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Business Intelligence 101: An Executive Guide to Business Intelligence

How to turn data into information.
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What is business intelligence?

Business intelligence, or BI, is an umbrella term that refers to a variety of software applications used to analyse an organisation’s raw data. BI as a discipline is made up of several related activities, including data mining, online analytical processing, querying and reporting.

Companies use BI to improve decision making, cut costs and identify new business opportunities. BI is more than just corporate reporting and more than a set of tools to coax data out of enterprise systems. CIOs use BI to identify inefficient business processes that are ripe for re-engineering.

With today’s BI tools, business folks can jump in and start analysing data themselves, rather than wait for IT to run complex reports. This democratisation of information access helps users back up — with hard numbers — business decisions that would otherwise be based only on gut feelings and anecdotes.

Although BI holds great promise, implementations can be dogged by technical and cultural challenges. Executives have to ensure that the data feeding BI applications is clean and consistent so that users trust it.

What kind of companies use BI systems?

Restaurant chains are often heavy users of BI software. They use BI to make strategic decisions, such as what new products to add to their menus, which dishes to remove and which underperforming stores to close. They also use BI for tactical matters such as renegotiating contracts with food suppliers and identifying opportunities to improve inefficient processes. Because restaurant chains are so operations-driven, and because BI is so central to helping them run their businesses, they are among the elite group of companies across all industries that are actually getting real value from these systems.

One crucial component of BI — business analytics — is quietly essential to the success of companies in a wide range of industries, and more famously essential to the success of professional sports teams.

In retail, US chain Wal-Mart uses vast amounts of data and category analysis to dominate the industry. Harrah’s has changed the basis of competition in gaming from building megacasinos to analytics around customer loyalty and service. Amazon and Yahoo aren't just e-commerce sites; they are extremely analytical and follow a “test and learn” approach to business changes. Capital One runs more than 30,000 experiments a year to identify desirable customers and price credit card offers.

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