Business intelligence (BI) is a specialized field employing technology, data tools, and services to offer insights for guiding business decisions and monitoring. These insights, often in the form of metrics and visualized data, provide an overview of the organization's current status. BI emerged to leverage the increasing volumes of data stored by corporations, aiming to help businesses derive value from these data assets.

The business intelligence process typically involves three main stages:

Data Collation from Various Sources

The BI function collaborates with different teams to gather and compile the necessary data from various sources to address specific knowledge gaps. This process may include setting up data logging within a product or extracting data from different databases.

Data Transformation and Storage

Once the data is collected, the BI team works on transforming, quality checking, and storing the data. This involves ensuring data integrity and consistency, and it is usually maintained in databases for ongoing access and analysis.

Business Reporting

The final step involves reporting the insights and information derived from the data to the organization. This is typically done through dashboards, reports, and other communication channels. The reporting may include a combination of pre-defined business dashboards, self-service tools, and ad-hoc outputs tailored to specific needs.

Tools for Business Intelligence

Business intelligence professionals utilize a range of tools to gather, convert, and store data, as well as to produce business reports. Here are some of the tools commonly employed by BI practitioners:

• Spreadsheets remain fundamental in BI operations due to their versatility and extensive feature set. BI teams leverage spreadsheets for their flexibility, enabling sophisticated data manipulation. Moreover, their user-friendly interface makes them accessible to various functions within organizations.
• Business intelligence teams often employ data mining tools to extract valuable insights from datasets. These tools may involve manual queries or specialized reporting tools designed to retrieve information from predefined databases, facilitating the generation of actionable business insights.
• BI teams frequently utilize reporting software or formalized reporting tools to fulfill corporate and regulatory reporting requirements. These tools enable BI functions to generate and deliver the necessary outputs efficiently and accurately.
• Data visualization tools and software are essential for business intelligence teams to present data and trends in an easily understandable format. These tools allow BI teams to offer self-service information to the business, facilitating better decision-making.

Types of Business Intelligence can be categorized into three main areas:

Continuous Business Intelligence

This involves the maintenance of various reports, dashboards, and self-service tools utilized by different teams across the organization to support day-to-day operations.

Formalized Reporting

Business intelligence teams may handle formalized reporting obligations such as regulatory compliance, financial reporting, investor relations, or other corporate reporting requirements.

Exploratory Business Intelligence

This encompasses the proactive exploration and analysis of data to uncover new insights or sources of information that could benefit organizational decision-making and strategy development.

Advantages of Business Intelligence

Investing in a business intelligence function offers numerous advantages:

Single Source of Truth

Business intelligence functions establish a centralized repository for essential business metrics, ensuring consistency and accuracy across the organization by rigorously verifying data quality.

Informed Decision Making

By surfacing critical business metrics, BI functions facilitate informed decision-making at all levels of the organization, disseminating information through various channels such as self-service dashboards and reports.

Enhanced Visibility

BI functions provide increased visibility into key performance indicators, enabling stakeholders to monitor and assess business performance effectively.

Improved Efficiency

By automating data collection, processing, and reporting tasks, BI functions streamline operations, saving time and resources while improving efficiency.

Despite these benefits, there may be challenges associated with the implementation of business intelligence:

Potential for Misinterpretation

Self-service BI tools may lead to confusion if stakeholders misinterpret or misunderstand dashboards or visualizations, highlighting the importance of training and clear documentation.

Overall, the advantages of implementing a robust business intelligence function outweigh the potential drawbacks, particularly when accompanied by effective training and communication strategies.

Applications of Business Intelligence

Business intelligence functions play a crucial role in various business domains including finance, marketing, product management, and human resources by providing valuable insights. 

Here are some examples:

MARKETING

For marketing support, the BI function may be responsible for generating and maintaining ongoing reports on the total addressable market (TAM) segmented by customer groups. This involves sourcing data on customer numbers, competitive figures, and industry-specific data to understand the potential customer base. These insights are then delivered to the marketing teams to formulate data-driven marketing strategies.

FINANCE

In finance, the business intelligence team may focus on managing the lifetime value (LTV) work stream. This involves gathering data inputs to create LTV data tables, developing LTV dashboards, and distributing reports on LTV updates across different countries. Additionally, they may handle regulatory reporting tasks, ensuring the setup of systems to generate company reports and financial statements.

HUMAN RESOURCES

In the realm of human resources, the BI function may be responsible for regular reporting to senior leadership on critical staffing metrics such as turnover rates, hiring trends, and overall company size and growth. They may also handle regulatory reporting requirements, ensuring consistent reports on salaries across different demographics.

PRODUCT

In product management, the business intelligence function may oversee various projects, including maintaining accurate customer numbers categorized by product features. This entails basic customer segmentation, such as tracking daily, weekly, or monthly user volumes and distinguishing between repeat and new customers. The BI team sources and verifies data on customer numbers and visualizes the information for business leaders.