Business intelligence refers to the modern method of translating raw data from different systems into useful business information. Business intelligence is a key part of the strategic planning process because decision makers can access and analyze valuable market, customer and company data. The goal of business intelligence is to interpret massive amounts of data to identify new opportunities, create actionable goals and gain competitive market advantages.
Business Intelligence Basics
Business intelligence is often used for very specific purposes regarding things such as sales, goals and marketing campaigns. For example, product pricing decisions can be made through in-depth business intelligence analysis of relevant historical data. However, business intelligence is most effective when it combines both internal data, such as operational or financial information, with external data, such as customer demographics. Business intelligence is typically applied to certain business concepts, such as analytics, data mining and big data.
Business Intelligence and Analytics
The goal of analytics is to explore and discover significant data patterns. Analytics uses statistical software programs to evaluate, improve and predict business performance and processes. This includes predictive analytics, which forecasts future events based on historic trends, and web analytics, which measures web usage. In fact, modern market research is now shifting to focus on web traffic an understanding how users engage websites. Web analytics identify web traffic patterns and online consumer behaviors, such as how much time is spent on certain pages. Business intelligence analytics is used within the retail industry to optimize stock levels and analyze consumer behaviors. Finally, many restaurants rely on analytics in order to decide which new products to offer in menus and which underperforming stores to close.
Business Intelligence and Data Mining
Data mining is now a standard business practice for many companies, especially those engaged in e-commerce. The goal of data mining is to extract valuable information from databases in order to understand consumer and market behaviors. For example, retailers can analyze their point-of-sale transactions in order to understand current sales trends so they can create effective future marketing campaigns. Specifically, data mining can help create effective marketing campaigns through analyzing target demographic groups.
Business Intelligence and Big Data
According to Forbes magazine, big data is an excellent source of actionable intelligence. Big data involves using complex software programs to analyze massive amounts of unstructured data to identify patterns. For example, insurance companies now can collectively analyze client data, which was previously unavailable, in order to offer competitive, customized rates to clients. Historically speaking, insurance companies relied on traditional sources of client information, such as demographic data and driving records. However, now insurance companies can use big data tools to analyze new information in order to provide individualized, highly accurate rates.
Data Warehouses
Business intelligence depends on data stored in databases or data warehouses. These centralized systems store data from different sources and provide universal access. However, there are different types of systems, such as simple data marts that contain data for a single department. Software programs are needed to extract relevant data for transformation into useable business intelligence. Data warehouses maintain data history, integrate data from multiple sources and increase data quality and consistency.
Related Resource: Become a Business Analyst
To wrap up, many businesses rely on business intelligence tools and techniques to make strategic operational decisions. Business intelligence will continue to grow in importance as more companies shift to online platforms and more consumers rely on technology to shop and engage companies.
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