What Is Business Intelligence?

Business intelligence can help your company boost revenue, cut costs or operate more efficiently. In a recent tutorial we looked at the benefits of big data for small businesses. But even if your firm doesn’t handle that volume of data, you can still benefit from an analytical approach. 

Like big data, business intelligence systems were once the preserve of large companies with lavish IT budgets. But thanks to extra competition and the advance of technologies like cloud computing and software as a service, more and more small firms are taking advantage of the affordable options on offer today.

So in this tutorial we’ll help you position yourself to make smart use of business intelligence. You’ll get a solid understanding of what business intelligence means, what benefits it can bring to your business, and how you can implement it successfully. We’ll also look at some examples of how companies are using business intelligence systems right now to help them get information about their operations and make better decisions.

1. What Is Business Intelligence?

First things first. What do we mean by business intelligence?

According to technology research firm Gartner:

Business intelligence (BI) is an umbrella term that includes the applications, infrastructure and tools, and best practices that enable access to and analysis of information to improve and optimize decisions and performance.

In simpler terms, it’s about making better decisions in your business by analysing information. Usually that takes the form of a database or other software that pulls together facts and figures from various parts of your business and produces charts, reports and other insights.

You can use business intelligence solutions to analyse any aspect of your company. You could monitor the effectiveness of your sales efforts, for example, or the efficiency of your factory operations, the performance of different staff members, and much more.

2. Benefits of Business Intelligence for Small Businesses

Business intelligence systems can be costly and time-consuming to put in place. So what’s the benefit of doing it? What can business intelligence systems do for your small business? 

A 2014 report by Dresner Advisory Services found that the main reason small companies use business intelligence is for “better decision-making”. Other important reasons included:

• growth in revenues
• increased competitive advantage
• improved operational efficiency
• enhanced customer service

We’ll look at some specific examples of how companies get those benefits in the next section, but that’s a pretty impressive list already. It touches on most of the key factors that determine a company’s success.

Most companies already analyse data anyway, but it’s often in the form of pulling together a few spreadsheets in Microsoft Excel. That can be very time-consuming, and the results aren’t always what you’re looking for. Excel’s great for a lot of things, but sometimes you need a different tool to solve a different problem.

“When done properly, the analytics can provide insights into trend analysis that otherwise can’t be seen,” said Dan Linstedt, president of Empowered Holdings in Saint Albans, Vermont, in an Inc Magazine article. “BI can also provide insights into the cost of acquiring new customers over time, and how those costs are related to ‘customer gain or loss.’”

3. Examples

So how are companies using business intelligence right now? Here are a few examples.

To Boost Sales

Customers are the lifeblood of any business, of course, and a business intelligence system can help you understand them better.

Meal kit company Hello Fresh is a prime example. The company used a centralised business intelligence solution from Tableau to analyse customer behaviour, saving its marketing analytics team 10-20 working hours per day and helping them to create customised digital marketing campaigns.

Tracking real-time customer data allowed Hello Fresh to react quickly to trends and changes in customer behaviour and to optimise its marketing campaigns. The results were impressive: increased conversion rates and improved customer retention.

To Control Inventory

As we’ve seen in previous tutorials, controlling inventory is an important way to make your business more efficient, improving cash flows and profits. Business intelligence systems can help you achieve that.

“Cutting excessive inventory—and thereby the cost to maintain it—is one of the easiest changes a company can make to immediately affect its bottom line,” Dwight deVera, senior vice president at BI provider Arcplan, told CIO.com. And a BI solution with a good dashboard, “that provides retailers better visibility into inventory, enables them to make better decisions about what to order and when so goods don’t sit idly on warehouse shelves.”

You can find a number of ready-to-use analytic solutions on our CodeCanyon marketplace, such as this Analytics Dashboard Utility for WordPress. Or grab a website admin template with an intuitive site dashboard from ThemeForest, such as the best-selling Metronic – Responsive Admin Dashboard Template, which is ready to plug into your site’s analytics.

To Analyze Web Traffic

Some business intelligence systems are simple and well-known, and you’re probably using them already.

Google offers lots of analysis of your website visitors through free services like Google Analytics and Webmaster Tools, and taking the time to use them effectively can help you attract more customers and optimise your website to encourage them to buy.

Bob Shirilla started a small business after spending two decades at a large IT company that regularly used data analysis software. He told Inc Magazine that his sites, Keepsakes-etc.com and Simply-bags.com, “are doing very well in a very competitive product space. I attribute their success to the business decisions made by using the Google Analytical tools.” 

Learn more about working with Google Analytics at scale, split testing experiments, and custom variables:

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To Provide Better Customer Service

Analysing what your customers are doing and having instant access to valuable information will help you to provide better customer service.

That’s what cybersecurity platform Bugcrowd found when it used a business intelligence system from Chartio. The company used business intelligence to centralise all its data about its interactions with customers, leading to insights that improved customer service and allowed the company to anticipate and meet its customers’ needs.

4. Implementing Business Intelligence

So now you’ve seen the benefits of business intelligence, and some examples of how small businesses can use it. If you’re convinced of its value, it’s time to look at implementing it in your company. In this section we’ll look at a simple process you can follow, and some examples of popular vendors you could investigate.

What’s Your Objective?

The first question to ask yourself is what you’re hoping to achieve.

As we’ve seen, business intelligence is an umbrella term for a wide range of solutions, in any area from customer relationship management to operational efficiency. So what’s your priority?

Do you want to boost sales, for example, or improve satisfaction among existing customers? Do you want to squeeze out more efficiency from your operations or your workforce? Be clear about the overall priorities and long-term plan for your business, and then consider how business intelligence systems can help you reach your objectives.

What Do You Have?

Once you’ve got an idea of what area you want to address, consider what data you already have. What information are you collecting right now, and what could you easily collect with the right systems in place? One of the main functions of business intelligence is to pull together data from different parts of your business and analyse it. So consider what kind of data you have available to feed in, as that will likely drive the results.

Also consider existing solutions you’re using, such as simple spreadsheets or databases. In some cases, these may be enough.

“There has to be enough data available so it can’t be readily understood without assistance,” says Paul Massie, senior director of operations and IT for YouSendIt. “There’s no point in implementing a BI if the data volumes are so small a person can look at the data and reach accurate conclusions.”

What Do You Need?

Once you’ve decided on an area of focus and identified what you have, it’s time to make a more specific decision on what you need.

If you’ve decided to focus on workforce efficiency, for example, and you already have data on employees’ attendance records, work hours, performance appraisals and computer usage, consider what the system you want to implement would ideally do.

Do you want something that integrates all your existing data and produces charts and reports showing you who’s performing best? Or do you want to identify new data sources and better ways of measuring employees’ performance?

Do you want to buy a simple software program, or have something customised for you? Do you prefer a cloud-based system, software as a service, or a software package that you install and run yourself? Do you want something that’s compatible with your existing systems, or something that replaces what you already have?

Once you’ve got clear answers to all these questions, you can start shopping around.

Sample Solutions

There are many providers out there, but here are a few to check out. The names and categories are taken from a report by Dresner Advisory Services.

Titans

• IBM
• Microsoft
• SAP

Large Established Pure-Play Vendors

• Actuate
• Information Builders
• Qlik

High-Growth Vendors

• Logi Analytics
• Pentaho
• Tableau
• Tibco

Specialized Vendors

• Dimensional Insight
• Dundas
• Jinfonet
• Klipfolio
• Phocas
• Targit

Emerging Vendors

• Adaptive Insights
• Birst
• GoodData
• Jaspersoft
• Jedox

This is not an exhaustive list, of course, and there are plenty of other providers out there. But browsing through the offerings of these companies will give you a great idea of the various business intelligence systems available to choose from.

You can also roll your own custom solutions. Learn how to work with web servers and create an analytics dashboard in our End-To-End Analytics course or how to start self hosting your own analytics server in this tutorial: 

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Next Steps

In this tutorial, we’ve arrived at a simple definition of business intelligence, discussed its benefits, and seen some examples of how other companies are using it to improve their performance.

The next step for you is to decide whether it’s right for your company, and start researching solutions. Follow the steps outlined in the final section of the tutorial to get clear on exactly what you’re looking for, and then start doing your research on different offerings from different vendors.

There are lots of options to choose from, so it can be confusing at first, but you’re also more likely to be able to find something that’s right for you and can help you take your business to the next level.

Editorial Note: This content was originally published in 2016. We’re sharing it again because our editors have determined that this information is still accurate and relevant.