A business, accumulates a large quantity of data – from the time it was conceived, and continues to grow from its day to day operations. There are two kinds of data that a business typically gathers: internal data and external data. External data are usually customer inputs, researches, statistics from surveys, questionnaires, feedbacks, or any information that comes from the market. Internal data, on the other hand, deal with business information which includes, but not limited to, operations, maintenance, personnel and financial data. The various sources where data can be derived from being plenty enough to sustain a data warehouse. But data stored, but not analyzed, are just bulk of useless information. The rise of business intelligence can put a leverage to these data, and convert it to a more usable and functional form, that will improve and benefit any type of business.
Collectively, business intelligence, is an organized set of tools, processes, methodology and technologies that is capable of acquisition and conversion of business data, turning it into a series of analysis, which can be further broken down into usable and proactive information beneficial to the business.
On the technical side, business intelligence involves statistics and metrics that can only be effectively analyzed by IT personnel, or a person with specialization in data and information technology. The efficient and effective approach in business intelligence is the collaborative effort of IT and business analysts, to be able to produce an accurate, systematic and statistics based result, with inputs from external and internal data, that can be utilized to improve the overall business performance in all its departments, with added emphasis on profit and outstanding service.
How to Understand the Data
As mentioned, data come from two distinct sources: external and internal.
Gathering of external data is usually business initiated. This is done by conducting surveys, distributing questionnaires, collecting performance feedbacks and reviews, among the few methods. Commonly, the data gathered are converted into visual representations such as graphs, pie charts, or whatever form that can be easily understood.
The internal data is supplied by the business itself. It contains information about the business history in terms of past performance, list of marketing strategies used, even competitors. It also involves financial reports over revenues, shares, and operational expenses. These data are analyzed further to come up with a conclusive report on past performance, and may also reflect immediate and current status of the business, as well as a tool for predictive analysis. It is usually presented through reports.
Advantages of Using Business Intelligence Tools
A business intelligence tool, or a BI tool, is a technology based system used in data gathering, data mining, data analysis, reporting and business performance analysis. It has a broad range of basic and extended features that aids in handling large amounts of business data and turn it into valuable information vital for decision making, strategic planning, market competition, effective operations and innovative product development.
Basic Functions of Business Intelligence Tools
- Data Mining
- Data Analysis
- Business Performance Analysis
- Data Mining
One of the foundations of business intelligence tools is the effective use of data gathered, intentionally collected or derived from the business database. Data mining is the process of “refining” and converting unstructured data into an interpreted form. Data conversion, when done manually, involves time consuming and tedious methods and introduce a bigger possibility of inaccuracy because analysis is sometimes subjective to a business analyst’s own opinion. Through a business intelligence tool, data mining becomes a systematic process that base its analysis on structure patterns evident in a group of data. It also makes use of statistics and language in data gathering, then categorizes according to user preference.
How will a business benefit from categorized data?
Through a business intelligence software, in depth analysis is done by complex algorithms of pattern hunting and source comparisons of the structured data. The data is further turned into clusters of related words, that are being used in the internet nowadays. This is the technology behind search engines which “intelligently” uses keyword analysis to associate it with the right information to return to you. This technology is also used in marketing and sales perspective. Data mining is a one important system developed that paved way to SEO, or Search Engine Optimization.
- Data Analysis
In earlier times, data analysis is done through an organized and standard pattern of methods. This is to effectively sort interrelated data, and also to derive certain conclusive answers to questions. The accuracy of the predetermined methods is compromised when a large volume of data is to be analyzed. This will require more time and effort before arriving to a more usable information. From a business perspective, time is crucial as well as a precious company resource like money. A business intelligence software answered this need for a comprehensive tool to accommodate large amounts of data to be analyzed. The tool makes use of sophisticated programming that returns credible data analysis that are useful in crucial decision making in a business.
A business intelligence software is also used in strategic planning to direct the business path in terms of growth and expansion. It returns processed data vital for predictive analysis, which revolves around future market trends, revenue analysis, and economic analysis.
To have a more credible result, an IT expert and a business analyst operate the software. As for the data, department managers are the ones who inputs the data from their respective areas. Collaborative effort and work delegation is still the effective way to arrive at sound solutions in the business world.
- Business reporting
Business reporting is the delivery of structured data to the people in the company, that are used in knowing the status of the business, usually at the present. Its content is used by key people in the company in decision making. It also supports the daily operations of the company as a whole, used by system analysts to sustain the business hardware and software backbone. For analysts, the visual forms of presenting data as graphs, pie charts and tables will help them convert it into a more usable form used in decision making. With a business intelligence software, the collected data are converted into your desired form, based on pre-designed templates integrated with it. It is one of the most basic features of a business intelligence tool, which saves users time in making visual appealing reports and conversion analysis. Business reporting is done on a regular basis, for continuous update about the status of the company.
And because the software is “intelligent”, reporting tools for business can also make a system that can deliver sound strategies for effective business management. It makes use of analysis of statistics, metrics, and classified business data.
- Business Performance Analysis
Business performance usually involves both historical and present data analysis, that is intended for use in marketing, sales, product development and human resource development. This can also be seen in a market competition perspective, or in terms of revenues in the past and the present time. Employee retention and competitiveness are also gauged to evaluate one’s business performance.
A business intelligence software makes use of historical and present data to derive a more conclusive information about the overall status of the business in its current market. The status can be broken down into different areas of competition and self-growth as well. The analysis doesn’t just base on revenues alone, but on how certain business strategies applied fared during different periods of time. There is knowledge about which marketing tool is the most effective, or where the most leads came from.
On employee performance analysis, a business intelligence tool can also process data gathered from each working entity to be able to analyze certain behavior trends to know which human resource management strategy to use. It takes careful evaluation in order to know if an incentive based or reprimand based solution is ideal for employee discipline. The business intelligence tool can also do an organized employee profiling for the human resource department.
In terms or product development, a business intelligence software returns data that are helpful in knowing what features can be integrated with your product to make it more useful and profitable. The analysis may be based on surveys and questionnaires., as well as technical data. The business tool also helps engineers or developers to integrate cost efficiency and ergonomics in their products and innovations.
Practical Application of BI Tools
A survey is conducted by the collaborative efforts of BeyeNETWORK and Saint Joseph’s University in the Philadelphia, USA, between November 2010 and January 2011, with 79 BI professionals responded, about the state of business intelligence at that time. Participants were asked relevant questions about the extent and impact of the use of business intelligence in their respective companies. 32.9% said that it is being used half of the time, with top application use in product or market analytics (63.4%), performance management (57.1%) and financial analytics (70.4%). The respondents were asked to check all that applies.
Basically, a business intelligence tool is deployed in all departments of a company to be able to effectively utilize its data for analysis and realization of measurements to take for its own improvement. In the finance department, there is a need for visual representation of revenue and budget figures in order to make decisions impacting operations, annual budget, payroll and capital funding. In the sales department, it helps the managers to know, based from historical data, what market trend or scenarios enabled the best sales turn out. The business intelligence tool also returns data about current sales vs past sales status in order for the management to effectively think of ways how to increase or surpass the current figures. In the marketing department, the business tool returns data in a form that illustrates which marketing strategy is most effective by using the data from various marketing media, surveys and customer feedbacks. The results will help marketing decision makers in predicting future market trends, and make sound decisions to promote a higher rate of success for their campaigns.
In the practical world, apart from businesses alone, more organizations are realizing the effectiveness of a business intelligence software for their specific needs. One example is the use of a business intelligence tool in order to help politicians make use of statistical records for their political campaigns. Another is the development of an online real-estate finder, which make use of keyword relevance to turn out more accurate results. In addition, it made the database information rich by adding photos and detailed specifications for each listing. The amount of data used for this online database can be quite overwhelming and time consuming process, but with the aid of a business intelligence tool, it became less complex.
There is still a growing interest in discovering more potential advancements in the field of business intelligence. Nowadays, the market has over 100 BI tool vendors that continues to explore and develop their platforms to cover a wider range of solutions for statistics and metrics based, as well as unstructured and structured data. For a closer look to some of the BI tools, emerging and established business intelligence software vendors, BI tools comparison, and top BI tools reviews, visit CrowdReviews.com.
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