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Introduction To The Basic Business Intelligence Concepts

Learn the basic concepts of business intelligence blog post by datapine

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 several 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 for beginners, 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

Before we dive into the most important BI concepts, we need to understand what business intelligence actually is.  

In today’s fast-paced world, data analytics has become one of the most valuable competitive advantages. To be able to extract the maximum potential out of their data, organizations need to invest in the right tools and processes to make sure everything is going as planned. That is where BI comes in. So, let’s define the concept in more detail below! 

What Is Business Intelligence? 

Business intelligence refers to a set of tools and processes to help companies manage their data from the collection to the reporting stage. Through this, organizations can discover valuable trends and insights to inform their strategies and ensure continuous growth. 

No matter how big or small, all companies are gathering data in some capacity. This data can be anything from customer demographics, sales for different periods, production volumes, and inventory, among many others. In a lot of cases, this data is just sitting there hiding an immense potential waiting to be untapped. Meanwhile, decision-makers are basing their decisions on pure intuition or experience, a practice that is highly subjective and error-prone. 

BI technologies offer present (real-time), historical, and predictive views of internally structured data relating to all departments within an organization. With the level of insight provided by professional BI tools, companies don’t need to rely on intuition anymore. Instead, they can make informed decisions based on their own data, which exponentially enhances operational insight and improves organizational performance as a whole. 

It does this by providing user-friendly access to advanced analytical technologies such as data warehouses, analytics, and visualization to identify and analyze essential business-based data to generate new, actionable corporate insights. For instance, artificial intelligence in business intelligence plays a pivotal role in pattern recognition. When approached correctly, pattern recognition can provide a level of insight that can skyrocket an organization’s performance. By helping users to discover integral insights autonomously, AI technologies make the process more intuitive, more streamlined, and ultimately – more accurate. 

What makes BI so valuable for companies is its self-service nature which allows technical and non-technical users to dive into the world of data without the need for complex analytical skills. Professional BI software offers users automated capabilities for data collection and monitoring. Plus, critical data insights can be visualized and discovered using interactive graphs and charts that make the information easier to digest and navigate. This level of user-friendliness sets the groundwork for the implementation of an analytical culture across all departments and relevant stakeholders, a fundamental process to achieve successful BI. 

That being said, a successful BI implementation depends on many processes that need to be understood and carried out correctly. This leads us to the main topic of this blog post: business intelligence concepts. 

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. To help you understand how these work later on, we first need to go through a quick explanation of how BI relates to the inner workings of the human brain.

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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 period. 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:

2 systems of thinking - slow / fast

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.

scheme comparing the 2 systems of thinking fast & slow


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 can 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 can use their slow thinking spotlight where it counts: on critical thinking and checking their biases.

You can view BI as an extremely powerful data discovery tool that is an extension of your fast-thinking mind.

This makes sense because BI 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?

Business intelligence concepts and solutions importance 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 basic 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, with about 120 zettabytes of data being generated each year.  For scale, in 2010, the entire Internet only produced 2 zettabytes. How’s that for exponential growth? 

The graph below from shows this exponential growth more clearly: 

Global data generated annually graph


As you’ve probably already noticed, a zettabyte of data is a massive amount of information that is hard for the human brain to grasp. The image below shows the different sizes of data compared to material objects to help you put each of these sizes into perspective. 

illustration of the different data sizes

**Source: Adeptia**

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 are more possible useful information points out than ever. But, on the other hand, there’s much more noise standing in the way of you finding that useful signal than ever before.

BI technologies help you eliminate that noise in an efficient way to help you manage massive amounts of information and simplify it to actionable insights. Data analysis doesn’t have to be a complicated task just full of numbers. Key information can be visualized in interactive reports to easily navigate it and extract valuable conclusions. This leads us to our next point. 

2. They provide a wealth of insights

By utilizing self service BI tools 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.

The best part is, their self-service nature enables anyone in the organization to collect, monitor, and analyze data and use it to optimize their daily operations. This was not possible in the past, as all analytical tasks were segregated to the IT department leaving the rest of the departments out of the process. 

3. Benchmarking is more accurate

By working with BI-based key performance indicators (KPIs), you’ll gain the ability to set actionable goals and benchmarks based on your actual performance. 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's future

Another key benefit of the business intelligence process is the ability to predict future scenarios. 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.

They do this through the use of predictive analytics processes that offer a digestible mix of historical and real-time data enabling companies to identify trends and patterns witing their information. These insights are later turned into accurate forecasts that help organizations plan their future strategies. For example, a business can analyze historical sales data to predict specific product demand and ensure accurate levels of inventory. 

 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. 

BI solutions will help you do just that by providing highly interactive and visually pleasing dashboards. Dashboards offer a centralized view of a company’s most important KPIs to support meetings and discussions. Their visual nature makes it easier to explore the data and show relevant findings to different audiences. We will see some examples of BI dashboards for different departments later in the post. 

As you’ve learned so far, the business intelligence process is crucial for organizational success. It is 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 BI concepts and components. 

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What Are The Concepts Of Business Intelligence?

Business intelligence concepts

If you ask a BI professional about the core of business intelligence concepts and components, they’re likely to break them down into specific segments or layers. However, for the purpose of this article, we will explain the 5 basic components of business intelligence:

  1. The business 
  2. The data itself (raw data)
  3. The data warehouse
  4. Data access, analytics, and presentation
  5. Data dashboarding and reporting

1) The business 

The first, and arguably the most important, of business intelligence components is the company itself. This is important to consider as the way BI is applied will be significantly influenced by the type of business and its specific requirements. Most traditional companies have standard functions and departments such as sales, marketing, finances, human resources, and manufacturing, among others. Each of these areas has different necessities which will help decision-makers narrow the focus of general BI requirements such as the data they need to collect. 

For example, the sales department might need to increase sales by improving the performance of sales reps. For that purpose, the company needs to gather valuable performance data to identify weaknesses and opportunities and provide the necessary training to improve performance. 

2) The raw data

The second concept of business intelligence is the data itself. As mentioned, 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 which can be internal or external and structured or unstructured, 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. 

3) 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 legacy systems in that they often update in real time, as opposed to having to be manually updated – a process that often required the IT department.

4) 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 fundamentals is to make use of that data. This involves accessing the data, analyzing it for important trends using different methods and techniques, and presenting it in a way that is immediately understandable for any type of audience no matter their technical knowledge.

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.

5) 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 set targets, identify patterns, spot trends, and uncover insights that foster growth and improvement. Through 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 5 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.

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How To Apply BI Concepts In The 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.

From choosing the right types of graphs and charts to knowing how to do efficient dashboard storytelling best practices, there is a lot to explore. With that in mind, here are 10 BI use cases for different functions in an organization.

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:

Sales Cycle Length Dashboard to track the whole sales funnel

**click to enlarge**

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 to new business.

Business intelligence concepts applied in a retail dashboard

**click to enlarge**

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 acquisitions you should keep an eye on, and how your different campaigns are performing, according to your goals.

Business intelligence basics applied to a Web Analytics data dashboard tracking important marketing KPIs

**click to enlarge**

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.

This customer service report template focuses on the team metrics and kpis

**click to enlarge**

BI solutions like our customer service dashboard offer a mix of pivotal insights geared towards meeting or exceeding your customers’ expectations regularly. 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 business's 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.

Business intelligence basics presented as an overview of the most essential metrics of the procurement department

**click to enlarge**

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.

IT reports: project management overview

**click to enlarge**

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.

7. Ensure efficient production processes 

Probably more than any other area, manufacturing needs to have efficient processes in place as one mistake or error can cost a lot of money. For that reason, tracking relevant performance indicators in a professional BI dashboard is a great way to ensure any issues or inefficiencies in the production process are caught promptly and tackled to avoid losing any time.  

Manufacturing Production Dashboard displaying main manufacturing KPIs to keep the pulse of your factory

**click to enlarge** 

The manufacturing dashboard below helps you do just that by providing a mix of critical KPIs regarding the performance of machines, production volumes, reasons for return, and more. Like this, get a centralized view of how everything is developing while being able to spot improvement opportunities. For example, you can see that June 2015 had a high number of returned items, this is something that needs to be looked into to ensure clients are satisfied and keep choosing your company. 

8. Boost the financial health of the business 

As we mentioned a couple of times already, BI technologies allow you to predict future outcomes to generate informed strategies and boost growth. This is especially true when it comes to finances, where forecasting plays a key role in building budgets and planning for costs. 

Financial forecast dashboard as a key business intelligence tool for organizations

**click to enlarge** 

The financial dashboard above is a different take on an income statement providing an actual and a forecasted value for key financial metrics: revenue, costs, and net profit. The forecasted amount should be updated throughout the year as market conditions and other things can significantly influence it. Businesses can use it as a benchmark to attain or just as a reference to build their budget. The dashboard also provides a breakdown of revenue by month and costs. Both of these charts provide valuable insight, on one hand, we can observe that in the past 7 months, the forecasted revenue has not been reached, and on the other hand, we can observe that marketing is spending more than it should have. These two things can mean something or nothing at the same time, it depends on the way the company uses forecasting. 

9. Hire and retain the best talent 

Just as important as keeping clients happy, ensuring employees are satisfied and engaged with the company is imperative. It is not only enough to hire the most qualified talents, you also need to offer them the best environment and opportunities to perform to the best of their abilities. Business intelligence tools enable you to do just that by providing a centralized informational hub to tweak your HR strategies and ensure high talent retention rates. 

Business intelligence dashboard tracking human resources talent management KPIs

**click to enlarge**

With insights into critical hiring stats, turnover rates, talent satisfaction, and more, human resources decision-makers can get a 360-view of talent management strategies and spot improvement opportunities to ensure employees are all in. Just by looking at the metrics we can already extract some valuable insights to improve. 

For instance, the voluntary talent turnover rate for marketing and finances is quite high, meaning something is making employees from these areas resign at a high rate and needs to be looked into. On the other hand, the fired talents percentage after a year of working is the highest. This means recruitment processes need to be optimized to ensure more qualified employees are hired. 

10. Streamline your entire supply chain 

To keep up with increasing demand and high client expectations regarding fast and quality deliveries, logistics companies need to track every single aspect of their supply chain to meet their goals and ensure a higher ROI. Our logistics dashboard below provides businesses with all the necessary information to achieve this. 

A supply chain management dashboard as an example of the value of BI for a logistics business

**click to enlarge**

With metrics such as inventory to sales, inventory turnover, out-of-stock items, and carrying costs of inventory, supply chain management can spot improvement opportunities and inefficiencies to ensure resources are spent efficiently with the highest returns. In this case, we can see a positive development in various areas. For example, the inventory to sales has seen an exponential increase in the past months of the year and the inventory accuracy hit its target of 91.4%.

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Key Takeaways 

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. The BI concepts provided here offer a form of advanced pattern recognition to 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!