The term “business intelligence” came into use in the 1960s to describe a system for sharing information among departments. Today, business intelligence (BI) tools enable self-service data management and digital data analysis. BI software solutions efficiently collect data to help owners and managers make informed business decisions. These critical insights can help your company adapt to industry and market fluctuations.
By 2025, the business intelligence market is expected to grow to $40.5 billion. So whether you have a small business or an enterprise, your company can benefit from BI solutions to stay ahead of the curve, decrease operating costs, and sustain and grow customer relationships.
We’ll explore business intelligence, why a business owner needs it, and how BI relates to competitive intelligence and artificial intelligence.
What is business intelligence?
Business Intelligence is not a single piece of software or even a software suite for crunching big data. Instead, it is an umbrella term that includes best business practices, software, infrastructure and other tools to optimize decision-making and enhance performance.
In essence, BI is about information analysis. A database pulls together information from the different parts of your business, and then applications convert that raw data into reports, charts and other analytical tools to provide insights.
Business owners can use BI in many ways:
- Examine any aspect of your business.
- See how well your sales efforts are going.
- Assess the efficiency of your manufacturing processes.
- Measure employee performance and company goals.
- Uncover and track industry trends using data from multiple departments.
- Inform business leaders who make critical companywide decisions.
- Track historical data.
- Make custom reports based on specific queries.
- Design graphs, charts, etc., based on collected data.
- Stay competitive in your industry.
Tip: When tracking industry trends via social media, identify and track trending topics on sites like Facebook, Instagram, TikTok, Reddit and Twitter.
How does business intelligence work?
These are some of BI’s analytical applications:
- Collaborative BI
- Mobile BI
- Open-source BI
- SaaS BI
- Operational BI
- Real-time BI
Technology is not just about gathering intelligence but about making immediate sense of data through visualization applications.
BI also offers dashboards and performance scorecards. Key performance indicators and business metrics are much easier to understand when displayed as visualized data.
How can small businesses use business intelligence?
Attempts to analyze data without BI are clumsy. For instance, teams often tabulate information on Microsoft Excel spreadsheets. However, collecting the data is time-consuming, and it’s tedious to put it together in an easy-to-grasp way.
Even worse, the results are not always accurate or insightful. While Microsoft Excel has many excellent uses, it’s like using a hammer when you need a jackhammer. BI tools are bigger, better, faster and more efficient for significant tasks, like taking a company to the next level.
Properly analyzing data can mean the difference between a modest profit and outrageous success. Proper analytics give you some important abilities:
- Gain insight into trends. Analytics offers insights into industry trends and helps you spot effective marketing opportunities you would have otherwise missed.
- Better serve customers. Customer analytics helps you learn what customers want and need from your company. This information can help you redesign your business to gain more customers.
Advantages of incorporating business intelligence
BI tools can help take your business to the next level. By increasing productivity in your workforce and improving the customer experience, BI tools provide the data you need to make proactive business decisions.
BI tools can assign tasks and reporting to teams and individuals to create a traced accountability system within the business. Holding your team accountable can increase loyalty by providing each person with a clear understanding of their role and reducing confusion among departments.
BI tools boost productivity in several ways:
- Companies of any size can create custom reports.
- Automated data can increase cash flow by decreasing the costs of labor and resources.
- By automating busy work, employees can be more productive and efficient.
- Frequent reporting can eliminate the need for an IT team and consultants.
BI gives companies access to a wide variety of data that can help streamline business processes, reduce pinch points and set measurable standards. You can use data reporting in real time, leading to better, faster business decisions. For example, team members can analyze detailed client information and forecasting before a sales meeting. As a result, it’s easier to connect with the client and conduct business more professionally.
Using BI tools to analyze customer data can determine how to engage customers, anticipate buying hot spots and downturns, and monitor industry and market changes. Anticipating your customers’ needs is a substantial competitive advantage and can keep you one step ahead for maximum profit potential.
Improved customer experience
BI tools also help your customers. By connecting phone records, text data from live chats and prior purchases, you can offer excellent customer service using data history to solve problems.
Did you know? Verizon invested in more than 1,500 employee dashboards across multiple departments. The dashboards housed data from customer support live chat sessions. By collectively analyzing the data, Verizon eliminated 43% of its support calls.
Disadvantages of incorporating business intelligence
Although there are many benefits to BI tools, implementing them isn’t always easy, especially for small businesses. There are a few things to consider before diving in.
- Cost: BI tools can be costly and require a significant upfront investment. ROI can make up for the cost, but usually not within the first year. If budget is a concern, consider using self-service BI tools. These tools can help you advance your business without needing IT support for onboarding or minor adjustments.
- Complexity: Depending on your business tool knowledge level, you might have to hire a team for onboarding and initial training. Plus, if you use different BI products and try to combine them, the data could be confusing and even overlap. Look for an all-in-one BI solution that can house all your necessary tools. Or find a third-party data connector to make sense of the varied information you gather from different BI tools.
- Security: If you invest in BI tools that house your customer and employee data, any error in your system could put that information in the wrong hands. To decrease the risk of a data breach, choose a BI company with security best practices in place, and thoughtfully decide what data you will allow your BI tools to access.
- Employee resistance: Implementing new tools across all departments can come with its share of obstacles. While some departments might catch on quickly and find BI tools to benefit their time and knowledge, other departments may find it cumbersome and give up on it entirely. Look for intuitive software that solves employee complaints and has clear actions and goals. The more employees adopt the tools, the easier it will be to maintain your data and profit from the analysis.
FYI: Conflict between sales and marketing teams isn’t uncommon, due to clashing strategies and role confusion. You can alleviate this stress by outlining a cohesive strategy that lets each team play a crucial role in the company’s success.
Business intelligence vs. competitive intelligence vs. business analytics
BI is often considered synonymous with competitive intelligence, and it’s also confused with business analytics. However, there are some important distinctions.
- Business intelligence: BI increases your competitive advantage. It uses various technologies to review internal data and analyze business processes. BI collects data through asking questions, reporting and online analytical processing.
- Competitive intelligence: With a marketplace focus, competitive intelligence uses data differently. Information is gathered, analyzed and disseminated to understand how to get an edge over competitors.
- Business analytics: Business analytics is related to competitive intelligence and can be considered a subset of it. Business analytics is all about predictive modeling, and its tools are statistics and quantitative measurements.
Business intelligence vs. artificial intelligence
BI and artificial intelligence (AI) overlap in their technological applications. BI and AI tools create valuable data from their analytics, allowing businesses to translate that data into informed business decisions.
However, their goals are significantly different. BI tools streamline data collection while automating the frequency and improving how a business utilizes the data. By using BI tools in various departments, your team can collect and aggregate that data to make informed business decisions.
On the other hand, AI tools are built to model human intelligence in the form of rational decision-making. For example, in certain instances, an AI chatbot can take the place of customer service reps. While it doesn’t necessarily improve the B2C relationship, it can fill the gap in real time for simple questions or concerns.
Tom Drake contributed to the writing and research in this article.