What Is Business Intelligence? (With Techniques And Uses)

By Indeed Editorial Team

Published 28 April 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

A reliable data set provides invaluable insights and allows companies to monitor the health of important systems within the organisation. Most companies have access to enormous amounts of data they can leverage to their advantage, irrespective of the industry. Business intelligence (BI) gives these businesses the ability to profit from their data by presenting otherwise unusable information in an understandable and interpretable way. In this article, we define business intelligence, look at some techniques, find out some uses and go through the benefits of using business intelligence.

What is business intelligence?

Understanding "What is business intelligence?" can help companies analyse massive amounts of data and make informed business decisions. An enterprise uses business intelligence technology and strategies to analyse historical and current data with the goal of improving strategic decision-making and gaining competitiveness in the market. Business intelligence systems help companies gather, store and analyse complex data, transforming it into meaningful and actionable information. The information finds its way to support strategic and operational insights and aid in optimal performance.

Related: Business Strategy Components And Examples

Business intelligence techniques

Here are some techniques companies incorporate in business intelligence:

Data mining

Data mining is the process of extracting information from data coming from different sources and using that information for various purposes. In business intelligence, data mining finds its way in making correlations or patterns among dozens of fields of a large database. Businesses can use business intelligence software to connect disparate data sources, collate and organise the data and generate reports and dashboards that help make more informed financial decisions.

Data mining transforms raw data into useful information through five steps:

  1. Extract, transform and load (ETL): An ETL process involves transferring data from one or more sources, transforming it and storing it in a data warehouse.

  2. Store and manage: Businesses then store and manage data using multidimensional databases, such as tabular cubes.

  3. Access: Standardising, loading and managing the data in a database enable business analysts and data scientists to access the information.

  4. Analysis: Based on queries submitted by end-users, the application software analyses and sorts the data.

  5. Present: Reports, charts and graphs help users understand the data upon its analysis and sorting.

Descriptive analytics

Most companies use descriptive analytics to analyse data. The goal of descriptive analytics is to gather and summarise raw data to make it easier to interpret. Business intelligence usually starts with descriptive analytics, which results in a visualisation like pie charts, line graphs and other graphics. Using descriptive analytics, organisations can track operations and monitor trends across the board. Examples of descriptive analytics are key performance indicators (KPIs) such as year-on-year growth in sales percentage, inventory tracking and revenue per customer. Dashboards, reports and presentations are some of the products of descriptive analytics.

Related: 15 Types Of Business Analytics Jobs Across Various Industries

Data visualisation

Data visualisation involves displaying information in a visual format, such as a map or graph, to make it easier for the brain to process. Visualising data makes it easier for users to identify different trends and patterns. Infographics are an extremely common form of data visualisation along with dashboards, which help provide important BI reports to computers and are customisable to meet the needs of different teams.

Related: Types Of Graphs And Charts

Querying

Database queries are requests for information. Users of BI systems can access data sources provided by their technology teams and query them. Analysing data using BI tools allows companies to connect to and query data repositories. Using them, businesses can create visualisations and dashboards that are easy to understand. In more advanced BI systems, users can customise the query or they can specify a query language. With well-written queries, it is easy to access accurate and relevant information that allows better business choices.

Related: SQL Query Interview Questions For Freshers And Experienced Candidates (With Sample Answers)

Use of business intelligence

Several sectors use business intelligence. Some of them include:

Marketing

Business intelligence allows an organisation's marketing team to develop more effective campaigns with a higher return on investment by analysing data from past and current campaigns. Using BI, marketers can gain a deeper understanding of clients' attitudes and use trends to design better marketing campaigns, target the right audiences and generate profits. In addition, businesses can leverage the data generated by social media platforms by using BI tools and integrating them with their customer relationship management (CRM) system.

Using predictive analytics, companies can also identify likely outcomes for the coming weeks and months by assessing trends and receiving data. Businesses can leverage BI platforms to determine future outcomes for their campaigns and decide which approaches to employ for maximum success with the help of machine learning (ML).

Related: What Is Machine Learning? (Skills, Jobs And Salaries)

Healthcare

While ensuring compliance with regulations and standards, business intelligence can help healthcare providers improve patient safety and outcomes while reducing costs and increasing revenue. BI allows healthcare providers to identify highly profitable and under-utilised services, track cash flow and create compliance reports. In addition, it improves patient care by improving the quality of healthcare, allowing doctors to predict and monitor patient diagnoses in real-time.

Sales

The use of business intelligence in sales allows marketers to track top-line and underperforming products and gauge the impact of marketing channels on conversions. BI solutions also provide companies with insights into sales gaps, which product groups are selling and which are not. In addition to determining growth areas and addressing sales gaps, a BI software can provide critical information for growth.

Finance

Chief finance officers (CFOs) and other financial professionals can improve strategic planning and decision-making with the help of business intelligence. BI helps track and identify quarterly and annual budgets, prevent serious business problems before they arise and improve the financial health of a company. Analysing operational processes with BI solutions lowers ongoing costs and maximises existing resources and expertise. By leveraging BI solutions, organisations can track income streams to identify which products and services are profitable.

Benefits of business intelligence

Here are some of the benefits of business intelligence:

Transform data into action

Business intelligence tools can help organisations learn how to predict future trends and patterns in the market and improve their decision-making. Companies can leverage BI tools to analyse data from websites and other sources and determine trends for use in their marketing strategies. This type of analysis can also help enterprises understand their own processes better. The information can help them identify new paths for a brighter future. In addition to providing companies with the right information and insight, BI also enables them to determine which actions to take.

Better understanding of business operations

Companies can understand their customers better by analysing user insights and buying patterns with the help of business intelligence. With the help of segmentation, for instance, it is possible to create a better product offering and user experience. Therefore, BI creates favourable conditions for both the business and its end-users.

Measure the effectiveness of marketing campaigns

Creating marketing campaigns for business takes time, money and effort, which can help get a better return on investment with BI. The effectiveness of a marketing campaign can be difficult to assess, especially when using traditional marketing strategies. Businesses can design and monitor effective marketing and promotional campaigns using business intelligence technology, which provides real-time insights into how customers respond to marketing and promotional campaigns. They can focus their efforts on campaigns that are producing ROI and discontinue campaigns that are not generating desired results.

Competitive advantage

Through business intelligence platforms, companies can learn what their competitors are doing and decide how to proceed, which gives them a competitive advantage. Companies that monitor their internal systems stay ahead of those that do not. BI tools can help with budgeting, planning and forecasting, which are powerful ways for businesses to stay competitive. Furthermore, businesses can learn how to differentiate products and services by tracking their competitors' sales and marketing performance.

Risk reduction

Organisations can leverage actionable data to mitigate risk in a number of areas using business intelligence. It is possible for institutions to detect and reduce fraudulent activities, such as credit card fraud, by tracking customer transaction histories. Another benefit that BI can provide is the ability to estimate the risk of customer loans based on various criteria, such as the borrower's earning potential and current financial assets when factoring in new data sets. Also, companies can use BI tools to analyse credit portfolios, detect potential debt collection cases early and take proactive measures to prevent them.

Increase revenue

Having the ability to extract important facts from operational data, such as social media statistics, and acting on them quickly can be very profitable for organisations. It is easier to predict future revenue and sales when they have access to all their historical sales patterns in one place. Most companies have access to the business intelligence tools needed for such data analysis.

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