by Analytics Insight
November 30, 2021
Know more about Business Intelligence and how it can add value
Finding an advantage in today’s business environment is increasingly challenging, and effective corporate leaders will take advantage of every tool available to help enhance their competitive edge.
Robust business intelligence (BI) is one must-have tool for the modern C-suite. Well-designed and implemented business intelligence programs allow companies to make the most of the rapidly growing and highly sensitive data sets they maintain. With faster and more in-depth analyses of both historical performance and predicted trends, companies can stay one step ahead of their industry rivals.
Corporate executives considering adding business intelligence tools to their decision-making processes must be able to convince their colleagues about the benefits of BI. So, they themselves must understand exactly what business intelligence can do, as well as what objections they can expect and how to overcome them.
Is BI just another term for competitive intelligence?
Some executives may think that business intelligence is just a rebranding of established competitive intelligence principles designed to sell yet another software package. But the truth is that BI goes well beyond traditional competitive intelligence. In addition to addressing more than dated market research, BI sweeps in an entire toolset that provides advanced, real-time analytics to facilitate decision-making in all business areas.
Conventional competitive intelligence involves analyzing a company’s industry and their counterparts in the industry, typically to answer specific questions. For example, businesses may use competitive intelligence to assess the need or demand for new products or product features.
In contrast, BI is a subset of business analytics, although the two are becoming more interchangeable. Business intelligence assembles and preprocesses data from across all company data sources. It then applies advanced analytical tools to the processed data to generate both historical and predictive analysis. And while BI can have a tremendous impact for management, it can be equally valuable at other levels of the organization.
Why business intelligence?
Most companies today have access to extraordinary amounts of data from a wide variety of sources. BI helps corporate leaders condense the data to manageable and actionable insights.
They can build a deeper understanding of how their business works and why it generates the results it does. They can combine historical analysis with information about their industry and competitors to build highly effective strategic planning processes. And they get real-time visualizations of performance against plan.
Overall goals of business analytics
Business analytics and BI include several different types of analyses, each with a particular focus. Moving chronologically from past to future, the analytical tools C-level managers should be familiar with are:
Descriptive analytics help companies understand their past performance, along with trends in their industry segments. Essentially, they answer the question, ‘What happened?’ With descriptive analytics, businesses get a better picture of their strengths and weaknesses.
Knowing what happened is of limited use unless you also understand why it happened. Diagnostic analytics involves a deeper dive into company data to search for causal links and explain why things happened the way they did. You can’t replicate results or change them unless you know how you got to them in the first place. Thus, diagnostic analysis is a crucial preliminary step in applying analytics to strategic planning.
Moving forward, the next question companies will want to answer using BI is what does the future hold. Predictive analytics applies the historical data you have already assembled and processed to assess the likelihood that certain future events will occur. Here is where you will apply more advanced tools to develop effective models of future behavior.
Now, you have reached the ultimate stage of BI in strategic planning. It’s time to decide what steps your business will take in response to your future predictions. Using prescriptive analytics, executives apply the results of all prior analytical stages to test various decision scenarios.
Put it all together, and the C-suite has a robust set of analytical tools and data serving as a solid basis for future strategic plans.
Standalone vs. embedded BI
One consideration that executives must take into account when implementing a BI program is the form their tools will take. BI platforms can be standalone platforms built in-house or sourced from third-party vendors or modules that integrate into other internal business systems. The latter is known as embedded BI.
Standalone BI platforms typically have more features and more power than embedded BI systems. They can, however, have steeper learning curves. Generally, standalone BI platforms are for an organization’s power users.
Your business can quickly create advanced users. Increasingly, businesses are upskilling employees in areas such as data science, using online coding courses that frequently take less than four months to complete.
On the other hand, embedded BI systems find more application across all levels of the organization because they reside within systems that corporate personnel already know. With a range of readily available, predefined dashboard components and reports, they are generally easy to use. However, they frequently have less ability to do deep dives into corporate data.
Selecting the right BI platform is an essential first step and depends in large measure on the purposes and goals your company has for BI.
Putting business intelligence to use
Your company’s finance arm, including your CFO, can apply BI in several ways to improve the company’s overall performance.
Optimize the supply chain
With BI, your organization can quickly and simply analyze every step in the supply chain. By predicting order trends, you can optimize inventories, distribution efforts, transit routes and more. By doing so, you reduce expenditures for the company and increase customer satisfaction.
Make more well-informed business decisions
Improving decision-making is one of the primary uses of BI. Financial professionals can access consolidated dashboards that provide real-time visualizations of everything from sales performance to income/expense analyses to supply chain performance. With this information in hand, your finance group has the best possible foundation for future planning.
Predict and respond to trends
The importance of useful visualizations is hard to overstate. Well-crafted dashboards allow users to quickly and easily spot trends. Once trends are known, the finance group can better determine how to respond to them. More rapid response and a greater understanding of trends lead to an enhanced competitive advantage.
Improve internal business processes
One benefit of BI that many users fail to recognize is that it can help significantly streamline internal business processes. BI can help your departments identify and rectify bottlenecks in the decision chain. Improving the efficiency and reducing the time needed for existing processes allows employees and managers alike to get more done in a day.
Reduce risk exposure and strengthen compliance efforts
Another often overlooked internal advantage of BI is that it can improve your compliance efforts. Compliance landscapes can be incredibly complex, covering everything from data privacy issues (HIPAA, GDPR) to export controls to anti-corruption efforts to tax concerns.
Data security is another area where BI can improve compliance efforts. For example, by analyzing corporate network activity, BI can provide indications of anomalous behavior that might suggest attempted exploits.
BI can monitor compliance efforts in real time, providing essential information and updates to relevant C-suite executives. Plus, it’s becoming increasingly common for companies to have a chief compliance officer whose responsibility it is to maintain compliance with industry regulations.
As with many other new programs, BI efforts are likely to experience initial hesitation or resistance. Common objections to BI platforms include lack of technical expertise among corporate executives, the time and effort necessary to master a new technical solution, or the expense of bringing in a new platform that has unknown ROI.
The best way to overcome objections is to show the C-suite how easy BI platforms can be to use and how they are the future of business analytics. Walking executives through a few simple but detailed dashboards is a very effective first step.
Once you have their attention, you can then explain how BI will optimize your internal operations (i.e., save money) and improve your competitive positions (i.e., make money). Ease-of-use coupled with improved revenue and profits is always a winning combination.