The term “business intelligence”, rather like “big data”, “anaylitices”, or “data science”, is very popular in blog posts, on resumes, and in business conversations. It is also frequently misunderstood by most people who are outside the professional data field. So what does it mean, and more importantly, what does it mean for your business?
Let’s start with a definition: Business intelligence (BI) is the set of techniques and tools for the transformation of raw data into meaningful and useful information for business analysis purposes.
All clear? No?
Okay, let’s try something a bit more “plain English”. In Business Intelligence, we collect and analyze data from within and outside your business. Why? Data from the past can be very instructive about the future, and how your business should face that future. And you do this all the time. When your company is working on the budget for the next fiscal year, what is one of the first sets of data you analyze? The current and previous fiscal year data, of course! While these numbers are not alone predictive, they provide insight into the future expenses and revenues your business can plan on. Add to that your sales pipeline data from your CRM, and you may get a more accurate picture of future revenue. Are you planning to expand your sale force? You can analyze the average performance of your current sales reps to predict what an additional rep will mean for your bottom line.
The same is true on the expense side. You can use your current and past expenses to understand what trends may be in different categories. Add to that information from your payroll company (e.g. new taxes and fees), your benefits administrator, your IT or telecom vendors, and your office supply firms and you can more accurately predict the future outflow of cash from your company.
But it doesn’t stop there. You can use market data to understand trends in your business sector. You can analyze your marketing (including online marketing) efforts to determine whether your dollars are being well used, or wasted. You can manipulate or “crunch” all sorts of information to provide you with informed intelligence to use in leading your organization. Many small and even medium sized businesses use only the most rudimentary analysis of the information available to them, instead relying on a handful of measurements they may have inherited from earlier managers, old articles, or “common knowledge”.
The world of business intelligence is much broader than it was even twenty years ago, and there is more information available to the everyday business owner and manager than at any time in history.
Working with a firm who understands how to acquire and analyze information can help you to make better decisions and grow your business.