One of the most common questions people ask us is, “What is business intelligence, and how can it help me?”
Although BI is expected to become an almost $54 billion industry by 2030, its deep focus on data and analytics can be opaque to some leaders and business owners. However, in a world where the amount of data we generate grows exponentially, business intelligence is critical to help organizations use that information to their advantage.
So, What Is Business Intelligence?
Business intelligence uses data and business knowledge to help organizations make informed decisions. It allows businesses and nonprofits to use raw data to take action and improve performance. Data from business intelligence can be displayed in many different ways to help companies navigate their data.
Think of business intelligence as the dashboard of controls that helps navigate a plane. That instrument panel provides the pilot and co-pilot with data that’s critical to flying safely—such as altitude, airspeed, vertical speed, heading, and other crucial information. If the pilot cannot access or understand that data quickly and easily and interpret it to take quick and decisive action, the consequences can be dire.
The same is true of how business intelligence data can guide and support your organization.
Why Is Business Intelligence So Important?
With an effective BI system and data culture in place, your business or nonprofit will have easy-to-understand, accurate, and applicable data at hand to make decisions that support growth and goal achievement. Without it, your organization could be flying blind into a storm of trouble.
Business intelligence also offers a significant return on investment. Nucleus Research estimates that for every $1 an organization spends on analytics such as BI, it can expect returns of up to $13. A myriad of benefits all contribute to this ROI, including:
- Efficiencies gained
- Time savings
- Expense savings
- Increased revenue by making smarter and faster decisions
Finally, business intelligence is critical to any forward-thinking organization that wants to outsmart the competition. About 72% of organizations consider BI to be important, very important, or critical to their daily operations. The reality is, if you’re not using BI to the fullest advantage, your competitors are.
What Kind of Business Questions Should BI Address?
Defining a business’s key questions that can be addressed by BI is one of the first steps in the process and can help determine the usefulness and trajectory of the project. It’s also one of the most individualized parts of the process. Every organization’s business questions will be nuanced and different based on their structure, operations, goals, and other vital factors. When formulating the business questions your BI should answer, remember that the most effective questions lead to answers that result in action, for example:
“Why has customer retention and revenue changed year-over-year?”
Depending on the answer BI offers, sales can take action to change tactics and implement strategies to improve these metrics.
“How has our productivity per employee changed in the past quarter?”
Depending on the answer BI offers, operations can take action to create new systems, processes, or policies to improve results.
Effective business questions also identify opportunities for ROI, new sources of revenue, and expense reduction.
A final pro-tip—start with the”what” and the “how” questions to get to the “why” question. For example, if you know that your customer retention and revenue are down year-over-year, the next question is to ask, “Why?” By digging in, you may find that a specific segment is down, or that a particular product line is underperforming. The more questions you can ask, the more answers you can find with the help of BI to improve your performance.
How Do I Start Implementing Business Intelligence in My Organization?
The first step to implementing a BI process in any organization is to first identify the current processes in place for collecting and analyzing data and how effective or ineffective they are.
To identify your current business processes, consider some of the following questions:
- Where are your data and information coming from?
- What are your KPIs and how effective are they?
- How do you measure success?
- Do you get the information you need in a timely manner?
- Does your process provide consistent and quality data every time?
- Do you trust the data?
Most organizations are sitting on a wealth of information that they can use to their advantage. The challenge comes from unifying that data to a central point and identifying what data has the most value to answer business questions. Ultimately, your information is only as useful as how and why you track it, and that’s where BI comes in.
For example, your organization may receive data through a point-of-sale system or customer management system. Then, individuals in your organization may be tasked with transforming that data into something understandable using spreadsheets and other manual methods. However, these ad-hoc approaches often result in faulty, slow delivery, and painful processes—which is the next element to consider as you put a BI process into place.
What Is the Most Painful Part of Dealing With Data in Your Organization Right Now?
Every organization experiences a pain point when it comes to collecting and analyzing data before they put a BI system into place. Perhaps it’s the managers who spend hours every week compiling reports that need to be updated minutes after they’re distributed. Or, it’s the individual contributors who spend hours and hours trying to answer a data-driven question that senior leadership asked off-the-cuff, not understanding the complexity involved in finding the answer. Each of these scenarios requires time, human capital, and money to address, and each of them presents an opportunity where BI can help. What if your organization had access to a central dashboard that automatically updated with the latest and most important insights to answer critical business questions—that’s what business intelligence can do.
Returning to the airplane analogy, a BI system creates the easy to read control panel of critical metrics that you need to make informed decisions. It can tell you where your opportunities and threats are with a simple glance, so you can put your energy toward making the right decision rather than getting the right data.
When Is Business Intelligence Successful?
At Nexus, we approach Business Intelligence as a service rather than a one-time project because it is an interactive and ongoing process when performed effectively. The ultimate goal of implementing BI is to create a culture of data, where every person—from individual contributors to executive leadership—has access to the right information to make the best decisions possible. Creating this kind of data culture requires an agile approach and an acceptance of a learning curve. Reports are not static and should evolve to meet an organization’s evolving BI needs. One question's answer will lead to more questions. This isn't a destination, it's the journey. Start off small, learn from it, and try again. Once organizations achieve this, the results can be truly transformational to every aspect of performance.
While poor data quality costs the United States economy about $3.1 trillion per year, according to IBM, effective data use can help organizations make more money and save on operations. In 2019, businesses that use big data saw an 8-10% profit increase and a 10% reduction in overall cost, according to Entrepreneur.
Is Business Intelligence Only for Large Corporations?
Although many large corporations spend millions of dollars a year on business intelligence, it is a tool that can be applied by any organization that wants to be more efficient with time, money, and resources. In fact, organizations with less than 100 employees had the highest rate of Business Intelligence penetration or adoption in 2018, according to Forbes.
No matter the size of the business, many functions can benefit from quality BI, from executive management to operations to sales teams. Executives can use advanced dashboards and visualizations to understand a company holistically and break through silos to make cross-functional decisions that can drive overall success. Operations can find efficiencies and determine actionable insights. Sales leaders and individual contributors can use BI to leverage their resources more effectively and identify leads and targets, find additional revenue opportunities, and nurture current client relationships.
BI also doesn’t need to be prohibitively expensive. Nexus EZ Analytics works with organizations on an individual basis to find the right solution that fits their budget.
By turning data into useful information through Business Intelligence, organizations can gain a substantial competitive advantage, make data-driven decisions, and ultimately improve their bottom lines. To return to the pilot analogy, BI helps your organization take on turbulence and unexpected conditions while helping you to maximize favorable conditions to arrive at your destination faster. So, the final question to ask is—do you have the right instrument panel in place? Or, could you be headed for a downturn?
Submit a comment