Business intelligence (BI) is the discipline that deals with gathering useful information to guide business decisions. Furthermore, this expression encompasses:
- on the one hand, a set of technologies and operations for the collection, integration, and analysis of data (and big data);
- on the other hand, everything concerning the presentation of the information obtained from the proceeding.
Its purpose is to direct the decision-making process to optimize business processes. As you may have already guessed, there are many intelligence activities to be carried out to improve the performance of a company:
- collection, analysis, and management of data ;
- use of software for BI interventions;
- creation of outputs with the strategic information obtained in the process.
The result of these operations is truly precious for a company’s strategy because it guides professionals in making the best decisions for companies. In this way, the strategic choices will be data-driven, or “guided by the numbers”.
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What is Business Intelligence for?
Business intelligence plays a key role in business decision management, because, thanks to its strategic use, the influence of personal sensations and impressions of individuals designated to make choices for a company is minimized.
Applications, or business intelligence software, help companies bring together data from different sources into a single view, which is an indispensable factor in obtaining a complete and orderly analysis and for the production of reports.
Among these data sources, we have to consider for example:
- CRM systems (customer relationship management);
- marketing analytics tools;
- sales performance dashboard;
- supply chain information systems (tools that keep all the incoming and outgoing flows of a company under control);
- data and metadata from customer care applications;
- data warehouse, real warehouses, in which, for analytical purposes, structured data are aggregated from both internal (company performance) and external (e.g. competitor) sources to the corporate information system. Unlike databases, which can be defined as collection spaces, in this “deposit” the information is transformed, even with data mining tools, to make it readable by analysts.
Thanks to Business Intelligence, data, and big data converge in a single place, where it is possible to analyze them, have unified dashboards, and make real-time reporting, to answer any question about the company.
How Business Intelligence Works
To understand how business intelligence works and how it has evolved in the digital age, it is worth immediately giving a practical example. Let’s take large-scale food distribution. The management that runs this kind of company has a constant need for information regarding:
- the performance of products and services,
- the behavior of competitors,
- the preferences of its customers (recurring and occasional).
In traditional BI, when there was a need to understand how the level of pricing affected sales, supermarkets sent an employee to the competitor’s store to manually record prices.
Food distribution companies also need to know the progress of purchases day by day, by time slots, periods, during promotions, and so on. This information was obtained from the counting of receipts, or, to find out how people move around the store and what their behavior is in a store, they resorted to viewing the videos recorded by the video cameras. These are just a few examples of how business intelligence has always been done in a traditional context.
It is easy to understand that this information and data acquisition process has always been sustainable only for large players because it requires so much time, people, and resources. Instead, today, thanks to digital technology and new business intelligence tools, even a small online store can collect this amount of information quickly and at virtually no cost.
We could say that digital has democratized access to information useful for business decisions because it has made them simpler, cheaper, and more immediate. This is an enormous asset, a great opportunity for all micro, small, and medium-sized enterprises in the Italian market.
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Business intelligence applications
What are the types of business intelligence?
Nowadays, the applications of Business Intelligence are innumerable and can direct decision-making paths in different aspects of corporate strategies. Let’s see some of them, with relative examples, linked to the most common digital marketing operations.
Any company with a small site has the option of installing a data analysis tool like Google Analytics at no cost. Through this tool, an entrepreneur, or the person in charge of managing the website, can obtain very useful information about visitors, for example:
- when they visit, on which days, times, in which seasons;
- the pages they prefer, those that have longer average permanence times, which ones involve a higher bounce rate (bounce);
- what are they looking for most, what products/services do they prefer;
- the geographical areas from which they come;
- what are the contents that engage the user the most?
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All this data will be able to guide those who manage the online presence of the business to optimize the site, to help potential customers find useful content, guiding them in their path, up to the purchase. This translates into higher revenue for the company, higher retention rates, and higher turnover.
I’ll give you another example right away: even a small business owner who runs a campaign of a few tens of euros on Facebook or YouTube, or some other online media, can see insights, i.e. results with dozens and dozens of metrics. Through these dashboards, he can understand how to improve his ads and return on investment by discovering:
- which target segment responds best to ads (demographics, such as age and gender);
- whether the campaigns work better in some cities than in others (geolocation);
- what are the public’s interests, behaviors, fields of study, professional sectors, and so on?
Here, the targeting criteria are innumerable and the results returned by the platforms on which advertising is done help to channel investments into the market segments with the best returns, minimizing budget waste.
For companies that have a small online shop, and e-commerce, sales reports also facilitate the decisions to be made about the product. With data visualization, entrepreneurs can understand:
- what are the goods that attract the public the most;
- the items that sell the most;
- the products that work better in the promotion and those that work worse;
- the traffic channels that bring more users to the store;
- the sources that generate the most sales, engage, and convert users into active customers.
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In the online world, there is also the so-called A/B Test discipline. What does it consist of? Simply, by putting online two (or more) versions of the same campaign in comparison. Typically, each ad has a landing page, and when traffic is generated, half goes to version A and a half to version B.
The two pages have different marketing messages, maybe different promotions and, thus, you can find out:
- which of the two promotions has the greatest interest from the relevant public;
- analyze the traffic sent to the pages;
- conversions achieved in terms of people filling out a form, or making a purchase
- you could also do interviews, and online surveys with an incentive to fill out, to generate leads.
There are many ways and tools that we have in the online world to do business intelligence, acquire, study, and use data intelligently. But above all these are available to everyone, both large companies and small and medium-sized entrepreneurs who want to improve their business.
What does a business intelligence manager do
As we said at the beginning of the article, business intelligence is not a single action, but it is made up of several operations which are summarized in data collection, integration, analysis, and output.
All these maneuvers are carried out by analysis and big data specialists, professional figures that are increasingly sought after by the job market.
This is the first phase of BI activities, in which information is collected from all sources available to a company:
- time to ground a project,
- database, or databases, for demographic, sociographic, and psychographic big data of customers and potential customers,
- small data, such as the results of surveys, questionnaires, reviews, etc…
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Integration and skimming
This is the step in which what is collected from the various sources is aggregated, so that there will be, for example, numbers, images, videos, texts, the result of which must lead to a homorganic reading. So each element taken into consideration must have a value that relates it to the others so that all the factors can be read together.
Then, a screening takes place, whereby what is significant for the investigation in progress is selected, while what is not is discarded. Furthermore, the reports are cleaned of inconsistencies and the data is validated. At this point, what has been examined passes into an analysis software, the so-called data warehouse, the “warehouse” we mentioned earlier.
Analysis and reporting
Once the information material has been selected, the moment comes when the data translates into answers to questions about the company and indications for improving its business. This occurs thanks to various data analysis processes that are carried out with specific data management tools. Furthermore, based on specific needs, you can choose between different types of analysis, which allow you to describe the current situation of the business, or predict possible future scenarios. All this will be able to guide human beings to make the best decisions, putting aside subjective sensations related to experience and relying on the advice of the numbers.
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What are the Business Intelligence tools?
Business intelligence tools include all the technologies and software applications programmed to carry out the operations of collection, integration, analysis, and output.
Among these, there are some paid ones, others open source, and open projects to which developers from all over the world contribute and which can be customized according to the intrinsic needs of a company. Let’s see some of them:
- excel spreadsheets,
- dashboards, for example, such as those of the platforms used for online advertising,
- data mining, which includes all techniques for extracting useful information from large amounts of data.
You may be wondering “Which business intelligence tool is the best?” There is no software that is better than others a priori, it all depends on the characteristics of the business in question, the company budget for purchasing tools, or the internal resources available in case an open-source application is chosen.
Importance of Business Intelligence for Companies
Why is business intelligence needed for a company?
Certainly, all the outputs deriving from business intelligence processes represent an asset for the management of a company. Insiders have the opportunity to identify critical issues and opportunities of a company, supported by validated data.
Their strategic choices to improve business performance are guided by concrete numbers, not by personal impressions. Furthermore, thanks to this support, effective decisions can be made faster, thanks also to reports updated in real-time.
Doing business intelligence, at various levels, is within everyone’s reach, through digital technology which has much lower costs than traditional methodologies.
In summary, some of the biggest benefits businesses derive from business intelligence operations include:
- identification of future opportunities to improve revenues;
- identification of critical issues, such as slowdowns in business processes;
- customer experience analysis and customer data collection;
- performance monitoring;
- budget optimization;
- control of competitors and market trends;
- integration of information gathered from different sources, to maintain a 360° view.
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