Data provides more reliable insight into organizational outcomes than intuition alone can. That’s why most managers build dashboards to monitor their sales pipeline, revenue generated, and churn rates: to get real-time updates on their team’s overall progress. While those are important metrics, reliance on just high-level summaries may cause leaders to miss out on crucial opportunities to grow their business smarter.
To bridge the knowledge gap between what executives see and what an in-depth analysis of the data reveals, companies increasingly leverage business intelligence (BI) software to help orient their next steps. Business intelligence considers the impact and influence certain actions have on various organizational outcomes and surfaces the best recommendations a team can take to drive key metrics and long-term success.
It is important for all professionals to understand what business intelligence is, ways in which it can benefit an organization, and how to select the best BI products / tools.
How to Define Business Intelligence
One way to define business intelligence is to say it’s an automated and smart process that leverages technology to analyze the relationships between different company metrics and their underlying causes. This helps users identify organizational inefficiencies, opportunities for improvement, and areas for sustained growth. BI makes it easier to turn information that would otherwise be abstract into tactical business strategies. To accomplish this goal, business intelligence integrates data and metadata from internal and external sources to highlight these hidden correlations.
Often, organizations use business intelligence software to create real-time dashboards that summarize their team’s overall performance, along with segmented reports that describe past and current trends to predict future behavior. Advanced BI solutions also incorporate artificial intelligence (AI) provided a thorough understanding of the effects and implications of certain actions. The conclusions developed from BI systems help to power better-informed decision making, which can facilitate improvements in productivity and faster company growth.
Why Your Organization Needs Business Intelligence
Business intelligence can give any organization the edge it needs to outperform the competition. While basic data-driven insights are good, a more in-depth look at the relationships between process variables can optimize the way you do business.
Nine benefits business intelligence can offer include:
- Anticipate potential problems. The right business intelligence software recognizes when new actions and inputs may negatively affect long-term outcomes and alerts users about the potential pitfalls.
- Create performance benchmarks. Using historical data and competitor analysis, business intelligence tools can establish the minimum goals you need to reach for this month, this quarter, and this year, while accounting for seasonal trends, industry growth, and more.
- Determine the effectiveness of previous and ongoing initiatives. A quantified understanding of campaign-level return on investment (ROI) makes it easier for managers to prioritize efforts that drive the biggest organizational impact.
- Develop forecasts for future sales. This can inform cash flow management, hiring decisions, and inventory replenishment, among other things.
- Find contextual answers. While the data can point to the results of a campaign, the cause may sometimes be unclear. BI and metadata management tools can help you uncover the underlying reasons why something happened so you can avoid it — or exploit it.
- Identify sales inefficiencies and opportunities. Business intelligence can highlight unseen bottlenecks in the sales process for you to address, as well as growth opportunities to upsell clients or close more deals.
- Merge related data points. When all the data is stored in one place, you save time. You no longer have to toggle between different dashboards for information and can get a consolidated look at your team’s overall performance.
- Segment your audiences and customer profiles. This helps you determine which audiences are profit drivers and which client relationships are costly to maintain.
- Surface cost-cutting measures. While BI insights can direct company leaders to target new growth opportunities, business intelligence can identify ways to save money, too. Business intelligence can compare employee performance against sales, software licenses against productivity increases, and purchasing needs against seasonal pricing to give managers a quantified sense of relative ROI.
What to Look for In the Ideal BI Solution
The research company Gartner predicts the market for business intelligence and analytics tools will reach $22.8 billion. Indeed, enterprises everywhere have begun to recognize the potential and power of a strong BI system, and several companies now produce their own platforms for analyzing an organization’s data. With a thorough understanding and answers to the question, “What is business intelligence?” and a view of advantages it offers, it is time to start a search for the perfect BI software to suit organizational needs.
Before committing to a new business intelligence software, there are seven important criteria to consider.
- A low learning curve. Historically, business intelligence was managed by IT departments. However, the individuals most likely to leverage BI insights for decision making usually are not developers or IT specialists. As BI increases in popularity, many platforms have become far more user-friendly. Among most organizations, it’s important that the BI solution purchased is intuitive enough that anyone can use it. Research from Gartner suggests that employee adoption rates for business intelligence tools are around 30 per cent. To offset the cost of BI software, managers should only select a tool most of their team members can and will use.
- Cloud-based hosting. To share access, reports, and insights easily with other team members, get a BI tool that works seamlessly in the cloud. That way, you can also use it on the go and ensure you always have the data you need to make a confident and informed business decision as soon as new opportunities arise.
- Excellent account support. In addition to a low learning curve, you also want to license a business intelligence software that offers video walk throughs; built-in explanations for different features; email, phone, and live chat support; and a client-friendly service level agreement.
- Strong analyses, conclusions, and explanations. The best business intelligence platform can develop a fully integrated understanding of how things work in your business and which actions, initiatives, and resources help accelerate or stymie organizational progress. The reports and data visualizations should also be easy to read so managers can quickly recognize the consequences certain processes have on your business and the potential impact of specific changes on your long-term success.
- Ongoing development initiatives. While most individuals purchase software to solve today’s problems, it’s wise to learn about the upcoming features that developers will build into their business intelligence tools. That way, you can ultimately license a BI solution that constantly improves and increasingly accommodates your various business needs.
- Seamless integration with existing and future technologies. Some BI platforms require custom integrations with the applications and technologies you use as part of your current analytics stack. To save resources and time, especially as business needs evolve, choose a BI software that is compatible with all the tools in your arsenal as well as software you may add later.
- The ability to accurately and rapidly process millions (potentially billions) of data points. As your business grows and your information-gathering processes mature, you will need a business intelligence solution that can comfortably handle all the data you feed it.
In the past, business intelligence solutions were best suited for big enterprises that could afford to collect and store large amounts of customer and organizational data. However, even small businesses can benefit from a solid BI platform as they begin to generate lots of data points worth analyzing, especially since the insights can have a meaningful impact on the bottom line. Of course, it’s crucial that the organization maintains good data collection practices, since bad or limited data can lead to false conclusions.
Gathering the right data and applying business intelligence to it, enables the organization to unlock huge potential to build an even bigger business. In fact, Nucleus Research found that for each dollar companies spent on analytics, on average, that investment generated a $10.66 return in 2011 and $13.01 in 2014. Between the potential revenue gained, costs saved, and efficiency improvements the organization can leverage with the right BI insights, it’s clear that every organization should at least consider if they are ready to license and leverage a new business intelligence software.