The earliest use of the term business intelligence (BI) was in the 19th century by Richard Millar Devens. He used the term to describe a banker who had benefited from gathering and utilizing information ahead of his competitors. More recently and prominently, the term was used by IBM researcher Hans Peter Luhn in 1958 to describe the potential of gathering meaningful information through technology. Luhn defined business intelligence as the ability to analyze and understand the relationship between facts to guide actions aimed at achieving the desired goal. He is popularly known as the father of BI, and his ideas became the foundation of some IBM analytical systems. Later, Howard Dresner proposed the term BI to be used to describe methods and concepts of making business decisions based support system facts.
What is Business Intelligence?
Today’s business environment has become extremely competitive. Moreover, data has become a significant competitive tool for businesses. Business intelligence (BI) refers to the variety of tools and applications used to collect and analyze data from both internal and external activities of a business to aid in decision making. The concept grew out of the conviction that most managers and business owners rely on unnecessary and inaccurate information to make business decisions. Although BI has existence for many years, it is not until recently that most organizations have started deeply engaging and exploring the concept.
The BI concept should seek to improve accuracy, timelines and the data collected to serve the intended purpose. In most cases, businesses have data that is either unstructured or semi-structured, making it difficult for analysis. Therefore, BI tools must provide better ways of capturing data, checking for errors and restructuring information to facilitate a more extensive analysis. Although BI solutions have evolved in the recent past, there is still a need for more development.
The Role of Business Intelligence
The primary purpose of business intelligence is to facilitate decision making in the business. BI provides managers and business owners with real-time information in regards to core processes of the business such as market trends, customer behavior, inventory, etc. The information is synthesized and analyzed to provide actionable and strategic insights. Below are some of the roles of BI in the business:
- Reporting - Reporting is one of the main functions of the BI tools. The tools are required to create reports that are standard, efficient and easy to use. The reports can either be generated automatically or by the request of the end-user.
- Dashboards - The dashboard mainly displays data reports in the form of graphics, charts and other illustrations that simplify complex information. Furthermore, the dashboard provides various levels of interactions aimed to achieve more insights.
- Analysis - The BI system analyzes the raw data to provide consolidated information and trends. The system has functions that hide the complexity of data interpretation to only provide the user with meaningful insights.
Benefits of Business Intelligence
There are many benefits to properly taking advantage of business intelligence. More and more companies are recognizing this fact and looking to take advantage of the following:
- Fact-based decision making - Once business intelligence tools are integrated into the organization, managers can get the details of the current data and other necessary aspects of the business. The synthesized information helps management make better decisions based on facts rather than guesswork. For instance, management can decide on the operations to concentrate on and which to discontinue.
- Improves sales - Initially, it took two or more days to generate reports. However, BI tools provide up-to-date reports that identify areas that require improvement to enhance sales. For instance, it can indicate an upgrade of the current customer service platform. Also, detailed data helps in the negotiation with the vendors and other suppliers.
- Eliminate waste - A business intelligence system can help to discover areas that do not add value to the business. Since BI works as a single system, it can analyze various areas of the company to identify wasted resources and inefficiency.
- Better insight on operations - Business intelligence enables the business to access its strength and weaknesses. For instance, it can help to assess reasons for customers’ dissatisfaction before sales are affected. Also, BI can help to identify market trends and conditions and enable managers to respond quickly to opportunities.