When it comes to making informed decisions, businesses today require accurate and timely data. This is where business intelligence (BI) comes in – it allows you to collect, organise and analyse data so you can identify trends, opportunities and threats. BI can help improve your decision-making process, but only if implemented correctly. So, how do you get started with BI? In this guide, we will walk you through the basics of BI and provide tips on how to get the most out of it.
What Is Business Intelligence (BI)?
Business Intelligence refers to the technologies and processes used to collect, store, analyse and provide access to data. It helps you make better business decisions by providing timely, accurate, and actionable insights.
There are three key components of business intelligence:
Data warehousing: This is where all your data is stored. A data warehouse is a centralised repository of business data that is used for reporting and data analysis. Read our deep dive into a Data Warehouse here.
Data mining: This is the process of extracting valuable information from your data warehouse. It helps you discover hidden patterns and relationships.
Reporting and analytics: This is the process of generating reports and analysing your data. It helps you gain insights into your business which can assist management with decision-making within their businesses.
Advantages and disadvantages of BI
The impact that business intelligence has on a business's bottom line ultimately comes down to its ability to execute needle-moving initiatives within this space. We have seen a dramatic increase in the management team's ability to make informed decisions, gain competitive advantages over their competitors, and ultimately increase operational efficiencies as well. The common theme here is that effective use of your analytics capacity has the potential to be pivotal in your business' growth and trajectory.
All things come with disadvantages and trade-offs though - some things to be aware of is that implementation often requires a substantial amount of buy-in from stakeholders in the business. The more willing an organisation is to invest in the journey to become data-driven the faster a meaningful return on investment is materialised. Depending on how complex your business is, the implementation can become time-consuming and expensive as well. There are ways to reduce this - when things are effectively prioritised.
The advantages do outweigh the disadvantages here. The key to effectively executing this comes down to a rock-solid and adaptable strategy.
How to develop a business intelligence strategy
The viewpoint that we have here at Horizon Data is that your analytics capacity within your business should be treated the same way that your product and engineering teams are treated. This means that clear roadmaps, prioritisation, and strategies are developed and continuously reviewed and adjusted.
Key items within your strategy should consider how to consolidate datasets that are valuable to the business. It is easy to fall into the trap where you are collecting data for the sake of the data being available. Just because data is available doesn't make it valuable.
Collecting data external to your business is proven to add value to your analysis. A practical example of this is supplementing a consumer's willingness to spend with the backdrop of the current economic environment that said consumer is currently in.
Finally, your business intelligence strategy needs to factor in experimentation and hypothesis testing - this is invariably how new business opportunities are discovered and validated.
Real-life business intelligence examples
There are many business intelligence examples out in the wild - below we touch on a few of them:
Medical Scheme's ability to effectively build insurance products are inherently dependent on their ability to track, analyse and test hypothesis on healthcare requirements within their client base. Discovery Health - a leading medical aid in South Africa - analysed the impact of the SARS-CoV-2 (COVID-19) vaccine with medical insurance claims.
The South African National Credit Regulator published an article from the International Finance Corporation which recommends that credit providers make use of "alternative data" in their product development. In a nutshell, alternative data can assist in building fair and relevant products for various segments of the market. Alternative data includes datasets outside the day-to-day operations of the business, such as the number of properties on the market (and which were sold), the number of defaults on lease agreements, the price of fuel, and the number of people walking into Starbucks coffee shops.
Uber has demonstrably shown that it can predict demand down to a granular level within very small geographical areas. They can predict surges in demand on a map (in the best case, they can model demand in a hexagon with a surface area of 0.9 square meters) based on real-time customer behaviour. There is a reason why there is always an Uber available after a music festival and a sporting event. During the New York bombings in 2016; they were able to assist in moving humans out of danger by predicting demand in real-time using their surge pricing model.
The future role of business intelligence
The business intelligence landscape has seen a tectonic shift in the last couple of years. The traditional data warehouse is now being augmented by new and exciting technologies such as data lakes, which provide a more cost-effective platform for businesses to store and query data. Data visualisation is also starting to play a bigger role in business intelligence - making it easier for business users to access data without having to understand the underlying complexities.
We are also starting to see the power of artificial intelligence being leveraged in business intelligence. Automated machine learning is making it possible for business users to build predictive models without having to have a deep understanding of statistics and data science.
The future of business intelligence is exciting - and it is only going to get more so!
It is fair to think that the tangible benefits are only available to companies with massive budgets and huge teams available to invest to gain the benefits of business intelligence. We believe that is not true, business intelligence is attainable for most if not all companies.
There are ways to start your data analysis journey in a low-cost and in incremental manner - investing in the capabilities that can add value to your organisation as and when they are needed is a prudent way of approaching an initiative like this.
The Bottom Line
Business Intelligence is a powerful tool that can help businesses make better decisions. By understanding and harnessing the power of your data, your company can stay ahead of the competition and make smarter decisions when it comes to expanding or pivoting your business. The future of business intelligence looks bright, and we are excited to see what innovations will be made in this field.
If you are interested in building the analytics capacity in your business, reach out to us today. We would be happy to help you get started on your journey to becoming a data-driven organisation.