Business Intelligence (BI)

The practice of turning data into actionable insights, allowing

business leaders to make better decisions, more often.

Written by CFI Team

Updated December 28, 2022

What is Business Intelligence (BI)?

Business Intelligence (BI) is the practice of turning data into actionable
insights. The actionable insights enable business leaders to take specific
action to improve the performance of the business.

Business intelligence processes include collecting data, creating models,

analyzing the data with queries, creating data visualizations such as
charts, and producing reports to be used by business decision-makers. BI
processes can be applied to both operational and strategic decisions.
The purpose of business intelligence is to produce information that
facilitates optimal business decisions that can improve operational
efficiency and profitability for a business and provide it with a competitive
edge in the marketplace. Business intelligence processes can provide
historical, current, and future forecast information related to business
operations.

Summary

 Business intelligence uses technology, such as software programs

like Excel, to analyze data and provide actionable information to
help business executives make informed choices and decisions.
 BI can be applied to making both operational and strategic business
decisions.
 Business intelligence is created by a team of professionals that
includes data engineers, data analysts, and data visualization
specialists.
BI – Uses and Cases

Business intelligence processes can provide a wide range of information

and analysis that can be used for various purposes. Some examples of
how business intelligence can be used are the following:

 Using data and statistics to reveal business or marketplace trends –

e.g., compare first, second, third, and fourth quarter product sales
figures to see if sales of an individual product are increasing or
decreasing
 Analyzing key performance indicators (KPIs) to identify areas where
operational efficiency is maximized or can be improved – e.g.,
examining same-store sales or plant production figures
 Comparing current results (such as sales) to either historical results
or company goals – e.g., look at year-over-year sales figures in
different geographical areas where a business operates
 Creating visual representations such as charts and graphs to make
data analysis more easily understandable and useful for decision-
makers – e.g., creating a chart or histogram that clearly reveals stock
sector trends
 Providing “what if” analysis of different possible business choices –
e.g., predicting how making one change versus another may impact
future sales revenue growth

BI – The Process

Although business intelligence is utilized in different ways and for

different purposes by individual companies, the process is fairly uniform
throughout all industries and typically unfolds as follows:

 Data from various sources – including internal company data and

external market data – is collected, integrated, and then stored;
because “big data” is commonly used, data is commonly stored in
what’s called a data warehouse, created by a data engineer
 Data sets are created and prepared for data analysis, often by
creating data analysis models
  Data analysts run queries against the data sets or models
 The results of queries are used to produce visualizations in the form
of charts, graphs, histograms, or other visual representations, along
with BI dashboards and reports
 Decision-makers utilize the data visualizations and reports to help
them in making decisions; they may also use their BI dashboard to
probe further into the data for more information.

BI Jobs and Roles – Data Engineers

Business intelligence requires a group effort that includes several

professionals, each serving to provide a particular function within the
overall BI process.

Data engineers source the data to be analyzed, organize it, and create
channels and automatic data feed processes to transport the data
between various database systems. They are also typically responsible for
arranging data storage by creating data warehouses and for data security
and integrity as it moves between systems.

Data engineers must possess a broad range of skills, such as being

familiar with working in programming languages such as SQL and Python,
knowing how to create databases, using ETL (Extract, Transfer, Load) tools,
and creating algorithms for data analysis.

Data engineers must be skilled in using programs such as Spark or

Hadoop, which assist in the organization and utilization of big data. They
must also be able to use programs such as Kafka and Pubsub, which are
used for integrated streaming, real-time data into existing databases.

BI Jobs and Roles – Data Analysts

Data analysts are primarily responsible for creating models and metrics
for doing data analysis. Analysts import data from various sources, such
as Excel files and databases, and then organize the data into usable
formats for running data analysis. Their next task is to create data analysis
models, which often involves combining related data that may exist in the
form of separate tables.

Data analysts also create automatic refreshing tools that can update data
in real-time. In addition, they create formulas for measuring performance,
such as KPIs. Finally, they document their work so that other analysts or
end-users of the data can easily interpret the data analysis models.

Like data engineers, data analysts must possess a broad range of

technical skills. They are commonly fluent in using not only basic data
analysis programs such as Excel but also software such as Power Query
and SQL. The Excel add-on, Power Query, makes data transformation both
quicker and easier for data analysts. Programs such as Tableau, Power
Pivot, and Power BI aid analysts in combining data from various sources
and creating data analysis models, metrics, dashboards, and visual
representations.

BI Jobs and Roles – Data Visualization Specialists

A data visualization specialist creates visuals and dashboards that help

business leaders identify key issues and take appropriate action to resolve
them. In order to accomplish this, data visualization specialists often
create visual representations to highlight key metrics, figures, or trends
identified by data analysis.

They may also create dashboards that combine different visual

representations and enable the end-users of the data to easily query the
data presentations for more detailed or additional information. Both data
analysts and data visualization specialists may be responsible for creating
and presenting reports to business decision-makers or other appropriate
personnel.

Data visualization specialists need to possess many of the same technical

skills as data analysts. They usually possess advanced expertise in using
Excel, Tableau, Power Pivot, and Power BI.
Importance of Business Intelligence

Utilizing business intelligence enables business decision-makers to make

more informed, and therefore, hopefully, better, decisions about how to
operate and manage their business. It can be used to assess products or
services, pricing and product positioning, advertising and marketing
programs, different potential markets, inventory and supply chains, and
production processes, to name a few things.

Business intelligence can help a company to operate more efficiently and

cost-effectively and also to be more competitive in the marketplace. A
strong business intelligence organization that includes the incorporation
of real-time data can assist business executives in recognizing changing
market trends and in identifying operational problems early on so that
they can be quickly remedied.

Ultimately, good business intelligence serves the same purpose as any

other aspect of running a business – that is, increasing revenue and
bottom-line profitability.

History of Business Intelligence

What we know today as business intelligence primarily began being

developed in the 1980s when the advent of widespread computer usage
made data collection and analysis possible for companies to utilize. Over
the years, BI processes widened and improved to include extensive data
mining, data visualization tools, and various methods of data analysis to
provide business decision-makers with important insights. Such insights
can be used to increase operational efficiency and to help in making key
business decisions related to things such as product pricing
and marketing campaigns.

Key advances in business intelligence include the ability to collect and

manage extremely large data sets, the ability to combine external and
internal data, increased data sharing, and the creation of business
intelligence dashboards.
BI dashboards enable individual users of business intelligence to
customize reports to serve specific purposes and run queries on the data
to provide more information. An important characteristic of modern
business intelligence dashboards is that they offer easy-to-use data
interfaces that don’t require technical IT expertise.

Modern-day business intelligence processes can incorporate real-time

data with existing historical data. It enables business executives to
perform data analysis that includes the most up-to-date information
available.

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