The business intelligence software market is estimated to be worth around $23.4bn in the US alone. This is up from $16.56bn in 2016. The reason? Companies are becoming more dependent on data to stay competitive.
Business intelligence software helps manage and interpret useful data. But, what is business intelligence software exactly, and how can it benefit your business?
What is Business Intelligence Software?
Business intelligence (BI) software is a tool that helps businesses make data-driven decisions through various capabilities including data mining and visualization.
Put more simply, business intelligence software solutions use internal and external business data as inputs and present it intuitively through dashboards, graphs, and reports. This enables businesses to improve efficiency, identify opportunities, and understand business performance.
All departments can use business intelligence to make better decisions. For example, HR can use business intelligence to identify skills and characteristics required to be successful in a specific role. Given that the average cost per hire can be as high as $4,425, this is important information.
How Does Business Intelligence Software Work?
BI software solutions tap into data warehouses to source information. Data warehouses are like a warehouse of information that source information from multiple sources into one digital location. Some modern solutions may also directly source data using Hadoop, though data warehouses are still a more common choice.
More advanced solutions also offer artificial intelligence (AI) and machine learning (ML) capabilities. AI and ML can further empower businesses to gain deeper insights into data sets. For example, a BI solution might source geographical information and use geospatial mapping to render visualizations.
How Can Business Intelligence Benefit Your Business?
The primary benefit of BI software is its ability to facilitate data-driven decisions. These data-driven decisions, in turn, offer the following benefits:
1. Efficient Decision-Making
BI software solutions can pull raw data from multiple sources and convert it into intuitive dashboards and reports. Leaders can gain deeper insights without manually compiling data or learning code.
Being able to visualize data on interactive dashboards offers valuable insights. You can quickly establish relationships and pick up patterns, allowing you to make impactful, data-driven decisions.
2. Competitive Edge
Having the right tools to source and interpret business data can give you a significant edge over competitors.
With BI software, you’ll be able to use data for multiple tasks (like staffing, budgeting, and risk analysis) more efficiently than competitors that rely on conventional business analytics tools.
Using a modern BI platform, you’ll also be able to track competitors’ data, such as sales and marketing data, and use it for predictive analytics. Tracking their strategies’ performance can provide actionable insight when coming up with your own strategy.
3. Better Data Quality
Big data almost always has inconsistencies and noise that skews the analysis. If you can source and consistently update data, you’ll put yourself ahead of many of your competitors.
BI platforms can work as data aggregators, pulling data from various sources. Collecting data from multiple sources improves the data quality and helps paint a clearer picture that’s closer to reality.
4. Real-Time and Accurate Reporting
A business intelligence platform collects data from multiple sources, converts it into reports, and updates them in real time, so you always have all the information needed to make effective decisions.
Reports are typically easy to read and include visualizations, allowing you to spend more time on strategy than interpreting reports. However, some BI tools also add interactive elements to their reports, allowing business users to manipulate data and variables visually and more effectively.
Lenovo India is an excellent example of how a business can use BI to improve reporting efficiency. The team at Lenovo India used Tableau, a BI platform, and increased reporting efficiency by 95% across multiple departments.
Interestingly, their HR team was able to consolidate various monthly reports into a single BI dashboard using Tableau, allowing faster decision-making.
5. Improve Customer Experience
With business intelligence software, you can create department-wise dashboards to pull data from multiple fronts like support and sales.
The data helps you identify opportunities to deliver better customer experiences. You can also study customer segments, current industry trends, and competing products to better understand what your customers are looking for.
Your customers probably research you and your competitor’s products before contacting you. Using data to identify an average customer’s objections to buying the competitor’s products and yours can help focus on their pain points, helping you drive home a sale and improve your offering.
What are the Types of Business Intelligence Software?
Business intelligence tools come in various forms. Some tools wrap multiple applications into one interface, while others offer a more focused set of capabilities.
Here are the most common types of BI software based on applications:
1. Operational BI (OBI)
OBI provides real-time operational data to managers, enabling them to make better decisions faster. For example, you can use operational data to identify productivity bottlenecks for a team or project using a BI tool’s reports.
You can have the OBI pull data from various internal and external sources like an ERP (Enterprise Resource Planning) tool and data warehouses. It compiles the data and presents it visually so you can evaluate it against benchmarks.
2. Online Analytical Processing (OLAP)
OLAP is a vital component (rather than a standalone type) of any BI system and is ideal for complex queries and calculations, “what if” scenarios, limitless report viewing, and more.
Business data is generally multi-dimensional. Put simply, business data can generally be segregated into multiple categories (or dimensions). For example, HR data might have dimensions related to qualifications, experience, and profile.
However, data sets are stored in tables in a data warehouse. Each data set can organize data in only two dimensions. OLAP can pull this data, reorganize it multidimensionally for processing, and offer better insights as a result.
3. Embedded BI
Embedded BI helps integrate reports, data visualization, and an interactive dashboard within an existing business application. The BI solution processes the data, but the host application is responsible for displaying the data in its interface, which can improve usability. Essentially, you get embedded analytics within a tool that you're already using.
The major benefits of embedded BI include:
- Placing information more contextually within an existing application
- Gentle learning curve
- Easy adoption because the BI tool is embedded in an application the team already uses.
4. Open Source BI
Open source BI tools are typically available for free and at a price. If you’re a startup or young company, open source BI might help you keep costs to a minimum.
Open source BI allows you more flexibility because you can always modify the code. For example, you can add modules for industry-specific compliance requirements such as HIPAA, provided you have someone on the team with relevant skills.
The downside? You might need to rely on the online community when you need support. As a business, you need professional support that can solve problems fast, which might be less likely when you rely on the community.
5. Location Intelligence (LI)
LI uses geospatial data analysis to help make geographic decisions. For example, a retail company might want to gauge the footfall before leasing a store in a specific location. That’s where LI can help. You can also use LI for logistics, marketing, and real-time merchandising, among other things.
Since location analytics is more visual than other forms of advanced analytics, its output is easier for laypeople to understand and interpret. When you have location-based data on a map, your teams can quickly identify the location of an event and determine why it occurred.
For example, LI can help you understand why a specific location’s revenue increased by 20%. Did the increased foot traffic have anything to do with the weather conditions or the season?
Prepare for the Future with BI
BI will likely become a must-have as opposed to a nice-to-have as more businesses, including your competitors, start capitalizing on the power of data.
Sure, a BI tool requires an upfront investment, but you’re likely to earn that money back, and then some, when you use it to make data-driven decisions.
Sometimes, you might get a business intelligence solution as part of another software solution’s suite of applications.
For example, ERP systems often include a business intelligence tool. If you’re considering a complete suite of business applications that also offers a business intelligence tool, read our guide on the 10 Best ERP Systems for Small Businesses on a Budget.
Related read: Best Business Management Software