BI answers these questions by analyzing and comparing business historical data. Data is created by business activities or data from outside sources like environmental, demographic, immigration data, etc. to study a particular group of people or customers. Such information is used by businesses to understand their business trends, their strengths and weakness, and to analyze competitors and the market situation. The information can also be used by government or secret agencies, especially like US Homeland Security, that need to have access to financial, immigration, transportation, and any kind of related data that can be analyzed to determine probable attacks on its citizens or property.
In addition to determining trends, another push to implement BI comes from, the Sarbanes-Oxley legislation, which affects corporate financial reporting, and accounting rules for publicly-held companies. To be in compliance with Sarbanes-Oxley, BI systems will be needed to insure the timely and accurate analysis of business data. Thus real time BI is not only relevant but key to achieving compliance.
Since business intelligence is a multifaceted concept, we will examine it from 3 different perspectives:
Making better decision faster:
The primary goal of business intelligence is to help people make decisions that improve a company’s performance and promote its competitive advantage in the marketplace. In short, business intelligence empowers organizations to make better decisions faster.
In the best of all worlds, managers, from the lower lead supervisor to the CEO, make decisions by considering their experiences, their understanding of the business, their business plan and information. Often the experience, understandings, and strategies that go into decision making are pretty static; that is they change very slowly. Making better decisions means improving any or all parts of the process; this also results in fewer poor decisions and more superior ones. Better decisions result in better achievement of corporate objectives, such as improving share holders value.
Converting Data into information:
To make better decision faster, executives and managers need relevant and useful facts at their fingertips. But there is often a large gap between the information that decision makers require and the mountains of data that business collect every day. We call this as analysis gap.
To bridge this analysis gap, organizations make significant investments in the development of BI systems to convert raw data into useful information. The most effective BI systems access huge volumes of data and deliver relevant subsets instantly to decision makers. Some call this “analysis at the speed of thoughts”.
BI solutions at the enterprise level are charged with collecting and reporting a company’s most important metrics sometimes called key performance indicators (KPIs).
Using rational approach to management:
Business intelligence can be described as an approach to the management. People and organization adopt the BI attitude because of belief that a fact-based, rational approach to making decisions, to the extent this is possible, is basically a good thing.
The BI attitude is characterized as follows:-
- Seeking objective measurable quantitative facts about the business
- Using organized methods
- Inventing and sharing methods that explain the cause and the effect relationships between operational actions and the effects theses have on reaching the goals of the business
- Experimenting with alternate approaches and monitoring feedback on results
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