What is Business Intelligence
Business Intelligence (BI) refers to technologies, applications and practices for the collection, integration, analysis, and presentation of business information. The purpose of Business Intelligence is to support better business decision making. The primary objective is to ensure:
- accurate data input
- accurate data integration
- accurate data analysis
- decision-makers within a business have real time information to help them make well-informed decisions regarding the operations of their businesses
Imagine millions of people all around the globe having access to, and using, technology to buy goods and/or services online. Sometimes they buy more than one product or service at a time. Now, for businesses, this is vital information to have. They want to analyze what products are bought together. In other words, what is the consumer trend at this point in time. But how do they actually get this information? They create a BI system to help them analyze all this data.
You might have heard the word algorithm been used before. An algorithm is a process or set of rules to be followed in calculations or other problem-solving operations, especially by a computer. So, companies create certain algorithms which enables them to have the information they are looking for. This information is consolidated on a centralized server (large hardware space), and then reports are 'spewed' out, so as to give the decision makers the necessary information they need to ensure continued profitability of their companies.
To be honest, it can be truly frightening if you knew just how much your data is being accessed by outside sources. (Cautionary note - do you want a wise investment for yourself? Purchase a VPN. A VPN stands for a virtual private network. This VPN extends a private network across a public network and enables users to send and receive data across shared or public networks in a safe and protected way.)
A good example of how to collect information for a BI system, is a point of sales item. Let's say you go into a store and purchase a certain item. When the sales lady rings this up on the till, this information is automatically forwarded to a centralized system, thus being able to record how many of these products have been purchased. This allows the retailer to perhaps reposition certain products in the retail outlet, or which products to buy more of and which product range to perhaps discontinue. Can you see the importance of information now?
Knowledge and information is power, and it could be the cutting edge that keeps you one step ahead of your competitor.
There are, however, certain variations in complexities when it comes to Business Intelligence.
Large corporations can afford to spend millions of dollars to create a BI database that runs effectively across the globe, whilst small start-ups can even manage this from using their own internal systems. This will be discussed in more detail in a later section.
Businesses need to ensure that their return on investment (ROI) outweighs the cost (money, time, resources) of setting up a successful BI system.
Simply put, BI is taking the most critical information in your business and putting it in a centralized system, this will allow you to see, both on a micro and macro perspective, the current trends and performance of your business. This will help you make better decisions when it comes to forecasting your future predictions for your business - but by using sound and accurate information.