Business intelligence, or “BI” for short, is becoming more and more popular of a topic with each passing year. However, there are also more marketers looking to pitch their brands and businesses related to business intelligence concepts. This leads to jargon and being used that can create a lot of confusion – which creates a need for clarity. That’s our goal with this introduction to BI: to give you clarity around the business intelligence basics. That way, the next time you’re at the water cooler and someone mentions BI concepts, you can join the conversation with a knowing smile. Exclusive Bonus Content: Get the short and sweet version with our free executive summary!
Beginner's guide to R: Introduction Get started with this popular programming language. [ Data warehousing and business intelligence are critical to business success. Take this online course. This Introduction to Business Intelligence: Designing a Successful BI Program course is offered multiple times in a variety of locations and training topics. Setting up a business intelligence program takes more than just installing the technology.
Introduction To Business Intelligence Concepts “Business intelligence (BI) is the use of computing technologies for the identification, discovery and analysis of business data – like sales revenue, products, costs and incomes. BI technologies provide current, historical and predictive views of internally structured data for products and departments by establishing more effective decision-making and strategic operational insight.” – The above definition is thorough and technically correct. However, it’s a bit complex.
So, at the risk of oversimplifying, business intelligence is the process of finding important and useful trends in data in order to make more effective decisions related to your business. As pattern recognition is a decisive part of BI, the role of is essential. When it’s done well, pattern recognition is one of the key hallmarks that distinguishes experts in a field from amateurs. The Two Types of Decision-Making In Our Brain Chess prodigy Joshua Waitzkin writes about this distinction in. In his book, Waitzkin states that the best chess players are those that can take in the most information in a short span of time. They do so using the “fast thinking” system of their brain. Let us explain.
As laid out by the Nobel winning psychologist Daniel Kahneman in his book, your brain has two different learning and decision making systems: Source:.click to enlarge. Slow But Accurate You have a slow thinking system which you can think of as a spotlight of attention.
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You use this system when you really focus on and think about a problem step by step. This slow thinking system is very accurate.
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However, it can only process so much information at any one time and requires a lot of energy. Many of us don’t use our slow thinking system for most decisions. Instead, we use our fast system, otherwise known as our intuition. Fast But Error Prone Your fast thinking system can take in massive amounts of data at once. It can also make snap decisions very quickly, with pretty high accuracy.
However, your fast thinking system has one big disadvantage. It is prone to logical fallacies and perceptual biases. If your slow thinking system is like a spotlight, your fast thinking system is like the area of a picture that isn’t in focus. You don’t have to burn much energy to use it, but you don’t see things as clearly as you do with your slow thinking system. Source: The capabilities of your slow thinking system, or your spotlight of awareness, don’t seem to change very much as you gain expertise.
Similarly to how most people can only hold so many digits in their short term memory at once, your slow thinking system appears to have some biological limits. Experts Have Better Pattern Recognition At this point, you may be thinking, “This is all well and good, but how does it relate to expertise and business intelligence?”.
The key point here is that experts in a field are able to recognize and use vastly more information at once using their fast-thinking system than amateurs can. As Waitzkin writes about in in, a chess grandmaster can look at a board for a split second, and take in more useful information than an amateur can in minutes. Due to this greater informational processing ability, experts are able to use their slow thinking spotlight where it counts: on critical thinking and checking their biases. You can view Business Intelligence as an extremely powerful tool that is an extension of your fast thinking mind. This makes sense because Business Intelligence allows you to process exponentially more information than you would be able to otherwise. While you still need to do your homework and check everything using critical thinking, if you use Business Intelligence correctly, you’ll have an incredible competitive advantage over the other companies in your market. Exclusive Bonus Content: Get the short and sweet version with our free executive summary!
Why Are Business Intelligence Concepts And BI Solutions So Important Today? The importance of Business Intelligence is growing at the same pace the data is produced – which is becoming less and less fathomable for the normal human brain. An exponential data growth The fact is, without Business Intelligence, you risk the very real possibility of drowning in data. Just look at these numbers: a ccording to in 2015 there were 2.5 quintillion bytes of data produced daily. Do you know how much a quintillion is? It’s a 2.5 followed by 18 zeros. It’s expected that by 2020, there will be 40 zettabytes of data in the world.
For scale, in 2012, the entire Internet only contained ½ of one zettabyte in data. How’s that for exponential growth?
Source:.click to enlarge. Depending on how you see it, this incredible amount of data is either a huge headache or the world’s greatest opportunity. On one hand, there’s more possible useful information points out there than ever before. But, on the other hand, there’s much more noise standing in the way of you finding that useful signal than ever before. Business Intelligence basics are crucial. They’re needed to cut through the noise, and get to the good stuff in the sea of data we all live in. The three basic components of a BI solution If you ask a BI professional, they’ll probably break the following business intelligence concepts into much more specific layers.
However, for the purposes of this article, there are three basic components to a:. The data itself. The data warehouse. Data access, analytics, and presentation Let’s examine each of these in turn. The raw data The first component is the data itself.
This could be anything from sales records for your year, keywords for your latest advertising program, salary and benefit tables, or profit and loss statements. A company’s data is usually stored in many different databases, because of the nature of that data and how it is collected (through CRMs, ERPs, flat files, APIs, etc).
This is why BI solutions developped various that let users connect all their databases in one centralized data warehouse, to work on them conjointly and easily perform cross-database analyses. The data warehouse As mentioned above, the is the logistics platform that connects all of your different databases together, and allows you to create relationships between them. This is an area that has seen great advances recently with the introduction of. The legacy approach to a data warehouse was often a mishmash of different Excel sheets, old main frame style databases that had to be accessed by technicians, paper based records, and proprietary program databases. After realizing how difficult it was to make use of all of these scattered data sources, people began to integrate databases through the use of warehouses and systems. Modern systems are also superior to the legacy systems in that they often update in real time, as opposed to having to be manually updated – a process which often required the IT department.
Data access, analytics, and presentation Once all of your data is connected and can “talk to each other,” one of the next key business intelligence concepts is to make use of that data. This involves accessing the data, analyzing it for important trends, and presenting it in a way that is immediately understandable. These steps can often blend together, especially if you use that let you zoom in and out of your data according to your business need. Data presentation has also come a long way since the Excel days.
Now there are beautiful, intuitive that can give you the information you need at a glance. How To Apply BI Concepts Concretely? As you read earlier, business intelligence basics essentially upgrade your ability to see useful trends and patterns related to your business and the marketplace. Business Intelligence concepts allow you to make use of the “80-20 principle,” which states that 80% of your results in any field come from 20% of your actions. To make the most out of your business intelligence, there is an important dimension to disclose: the data visualization. Indeed, visualizing the mountains of data you deal with is essential to understand it, this is why some should be added to the overall BI basics we are talking about in this post. From to knowing how to do an efficient, there is a lot to explore.
With that in mind, here are a couple of BI use cases. Business Intelligence applied to sales Using, you can see which of your sales reps are performing the best. You can then dig deeper into why their performance is better than their colleagues’, and see what you can do to replicate their success on a wider scale. With a like the following one, we can clearly analyze the sales cycle length at each step of the funnel, and compare each manager’s performance:.click to enlarge. 2. Business Intelligence applied to customer acquisition You can examine which of your customer acquisition channels is currently driving the most revenue.
You can also analyze which of your customer acquisition channels is giving you your best customers — the ones that pay on time, and refer you new business. For instance, a like the one hereafter will greatly help the manager in knowing his/her customers’ behaviour. Breaking down the sales volume by division shows that women’s articles are the main source of revenue; breaking them down by location shows the performance of each city.
All of this will help in designing specific marketing campaigns according to the target, or if they need to compare two points of sales when implementing A/B testing campaigns, in order to acquire new customers more efficiently.click to enlarge. 3. Business Intelligence applied to marketing Using a combination of and predictive analytics, you can identify your most efficient campaigns and the common factors they share.
On the below, you get an idea of how your online presence is going, the different channel acquisition you should keep an eye on and how your different campaigns are performing, according to your goals. You can then use this information to plan your next marketing initiative and make it as likely to succeed as possible.click to enlarge. Exclusive Bonus Content: Get the short and sweet version with our free executive summary! This introduction to business intelligence showed us that in today’s data-driven world, the companies and individuals who can sift through the noise to find the signals of real importance will have a head and shoulders advantage over their peers. BI concepts provide a form of advanced pattern recognition to the savvy individuals and businesses who are looking for cutting-edge competitive advantages. Put as simply as possible, BI helps you to know your marketplace, your customers, your competitors, and your business as well as possible so that you can make the most effective decisions you can.
So don’t miss the train, and hop on the BI bandwagon with!