Business Intelligence (BI) software comprises various application tools to retrieve, analyze and report on raw historical and current data in order to identify and develop business opportunities as part of a competitive marketing strategy.
Another way of looking at it is that BI software puts important business information in front of decision-makers when they need it, in a format they can understand and act upon quickly. The information has to be shareable, yet secure.
Every day, large BI systems analyze the activities of millions of individual customers making literally billions of transactions. Sophisticated software is able to continuously track the profitability of specific customers and products, and to detect fraudulent activities using algorithms that become more accurate over time.
Something as simple as a spreadsheet is a business intelligence tool. On a very basic level, you manually enter data into a spreadsheet so you have an easy way to visualize relationships among the different data points and, in many cases, draw conclusions about what these relationships mean.
At this very basic level, if your sales spreadsheet showed gross sales doubled in July and August, you might reasonably conclude your product is most appealing to consumers in the summer or during hot weather. Based on this information, you could decide to concentrate a larger portion of your marketing spend in the summer, as that's likely when people are most interested in your product. Then again, you might also decide to move your marketing dollars toward the cooler seasons to improve year-round awareness of your product and boost off-season sales.
The moral here is that BI software doesn't tell you what to do. It provides a means to quantify and visualize data so you can make more informed decisions based on the data you select. Some of the business problems that business intelligence software helps with include:
- Customer Satisfaction
- Problem Resolution
- Customer Loyalty/Value
- Customer Segmentation
- Customer Turnover
- Product Upsell/Cross-Sell
- Cost Control
- Performance Management
- Product Defects
- Marketing Effectiveness
Just as there is an enormous amount of data to sort and categorize, there is a wide variety of BI tools that are both open-source (free) and commercial. Generally, open-source software is good for people with IT experience whereas commercial software usually comes with training and other useful customer support useful for those with minimal technical training.
While there are more expensive tools that automatically do more sophisticated processes than a spreadsheet can, almost all BI tools have an export to spreadsheet function. There are also several other ways to display data, including visualizations and infographics (i.e. charts and graphs), which most BI tools also generate.