Business intelligence simplifies complex data and turns it into easy-to-understand information. When presenting information, different BI tools use dashboards and visual elements like charts and graphs. Because of this, even those with limited background in technology can perceive its message — making it an excellent tool for communicating insights and trends. In this article, find out more about what business intelligence is, how it works and the benefits it can bring to your organization.
What is business intelligence?
Business intelligence may sound like a single component, but it’s an umbrella term covering a broad range of processes, technologies and strategies for transforming raw data into useful information. Its goal is to help organizations make informed decisions by providing comprehensive business data.
Companies often employ business intelligence software to collect, analyze and access internal and external data. BI software can also generate reports on the business’s present and past performance, including why such outcomes occur. These insights can be helpful in discovering problems or issues, finding workable solutions, spotting market trends and identifying new opportunities. Instead of relying on hunches alone, BI helps organizations to make decisions based on what their data communicates to them.
Traditionally, business intelligence demands the help of the IT department to review data and generate reports. This method resulted in a slow cycle which limits the use of BI and reduces the timeliness of data.
Fast forward to the present, modern BI tools have become more user-friendly and intuitive. With this progress, users can finally analyze data on their own. This is extremely useful for departments that need immediate access to current data, such as marketing and sales. It’s also good news for small businesses with constrained IT access.
How does business intelligence work?
As mentioned above, BI software is needed to process data. This software uses dashboards and data visualization tools like charts, graphs and maps to present data into digestible information.
How business intelligence works for you depends on the metrics and key performance indicators (KPIs) you measure. The metrics and KPIs you set will determine the types of information you will get on your BI, so it’s vital to identify upfront the information you need.
In this article, Microsoft enumerates the four steps on how BI transforms raw data into actionable insights: data collection, analysis, visualization and real-time action. Here’s a brief discussion of each step.
- Data collection: BI tools aggregate structured and unstructured data from multiple sources, transform and remodel the collected data, then store them in a central location so it can be analyzed as one data set.
- Analysis: When analyzing data, BI tools use automation to quickly find patterns and outliers on the business’s current state.
- Visualization and presentation of findings: BI tools present findings through data visualization such as dashboards, charts, graphs and maps. This reporting method makes it easier for users to understand the real-time status of the business and the market.
- Real-time action: Insights acquired through BI are most useful when acted upon in real-time.
If used the right way, business intelligence is a powerful tool that can aid business growth. But no matter how useful the insights it provides, if you don’t act on them, the information you’ll get will still be rendered useless. By taking real-time action, BI will work as you expect it to be.
Benefits of business intelligence
The capability of business intelligence tools to deliver real-time insights has significant benefits to an organization, such as:
Better organizational efficiency
The use of BI tools can break down silos across departments. It allows different teams to share essential information with ease — users can share visualized reports and view them together with others in real-time. Since it presents data based on your KPIs, concerned departments can be aware of their progress and be more focused with their goals.
Improved financial performance
Through its dashboard, BI can help you understand your numbers better. You can use it to monitor your KPIs and see if your efforts are aligned with your financial goals.
Real-time access to market trends and changing consumer preferences
BI tools process big data in real-time. It lets you spot trends and opportunities the soonest time possible which empowers you to make quick and informed decisions.
Gain competitive advantage
You can also use BI to benchmark your business not only against the competition but also against your past performance. You can use it to determine what you can offer that your competitors don’t have as well as any areas of improvement.
Business intelligence is a vital tool that fast-tracks your business’s growth and success. By understanding what business intelligence is, how it works and how you can maximize its potential, you can be well on your way to reaching your goals.
If you’re looking for accounting services that use business intelligence technology, contact us today to get a free consultation from our experts. You can also get our free Business Analytics whitepaper for more information on how you can leverage data to drive your business forward.