Business users know the importance of collecting customer information and sales data. Knowing how to utilize data mining and data warehousing as part of a larger business strategy is a more complex project. Fortunately, this data can be analyzed in order to resolve an existing concern or problem.
In utilizing business intelligence and analytics tools, businesses can work to generate actionable insights from raw data sets. This process streamlines work processes, increases revenue, and assists with business decisions based on statistics and evidence, rather than intuition.
Business intelligence and analytics tools are often used interchangeably and perform many of the same functions, while also sharing key differences. Here is how BI and analytics tools work together to help businesses improve and streamline business processes.
Business Intelligence vs. Business Analytics
Business intelligence encompasses the various technologies, tools, applications, and methodologies that are utilized to collect data from internal and external sources, analyze the information, and generate actionable insights to help make informed business decisions. Business analytics is the process of sorting and studying data and utilizing statistical models to transform the data into useful business information. The analytics process is divided into 4 phases, including-
- Descriptive Analytics the interpretation of historical data to better understand the current state of the business
- Diagnostic Analytics the examination of data to answer why a circumstance/problem happened
- Predictive Analytics the use of historical and current data to predict future outcomes
- Prescriptive Analytics the examination of predictive analytics to draw specific recommendations
To better understand the difference between the two terms, think of business intelligence as the enabler and analytics as the executor. BI sits within the descriptive phase in that it's where most organizations begin when undertaking an analytics program/software. The technologies and software encompassed in BI enable the analytics process to take place.
Data analytics is the technical process of mining data, cleansing it, and transforming it to generate insights, recommendations, and evaluations.
BI for Data Management & Business Use
There are a variety of different BI tools that are used for different business purposes. Popular ones include-
- Dashboards - an information management tool that utilizes raw data to track and analyze key performance metrics under one unified view
- Cloud Computing use of hardware and software to deliver a service through the internet. Large amounts of data can be stored and maintained in the cloud as opposed to an individual server
There are several ways for different business intelligence tools to provide value to an organization. For example, dashboards provide a way for organizations to examine data from structured sources, such as Customer Relationship Management systems (a database that holds customer information) or financial software systems (software that holds records of all financial activity).
A dashboard may be used see overall company objectives, such as sales by region. This can help businesses know
how each franchise is performing, and whether or not they are meeting overall sales goals. Or, the dashboard view can be personalized so each employee sees their sales performance, salary, or completed tasks. This can help streamline and organize employee's workday and ensure they are being productive.
Companies can also choose from different cloud computing platforms, such as
Amazon Web Services, Microsoft Azure, or Google Cloud. Cloud computing can be utilized to store and backup files, or access QuickBooks (an accounting tool), email services, or web-based phone systems and data storage. This helps streamline work processes and allows for a place to store big data that would otherwise overwhelm a personal server.
Regardless of the BI tool utilized, the majority has evolved to be user-friendly and intuitive. This allows non-technical employees to find the information they need without help from data professionals or the IT department. This alone helps to save time, streamline work processes, and encourage collaboration on business projects.
Business Intelligence as a Gateway to Business Analytics
Though BI tools are useful for data collection and storage purposes, they don't always provide the level of in-depth analysis that can spur innovation, growth, and increase revenue. Many organizations need data to answer more complex business questions.
For example, an owner may want to see the sales data from the previous year, broken down by region. BI tools, such as dashboards, can answer these questions. However, if a manager wants to know more about customer behavior, or predict future trends based on historical information, some BI solutions won't be able to perform such a task. This is when data analysts or analytics software solutions are needed to perform a predictive analysis, prescriptive analysis, and statistical analysis, which analyze data to determine patterns and trends.
Data analysts perform statistical modeling to dig deeper into data sets and generate insights in a variety of ways. There are also data analytics software solutions that automatically track a diverse array of business activity (sales, finances, customers, etc.) and perform predictive and prescriptive analysis, based on the user's query.
Over time, traditional BI vendors recognized that their solutions didn't provide the type of in-depth analysis that businesses often required. As a result, providers are now creating BI tools that can transfer a greater amount of data and perform analytics on a greater scale.
These newer BI tools are often able to produce more accurate, insightful reports that are typically relegated to advanced analytics software. Advanced BI systems can answer queries such as What type of prospective customers should the business target? or Which promotions are offered at different franchises, and who are they offered to?
70% of organized leaders view advanced analytics as critical for their future success. Therefore, it's important that high-functioning BI system providers or analytics software providers continue developing quality BI tools that can produce meaningful insight into everyday business processes. The bigger the data-driven world becomes, the more they will need these tools to improve operational efficiency, increase productivity, answer questions, and bring in more revenue.