Business intelligence (BI) is a set of technological processes for collecting, managing and analyzing organizational data to yield insights that inform business strategies and operations.
Business intelligence analysts transform raw data into meaningful insights that drive strategic decision-making within an organization. BI tools enable business users to access different types of data—historical and current, third-party and in-house, as well as semistructured data and unstructured data such as social media. Users can analyze this information to gain insights into how the business is performing and what it should do next.
According to CIO magazine: “Although business intelligence does not tell business users what to do or what will happen if they take a certain course, neither is BI only about generating reports. Rather, BI offers a way for people to examine data to understand trends and derive insights.”1
Organizations can use the insights gained from BI and data analysis to improve business decisions, identify problems or issues, spot market trends and find new revenue or business opportunities.
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Business intelligence (BI) is descriptive, enabling better business decisions that are based on a foundation of current business data. Business analytics (BA) is then a subset of BI, with business analytics providing the prescriptive, forward-looking analysis. It is the umbrella of BI infrastructure that includes the tools for the identification and storage of the data for decision-making.
BI might tell an organization how many new customers were acquired last month and whether order size was up or down for the month. As opposed to this, business analytics might predict which strategies, based on that data, would most benefit the organization. For example: What happens if we increase advertising spending to give new customers a special offer?
BI platforms traditionally rely on data warehouses for their baseline information. The strength of a data warehouse is that it aggregates data from multiple data sources into one central system to support business data analytics and reporting. BI presents the results to the user in the form of reports, charts and maps, which might be displayed through a dashboard.
Data warehouses can include an online analytical processing (OLAP) engine to support multidimensional queries. For example: “What are the sales for our eastern region versus our western region this year, compared to last year?”
OLAP provides powerful technology for data discovery, facilitating BI, complex analytic calculations and predictive analytics. One of the main benefits of OLAP is the consistency of its calculations that can improve product quality, customer interactions and business process.
Data lakehouses are now also being used for BI. The benefit of a data lakehouse is that it seeks to resolve the core challenges across both data warehouses and data lakes to yield a more ideal data management solution for organizations. A lakehouse represents the next evolution of data management solutions.
The steps taken in BI usually flow in this order:
Some newer BI products can extract and load raw data directly by using technology such as Hadoop, but data warehouses often remain the data source of choice.
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The term “business intelligence” was first used in 1865 by author Richard Millar Devens, when he cited a banker who collected intelligence on the market before his competitors did. In 1958, an IBM computer scientist named Hans Peter Luhn explored the potential of using technology to gather BI. His research helped establish methods for creating some of IBM’s early analytics platforms.
In the 1960s and 70s, the first data management systems and decision support systems (DSS) began to store and organize the growing volumes of data. “Many historians suggest the modern version of BI evolved from the DSS database,” says the IT education site Dataversity. “An assortment of tools was developed during this time, to access and organize data in simpler ways. OLAP, executive information systems and data warehouses were some of the tools developed to work with DSS.”2
By the 1990s, BI grew increasingly popular, but the technology was still complex. It usually required IT support—which often led to backlogs and delayed reports. Even without IT, BI analysts and users needed extensive training to be able to successfully query and analyze their data.3
Business intelligence is as much a way of thinking as it is composed of hardware and software. By adopting a data-driven culture—based on a complete set of approaches, processes, digital technology and data analysis—an organization can find new insights to make better business decisions and gain new advantages. Installing a new BI software package alone does not bring about this culture shift.
Benefits of BI:
Challenges of BI
Data is the lifeblood of successful organizations. Beyond the traditional data roles—data engineers, data scientists, analysts and architects—decision-makers across an organization need flexible, self-service access to data-driven insights accelerated by artificial intelligence (AI). From marketing to HR, finance to supply chain and more, decision-makers can use these insights to improve decision-making and productivity enterprise-wide.
Organizations benefit when they can fully assess operations and processes, understand their customers, gauge the market, and drive improvement. They need the right tools to aggregate business information from anywhere, analyze it, discover patterns and find solutions. To deliver a BI system that can make all of this possible, organizations should:
Business intelligence adds value across multiple functions in almost any industry. For example:
Customer service: With both customer information and product details available through a unified data source, customer service agents are able to quickly answer customer questions or begin to solve customer concerns.
Finance and banking: Financial firms can determine current organizational health and risks, and predict future success by viewing combined customer histories and market conditions. Data can be reviewed branch-by-branch with a single interface to identify opportunities for improvement or further investment.
Healthcare: Patients can quickly get answers to many pressing healthcare questions without asking time-consuming questions of staff or medical personnel. Internal operations, including inventories, are easier to track, minute-by-minute.
Retail: Retailers can boost cost savings by comparing performance and benchmarks across stores, channels and regions. And, with visibility into the claims process, insurers can see where they are missing service targets and use that information to improve outcomes.
Sales and marketing: By unifying data on promotions, pricing, sales, customer actions and market conditions, marketers and sales teams are better able to plan future promotions and campaigns. Detailed targeting or segmentation can help boost sales.
Security and compliance: Centralized data and a unified dashboard can improve accuracy and help determine the root causes of security problems. Compliance with regulations can be simplified with a single system to gather reporting data.
Statistical analytics: Using descriptive analytics, organizations can review statistics to spot new trends and uncover why those trends are developing.
Supply chain: Worldwide data on a single pane of glass (SPOG) can speed the movement of goods and the identification of supply chain inefficiencies and bottlenecks.
Recent developments in business intelligence are focused on self-service BI applications that enable non-tech-savvy users to use automatic analysis and reporting. The IT team remains responsible for managing corporate data—including accuracy and security—but multiple teams can now have direct access to data and be responsible for their own analysis, rather than having the job wait in a queue for IT to run.
The ongoing advances in modern business intelligence and analytics systems are expected to integrate machine learning algorithms and AI to streamline complicated tasks. With the new emphasis on self-service, these capabilities can also accelerate the enterprise’s ability to analyze data and gain insights at a deeper level. AI-based systems can read from multiple sources automatically while grabbing the most relevant information to lead decision-making.
As an example, consider how IBM Cognos® Analytics brings together data analysis and visual tools to support map-creation for reports. The system uses AI to automatically identify geographical information. It can then refine visualizations by adding geospatial mapping of the entire globe, an individual neighborhood or anything in between.
Modern BI solutions live on cloud-based platforms to extend the reach of BI worldwide. Consumer insights can be drawn from big data, producing information that ranges from descriptive to predictive. Many BI solutions now include real-time processing, enabling immediate decision-making.
Further advances in enterprise-grade BI systems include natural language queries, which are easier for users who are not SQL experts. Low-code or no-code development capabilities are available in some BI systems so users can create their own tools, apps and reporting interfaces to further speed the answers and time-to-market.
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Use predictive analytics to help you uncover data patterns, gain accurate insights and improve decision making. Mark Lack, Strategy Analytics and Business Intelligence Manager, Mueller, Inc., confirms this benefit: "Deep analytics. Just add data."
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1 CIO magazine: https://www.cio.com/article/272364/business-intelligence-definition-and-solutions.html
2 Dataversity Digital: https://www.dataversity.net/brief-history-business-intelligence/
3 Better Buys: https://www.betterbuys.com/bi/history-of-business-intelligence/
4 Report by Seagage and IDC: https://www.seagate.com/files/www-content/our-story/rethink-data/files/Rethink_Data_Report_2020.pdf