplace will be more adequately prepared for the continual changes that inevitable occur in markets. Business intelligence is an important concept for any company to understand, because it will help them to gain new customers, retain old customers, and see a positive ROI.
Recommended Books on Business Intelligence:
- Business Intelligence (2nd Edition)
- Business Intelligence For Dummies
- Successful Business Intelligence: Secrets to Making BI a Killer App
- Business Intelligence Roadmap: The Complete Project Lifecycle for Decision-Support Applications
- Business Analytics for Managers: Taking Business Intelligence Beyond Reporting (Wiley and SAS Business Series)
Robert Flanglin writes about a variety of business topics and specializes in Business Intelligence. Robert Flanglin writes for the Business Intelligence Journal.