Business intelligence (BI) is a term that gets thrown around a lot in the business world, but what does it really mean?
First of all, BI isn't just a pile of information, it's actually a whole set of theories and processes that help professionals sort through and analyze the information they collect.
A lot of information passes through a company's internal network, but this information must be organized and presented in a relevant, contextualized way before it is useful in the decision-making processes of an organization.
Good BI is instrumental in making businesses successful. The information gathered and sorted by BI analysts helps companies better understand their history, where they stand and how they might grow in the future.
Software and tools
Most companies use a range of software and tools — collectively known as an enterprise resource planning (ERP) system — to process and manage information as it passes through each department.
The information gathered by the ERP system is gathered in a company's database, which is usually housed in a data warehouse. BI analysts use a range of tools and software to access the information stored in the data warehouse.
Databases are usually accessed through what's known as a BI portal, which is simply a user-friendly interface connected to the database. Through the BI portal and its accompanying software tools, analysts perform queries, create reports, analyze data and create forecasts.
Most BI software includes three basic tools: data extraction, data architecture and query development.
Data extraction is facilitated by an extract, transform and load (ETL) tool, which selects data that matches the criteria determined by analysts.
When analysts aren't extracting data, they may be organizing it using data architecture tools. Such tools help analysts reorganize the ways in which data is stored so that it will be more useful to the company.
Query development tools help analysts interact with data by translating queries into a language that a database can understand. Most databases in the United States use Structured Query Language (SQL), a special programming language.
There are a lot of different options for BI tools and software packages, but none of them would be of much use to companies without the know-how of BI analysts. These analysts are the link between the information on a computer screen and a company's decision makers.
BI analysts typically work in the IT department of a company, where they use the tools at their disposal to sort data and generate reports. Most analysts have a background in statistics or data management and exhibit superior computer skills.
The data analyzed varies depending on the company an analyst work for, but a BI analyst at a retail company, for example, may deal with information regarding inventory, sales and customers.
BI analysts may perform specific queries against the database on a daily, weekly or monthly basis. They may also be asked by managers to generate ad hoc reports with the use of custom queries.
Business intelligence vs. market intelligence
Business intelligence helps a company's leaders improve internal processes and make sound decisions. But not all the information a company collects has to do with what's going on inside the business.
Information regarding the competition, as well as data collected from distributors and clients is used to form the basis of what's known as market intelligence.
Market intelligence, which often includes marketing research, can help companies put BI in context.
Where should a company devote more resources? Which markets should it try to infiltrate next? These are some of the questions that market intelligence analysts try to answer.