“Without big data, you are blind and deaf and in the middle of a freeway.” – Geoffrey Moore, management consultant, and author
In a world dominated by data, it’s more important than ever for businesses to understand how to extract every drop of value from the raft of digital insights available at their fingertips.
According to Better Buys, 85% of business leaders feel that using big data to their advantage will significantly improve the way they run their companies – and they’re not wrong.
By gaining the ability to understand which datasets are relevant to particular goals, strategies, and initiatives in your organization, you’ll be able to identify trends or patterns that will help you make significant improvements in a number of key areas within the organization. This concept is known as business intelligence.
Business intelligence, or “BI” for short, is becoming increasingly prevalent across industries each year. But with business intelligence concepts comes a great deal of confusion, and ultimately – unnecessary industry jargon. Such jargon leads to business intelligence buzzwords that can dilute the meaning of important information.
With our introduction to business intelligence, we’re going to dispel the myths surrounding BI, explore the core business intelligence concepts, cover the BI basics, and drill down into a mix of real-life business intelligence examples and use cases.
Introduction To Business Intelligence Concepts
Business intelligence concepts refer to the usage of digital computing technologies in the form of data warehouses, analytics and visualization with the aim of identifying and analyzing essential business-based data to generate new, actionable corporate insights.
BI technologies offer present (real-time), historical, and predictive views of internally structured data relating to all departments within an organization, which exponentially enhances operational insight and improves the decision-making process.
Put simply: Business intelligence is the process of discovering valuable trends or patterns in data to make more efficient, accurate decisions related to your business goals, aims, and strategies.
As pattern recognition is a decisive part of BI, artificial intelligence in business intelligence plays a pivotal role in the process. When approached correctly, pattern recognition is one of the key hallmarks that distinguishes BI experts from BI amateurs. By helping users to discover integral insights autonomously, AI technologies assist tremendously in pattern recognition, making the process more intuitive, more streamlined, and ultimately – more accurate.
A host of business intelligence concepts are executed through intuitive, interactive tools and dashboards – a centralized space that provides the ability to drill down into your data with ease. But more on that later.
Next up, let’s consider how business intelligence concepts relate to the inner workings of the human brain.
The Two Types of Decision-Making In Our Brain
Chess prodigy Joshua Waitzkin writes about this distinction in The Art of Learning: A Journey in the Pursuit of Excellence. In his book, Waitzkin states that the best chess players are those that can take in the most information in a short span of time. They do so using the “fast thinking” system of their brain.
Let us explain. As laid out by the Nobel winning psychologist Daniel Kahneman in his book Thinking, Fast and Slow, your brain has two different learning and decision making systems:
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1. Slow But Accurate
You have a slow thinking system which you can think of as a spotlight of attention. You use this system when you really focus on and think about a problem step by step. This slow thinking system is very accurate. However, it can only process so much information at any one time and requires a lot of energy.
Many of us don’t use our slow thinking system for most decisions. Instead, we use our fast system, otherwise known as our intuition.
2. Fast But Error-Prone
Your fast thinking system can take in massive amounts of data at once. It can also make snap decisions very quickly, with pretty high accuracy. However, your fast thinking system has one big disadvantage. It is prone to logical fallacies and perceptual biases.
If your slow thinking system is like a spotlight, your fast thinking system is like the area of a picture that isn’t in focus. You don’t have to burn much energy to use it, but you don’t see things as clearly as you do with your slow thinking system.
The capabilities of your slow thinking system, or your spotlight of awareness, don’t seem to change very much as you gain expertise.
Similarly to how most people can only hold so many digits in their short term memory at once, your slow thinking system appears to have some biological limits.
Experts Have Better Pattern Recognition
At this point, you may be thinking, “This is all well and good, but how does it relate to expertise and business intelligence?” The key point here is that experts in a field are able to recognize and use vastly more information at once using their fast-thinking system than amateurs can.
As Waitzkin writes about it in “The Art of Learning,” a chess grandmaster can look at a board for a split second, and take in more useful information than an amateur can in minutes. Due to this greater informational processing ability, experts are able to use their slow thinking spotlight where it counts: on critical thinking and checking their biases.
You can view business intelligence as an extremely powerful data discovery tool that is an extension of your fast thinking mind.
This makes sense because business intelligence allows you to process exponentially more information than you would be able to otherwise. While you still need to do your homework and check everything using critical thinking, if you use business intelligence correctly, you’ll have an incredible competitive advantage over the other companies in your market.
Why Are Business Intelligence Concepts And BI Solutions So Important Today?
The importance of business intelligence is growing at the same pace the data is produced – which is becoming less and less fathomable for the normal human brain.
As mentioned: We live in a world rife with digital data, and without using it to your advantage, you will quickly fall behind the pack, which will render your empire obsolete in a matter of years.
But as powerful as digital data is for decision-making and improved business efficiency, it’s only advantageous if you know how to handle it the right way. That’s where today’s BI concepts come in.
To highlight the importance of business intelligence concepts in the modern age, here are the key benefits of embracing the power of BI:
1. They prevent you from drowning in data
The fact is, without business intelligence, you risk the very real possibility of drowning in data. Just look at these numbers: according to CloudTweaks, in 2015 there were 2.5 quintillion bytes of data produced daily. Do you know how much a quintillion is? It’s a 2.5 followed by 18 zeros. We have already entered the Zettabyte era, also mentioned as one of our tech buzzwords for 2019, and, for scale, in 2012, the entire Internet only contained ½ of one zettabyte in data.
How’s that for exponential growth?
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Depending on how you see it, this incredible amount of data is either a huge headache or the world’s greatest opportunity. On the one hand, there’s more possible useful information points out there than ever before. But, on the other hand, there’s much more noise standing in the way of you finding that useful signal than ever before.
2. They provide a wealth of insights
By utilizing BI concepts and solutions for your business, you’ll be able to extract a wealth of insights that will help improve interdepartmental and external communications, problem-solving processes, online data analysis, financial efficiency, goal-setting, marketing, and profitability.
3. Benchmarking is more accurate
By working with BI-based key performance indicators (KPIs), you’ll gain the ability to set actionable goals. In turn, this will accelerate your overall success by helping you to formulate strategies more effectively and work towards essential benchmarks more efficiently. By choosing and setting the right KPI template for your business, you will be able to evaluate your goals and progress on a deeper and more accurate level.
4. You can predict your business future
Another key concept of business intelligence is the ability to predict future trends. The digestible patterns and information served up by online BI tools and solutions offer a viable means of predicting future outcomes and putting plans in place to either prevent calamities from occurring or take advantage of potential trends before your competitors.
5. They enable powerful data visualization
If you’re able to visualize your data with the help of online data visualization, making it digestible to the human eye, you’ll be able to tell a story with your insights and communicate your discoveries to others more effectively. Doing so will boost the success of your organization, making it more powerful than ever before. And BI solutions will help you do just that.
Business intelligence basics are crucial. They’re needed to cut through the noise, and get to the good stuff in the sea of data we all live in.
Now that you know the importance of it, and its primary benefits in the digital age, let’s break down the key components of a contemporary BI solution.
What Are The Concepts Of Business Intelligence?
If you ask a BI professional about the core of business intelligence concepts, they’re likely to break them down into specific segments or layers. However, for the purpose of this article, we will explain the 4 basic components within business intelligence:
- The data itself (raw data)
- The data warehouse
- Data access, analytics, and presentation
- Data dashboarding and reporting
1) The raw data
The first component of an integral BI solution is the data itself. This data could be anything like sales records for the year, the keywords implemented in your latest advertising program, salary and benefit tables, or profit and loss statements.
A company’s data is typically stored across a host of databases, depending on how each specific data set is collected (through CRMs, ERPs, flat files, APIs, etc.). As a result of this fragmentation, today’s BI solutions are developed with various data connectors that let users consolidate all of their databases into one centralized data warehouse, allowing them to work on each insight conjointly and enhancing cross-database analysis.
2) The data warehouse
As mentioned, the data storage warehouse is the logistics platform that connects all of your different databases together and allows you to create relationships between them. This is an area that has seen great advances recently with the introduction of cloud-based BI tools.
The legacy approach to a data warehouse was often a mishmash of different Excel sheets, old mainframe style databases that had to be accessed by technicians, paper-based records, and proprietary program databases.
After realizing how difficult it was to make use of all of these scattered data sources, people began to integrate databases through the use of warehouses and systems. Modern systems are also superior to the legacy systems in that they often update in real time, as opposed to having to be manually updated – a process which often required the IT department.
3) Data access, analytics, and presentation
Once all of your data is connected and can ‘talk to each other,’ one of the next key business intelligence concepts is to make use of that data. This involves accessing the data, analyzing it for important trends, and presenting it in a way that is immediately understandable.
These steps can often blend together, especially if you use interactive dashboards that let you zoom in and out of your data according to your business need. Data presentation has also come a long way since the Excel days. Now there are beautiful, intuitive dashboard examples that can give you the information you need at a glance.
4) Data dashboarding and reporting
Building on our previous point, the fourth and perhaps most pivotal component of an interactive dashboard is the ability to continuously track, monitor, and report your data.
By having access to a flexible, customizable, data-driven online dashboard, you can to set targets, identify patterns, spot trends, and uncover insights that foster growth and improvement. Though initiative functionality and seamless data visualization, it’s also possible to share your discoveries with others within the organization in a way that’s inclusive as well as digestible.
Moreover, today’s BI-based dashboard reporting is portable, meaning that it’s possible to log in, analyze data, and share information wherever you may be in the world, 24/7, on a multitude of devices.
It’s clear that these 4 concepts of business intelligence are a recipe for data-driven success. Now let’s look at how to apply them in a real-world context.
How To Apply BI Concepts In Real World?
As you read earlier, business intelligence basics essentially upgrade your ability to see useful trends and patterns related to your business and the marketplace. Business Intelligence concepts allow you to make use of the “80-20 principle,” which states that 80% of your results in any field come from 20% of your actions.
To make the most out of it, there is an important dimension to disclose: data visualization. Visualizing the mountains of data you deal with is essential to understanding it. For this reason, you should apply some dashboard design principles to the overall BI basics we’ve covered in this guide.
1. Shorten your sales cycle length
Using sales analytics, you can see which of your sales reps are performing the best. You can then dig deeper into why their performance is better than their colleagues’, and see what you can do to replicate their success on a wider scale.
With a sales dashboard like the following one, we can clearly analyze the sales cycle length at each step of the funnel, and compare each manager’s performance:
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2. Identify your customers’ behaviors
You can examine which of your customer acquisition channels is currently driving the most revenue. You can also analyze which of your customer acquisition channels is giving you your best customers — the ones that pay on time and refer you new business.
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For instance, a retail store dashboard like the one above will greatly help the manager in knowing his/her customers’ behavior. Breaking down the sales volume by division shows that women’s articles are the main source of revenue; breaking them down by location shows the performance of each city. All of this will help in designing specific marketing campaigns according to the target, or if they need to compare two points of sales when implementing A/B testing campaigns, in order to acquire new customers more efficiently.
3. Plan successful marketing activities
Using a combination of marketing analytics and predictive analytics, you can identify your most efficient campaigns and the common factors they share. On the web analytics dashboard below, you get an idea of how your online presence is going, the different channel acquisition you should keep an eye on and how your different campaigns are performing, according to your goals.
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You can then use this information to plan your next marketing initiative and make it as likely to succeed as possible.
4. Improve your customer experience processes
In the age of information, customer service and customer experience (CX) are among the most important factors in ongoing growth and success. Getting them right consistently is vital.
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BI solutions like our customer service dashboard offer a mix of pivotal insights geared towards meeting or exceeding your customers’ expectations on a regular basis. By working with focused customer service KPIs, including average response time and top agents, this dashboard offers insights to boost your customer-facing efforts as well as your internal training and development initiatives. This makes it a definitive means of fostering consistency, excellence, and customer-centric innovation at all times.
5. Control your entire procurement operation
Industry or sector aside, procurement is the logistical heart of almost every businesses daily operations, and it extends further than tangible stock or goods alone. In today’s climate, procurement also covers services including third-party vendors, freelancers, and agencies.
There are various procurement KPIs, but keeping them fluent, cohesive, efficient, and consistent is key to your success – if one domino in the chain falls, so will most of the others. To keep your procurement efforts ticking over as successfully as possible, applying BI concepts to your strategy is essential.
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Our procurement dashboard offers a scannable comprehensive overview of your entire operation, providing insights that will help fortify weaknesses, manage relationships, and save time as well as money – another testament to the power of BI solutions.
6. Upscale your IT project management
As a direct result of digital transformation, the role of the IT department is more extensive – and pressured – than ever before.
To offer an exemplary level of internal support; manage patches, assets, and servers; troubleshoot potential issues; and ensure projects are delivered to their optimum capacity (and on time), taking a BI approach is crucial.
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The IT dashboard featured above offers all of the BI basics, plus a mix of tailored IT KPIs, to help manage and improve even the most stretched of IT departments. By working with an IT-based dashboard, you stand to tackle regular issues, deliver projects, and manage your infrastructure more effectively, which will have an incredibly positive impact on your entire organization.
This introduction to business intelligence basics proves that in today’s data-driven world, companies and individuals that can sift through the noise to unearth signals of real importance will rise far above the competition. BI concepts provide a form of advanced pattern recognition to the savvy individuals and businesses who are looking for cutting-edge competitive advantages.
In summary, BI helps you to understand your marketplace, your customers, your competitors, and your business so that you can make the most effective decisions.
So don’t miss the train, and hop on the BI bandwagon with datapine’s 14-day free trial!