What is Business Intelligence?
Business Intelligence (BI) is the set of methodologies, applications, practices and capabilities focused on the creation and management of information to make better decisions to the users in an organization.
Business Intelligence (BI) is a set of tools and applications for aid to decision making that facilitate interactive access, analysis and manipulation of mission-critical corporate information. These applications contribute to a valuable insight into operational information identifying problems and opportunities.
With these, users are able to have access to large volumes of information to establish and analyze relationships and understand trends which later will support business decisions.
Who coined the term Business Intelligence?
Business Intelligence or BI is not a new concept. Hans Peter Luhn (researcher at IBM), coined this term in 1958 in one of his article “A Business Intelligence System”, in which he provides the following definition: “the ability to learn the relationships of facts presented in a way that guides the actions toward a desired goal”
But until 1989, Howard Dresden (Gartner analyst) proposes a more formal definition of BI, which is “concepts and methods to improve business decisions through the use of support systems based on facts.”
How did Business Intelligence evolve?
Obviously, the concept about Business intelligence has evolved over the years to a more formal concept which is used at present.
The world of information has increased the need for optimal, fast and efficient methods to “extract and transform data from one organization and distribute information throughout the value chain” (it is a theoretical model to describe the activities that generate value in an organization).
Business Intelligence covers this need; that is why, at first instance, we can say that it is an evolution of the “systems of support for decisions”.
What does Business Intelligence system serve?
BI serves to:
1. Enlarge the strategic vision, reduce risk and uncertainty in decisions making and build long-term competitive advantages based on its intelligent information
2. Have a continuous improvement of the organization, thanks to timely information generates the knowledge that enriches decision making.
3. Organizations to be proactive and nimble in the management of the information that is used.
Business Intelligence system and the Business Management
The term Business Intelligence (BI), recognizes the value of providing facts and information to support decision-making within an organization.
The business intelligence processes have become an essential part of business management because they provide us with information of great importance for an organization:
It helps us know exactly
- Who are our customers?
- How are the customers?
- What are the behavior patterns of our customers?
- What do customers want?
Business intelligence system also provide insight of the functioning of internal processes of an organization. They provide answers to important questions like:
- How much does each of the products or services that the company offers cost?
- Which of these products or services are really profitable?
- Where does the company lose?
- How much does it cost to each customer?
- What departments of the company is functioning properly?
- What services can you outsource for the company?
Business Intelligence system is a source of innovation. Therefore is more accessible to all types of companies or organizations. Today any organization is able to provide themselves with systems to store and analyze information in order to learn intelligent knowledge for their business.
Business Intelligence system is more than a simple technology or a new way for business management. In reality it is a new innovative scenario, where the company:
- Seeks excellence by defining the goals that you want to achieve
- Analyzes their procedures
- Manage information
- obtain knowledge
- Make the best decisions
- Evaluate their results
- It is constantly renewed
Why invest in business intelligence?
There are numerous factors that decides why a company should invest in business intelligence. The most important of them are:
1. Business Intelligence increase revenue, reduce costs, compete effectively. It should help companies achieve a comprehensive and timely view of information, providing knowledge for effective decision making.
2. The BI should help companies organize their data for easy analysis and processing, to discover patterns of behavior and trends that are difficult to detect.
3. The BI should assist organizations to make intensive use of investment in information technologies already existing, adding more value to integrate and analyze the data stored in operational systems.
Benefits of Business Intelligence system
Business intelligence system provide the following advantages:
1. An integrated technology platform that would add to the investments already made by an organization, to provide high quality information to each computer or server in every department of a company, adding value at every step of the process and providing a unique version of the reality.
2. Comprehensive and enhanced access to the capabilities of analysis already known, help you to know the past performance of an organization to control and communicate the present and predict the future with reliability.
3. Custom user interfaces that “adapted to each task”, conceived and designed for all levels of experience and usage patterns of users of information (such as experts, executives, managers, technologists, etc.).
4. A range of solutions to meet the demand for information and generation of reports from different sectors of activity (financial services, manufacturing, telecommunications, health, etc.) and the entire company (corporate performance management, customer intelligence, financial intelligence, human capital management, understanding the supply chain, etc.)
In conclusion, a Business Intelligence system must carry the intelligence operations of an organization (business performance, customers, financial, human capital, supply chain, etc.) to the next level, by putting intelligence in the hands of greatest possible number of expert users, executives, managers, technologists, etc.) throughout the organization, in a more efficient manner and at a lower cost.
Benefits of Implementing information system in business intelligence
The implementation of information systems in business intelligence, provides several benefits:
1. Creates a “circle of information”, ie, the data is transformed into information that generates knowledge which allows to make the best decisions and this translates to better outcomes and as a result new data are generated.
2. Provides updated information.
3. Reduce the difference in orientation of business between the department and the organization.
4. Improves understanding and documentation of information systems throughout the organization.