We live in an era of knowledge and technological advancement beyond measure (Reyes 2010). Digitalization has completely revolutionized our daily lives, and one of the biggest impacts has been in the business world (Mergel, Edelmann, and Haug 2019). Companies now have access to data-driven tools and strategies that allow them to learn more about their customers and themselves, but not all organizations are taking advantage of them (Brown et al. 2018). Today we will break down what Business Intelligence (BI) is and why it is crucial to the success and sustainability of your organization.
What is business intelligence?
Before discussing the importance of BI, we must first understand what it is and how it applies to strategic business initiatives. The term Business Intelligence (BI) refers to the technologies, applications, strategies and practices used to collect, analyze, integrate and present data, converted into information, in a relevant way. The whole purpose of a BI is to support and facilitate business decision making. A BI allows organizations to access information that is critical to the success of multiple areas, such as sales, finance, marketing, innovation, internationalization, customer satisfaction and a multitude of other areas. Effectively leveraging BI will allow for increased actionable data, provide great insight into industry trends, and facilitate a more strategically oriented decision-making model.
To illustrate BI in action, here are some specific examples of ideas and benefits that can come from its adoption and application:
Human talent: Human resources can benefit greatly from the implementation of employee BI, compensation and payroll tracking, and employee satisfaction reporting.
Finance: A BI can help finance departments by providing orderly and consistent reporting of financial data. The application of BI can also help track budgets in detail and identify potential problem areas before they cause any negative impact and improve the organization's overall business health and financial stability.
Commercial and sales: BI helps the sales force by providing visualizations of the sales cycle, detailed analysis of conversion rates, as well as total revenue analysis. It can also help the sales team identify what is working, as well as failure points that can result in dramatically improved sales performance.
Marketing: A BI provides the marketing department with a convenient way to view all current and past campaigns, the performance and trends of those campaigns, a breakdown of cost per lead and ROI, site traffic analysis, as well as a multitude of other actionable pieces of information.
Senior management: Plain and simple, a BI enables organizations to reduce costs by improving efficiency and productivity, improve sales decisions and reveal opportunities for continuous improvement. A BI allows the decision makers in the organization (management team) to more easily take “the pulse” of the organization by eliminating gray areas and eliminating the need to guess about how the business is doing.
Why is business intelligence important?
The main reasons to invest in a BI strategy and system are:
Gain new customer insights: One of the main reasons companies are investing time, money and effort in BI is because it gives them a greater ability to observe and analyze current customer buying trends. Once BI is used to understand what consumers are buying and why they are buying, this information can be used to create products and product enhancements to meet expectations and needs and, as a result, improve the organization's bottom line.
Improved visibility: Organizations that link their BI have better control over their processes and procedures. A BI makes all areas of the organization visible, helps to easily identify areas for improvement and allows to be prepared instead of just reacting.
Actionable information: An effective BI system serves as a means to identify key patterns and trends. A BI system also enables you to understand the implications of various processes and organizational changes, allowing you to make informed decisions and act accordingly.
Efficiency improvements: Business intelligence systems allow companies to share vital information between departments with ease, saving time on reporting, data mining and data interpretation. Making information sharing easier and more efficient allows organizations to eliminate redundant roles and duties, allowing employees to focus on their work instead of focusing on data processing.
Real-time data: When the management team and decision makers have to wait for reports to be compiled by various areas or individuals, the data is prone to human error and runs the risk of being outdated when it arrives for review. BI systems provide users with access to real-time data through various visualization systems. Large amounts of data can be assimilated, interpreted and distributed quickly and accurately by leveraging Business Intelligence tools.
Lucas Giraldo-Rios
