What is Business Intelligence?

By Sanjay Srivastava
Updated: May 15, 2012

What is Business Intelligence?

If you are running a business and it has been in existence for some time, you will most likely have collected a large quantity of data about the business, its clients, its suppliers and its competitors – sometimes without even realizing it. You should have data about purchases and sales, client preferences and complaints, about failure patterns and inventory movement cycles, funding and credit needs and every other aspect of the business.

Whether this data is stored on a computer or in dusty files, there is a treasure trove of business knowledge hidden inside it.  Extracted, analyzed and summarized correctly, the data can show trends, make predictions and suggest courses of action. It can be used as a strategic tool and a powerful differentiator for your business. In many disciplines such as marketing and advertising, it is common to use this kind of data, study it and act on it. Only in recent years have other business areas woken up to the value of this analysis.

This then, is the domain of Business Intelligence (BI).

BI Must Add to the Bottom Line

In the final analysis, BI is about adding to the top and bottom line of the company. BI does not exist to make things easier or for other parts of the company to work or collaborate or share or record data. BI exists only so that the company is able to make strategically better decisions and improve its revenues. Seen in this light, BI has very little to do with the IT departments of companies. Business Intelligence uses IT as a tool to undertake better research and analysis and create strategic value for the company.

With every aspect of businesses now going digital, extraction of Business Intelligence has become much easier, faster and much more fruitful.

Capabilities and Market Size

Any Business Intelligence solution supports certain key capabilities. These cover enterprise wide reporting, querying, online analytical processing functions such as data consolidation, drill down (the opposite of consolidation), slicing and dicing data and creating multiple visualizations.  While the software itself may appear easy to use and manipulate, the fact remains that Business Analysis is a professional job and it requires a skilled individual to derive true value from the data.

The market for BI products has been growing rapidly. It had already reached $10.5 billion by 2010 and rose 16% to reach $12.2 billion in 2011.  Five players dominate the market. These are SAP (24% market share), Oracle (15.6%), SAS Institute (12.6%), IBM (12.1%) and Microsoft (8.7%). The remainder is made up by a number of smaller players in the market. IBM is growing the fastest averaging nearly 21% annually.

The Many Domains of BI

Business Intelligence is active in many different domains. These can range from measuring performance metrics of companies to analytics, BI modules in ERP suites and as part of reporting platforms. There are also several collaboration suites and knowledge management platforms that contribute to business management. Since the requirements of domains are different, there is seldom a one size fits all solution to BI. Customization is obviously an important aspect of BI solutions.

All of this growth and the future are dependent on Business Intelligence delivering more than simple and obvious answers. BI has to deliver strategic answers. In the words of SAS Chief Marketing Officer Jim Davis, “people are not interested in buying a technology as much as they are in buying a solution”.

A new trend in the BI marketplace is to use SaaS as a standard delivery model for business intelligence software. This also implies that companies will have to develop implicit trust in the SaaS service provider before they can trust them with their critical data. Aggregators who provide these services will slowly develop into vertical niche areas because their insights and experience in a particular domain will help them make better and more valuable analysis.

Modern business needs also recognize that the user of the BI product will not be restricted to his desktop to access BI output. He would expect to access the data on his smartphone, tablet or laptop while moving, and take appropriate decisions. These decisions would be fed back into the company’s information management and control systems. Therefore the BI system must cater to this requirement and support the modern day business user.

Social media is also becoming an important component of the information available to a company. Social media inputs that provide a stream of data on business trends, customer feedback, user group requirements and sentiment are also factored into the BI solution as an important source of input.

Database Issues

Companies are discovering that very restrictive data collection policies reduce the spectrum of data that a BI platform can use. Therefore, most BI software platforms allow for using a wide spectrum of data but assign a confidence level to the accuracy of the data they use. If a user is looking for regulatory compliance, naturally they will select only that data in which they have very high confidence level, whereas for an application that gauges the likely market acceptability of a new product, a wider cross section of market sentiment and social media inputs form an acceptable range of inputs for BI.

Dashboards and user Interfaces

Most users of BI systems will not be software experts. But real value only emerges when the actual end user of a system interacts with its output and examines the solutions from various different viewpoints that emerge from his experience. This brings up the need for a well designed, extremely intuitive user interface.  The user interface must support sharing and collaboration so that several persons can work together and take the right decisions.

Well designed and implemented Business Intelligence tools can make a major difference to the competitiveness of a company. In the constant quest to improve the bottom line and market share, BI is proving to be an invaluable tool.

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