What is Business Intelligence

Business intelligence is a phrase which is thrown around a lot these days. But people aren't sure what business intelligence is. So here's an article which explains it and its contribution.

Understanding Business Intelligence

A simply way to define business intelligence or competitive intelligence would be to say that it is a combination of those tools which make a business more 'intelligent'. Its tools arm the employees and the owners with information and business development ideas which can help the business grow. Business intelligence tools help to tell the employees more about the business, its product offering, its standing in the market and in the mind of the consumer.

What Are these 'Business Intelligence Tools'?

Most of the time, these tools refer to statistical data mining and data warehousing software. But more and more people are agreeing to the fact that the definition of business intelligence tools ought to also include querying and reporting software. Here's how the common business intelligence (BI) system works.

Now a business conducts all sorts of market research to receive feedback about their products. They use questionnaires, client calling, all sorts of ways to receive feedback from the customers, which they feel will help them improve their product/service offering. The data they receive from the market surveys is then fed into a data management package by the data entry operators. These software packages churn the high volume of information and try to figure out a logical sequence from the different responses of the customers. This is known as data analysis. The end product of it are graphs about the customer response that tell you all about the responses of customers.

Clearly, all this is rather difficult to understand, so let me help you understand with the help of an example.

How Business Intelligence Works

Now suppose you're the owner of a restaurant. You know that a lot of restaurants have this little customer feedback card they send along with the bill. They ask you questions about how you rate the food, the ambiance, the service and the overall experience. Now this data is fed in a business intelligence software. The software will analyze the given data and show you the results.

Now the results would show something like 63% of the people rated the food worth 5 stars, 25% though it was worth 4 star and 12% of the people gave it three stars. While 25% thought the ambiance was worth 3 stars and the rest voted below 3 stars.

What does this tell you? It tells you that while the food your serve is clearly top class according to your clientele, they think that the ambiance and decor of the place could use some work.

Which means that in order to give more value to your customers, you would need to improve the ambiance of the place and make it more aesthetically pleasing so that the customers enjoy it more.

So, while this was a very simple example of business intelligence, it is important to understand that it goes way beyond that. The software are used by huge business that churn volumes and volumes of data to tell its decision makers what changes are to be made to make their product offering more likable to the customers. The volumes of data that sophisticated database management software process is quite enormous. The result of which is, an intelligent business, one which knows more about itself and can use the data to improve its standing among the customers.