Business intelligence (BI) refers to skills, technologies, applications and practices used to help a business (or stakeholders) acquire a better understanding of its commercial context. Business intelligence may also refer to the collected information itself.
Business intelligence (BI) applications provide historical, current, and predictive views of business operations. Common functions of business intelligence applications are reporting, OLAP, analytics, data mining, business performance management, benchmarks, text mining, and predictive analytics.
Business intelligence often aims to support better business decision-making. Thus a BI system can be called a decision support system (DSS).
History of Business Intelligence
In a 1958 article, IBM researcher Hans Peter Luhn used the term business intelligence. He defined intelligence as: "the ability to apprehend the interrelationships of presented facts in such a way as to guide action towards a desired goal."
In 1989 Howard Dresner (later a Gartner Group analyst) proposed BI as an umbrella term to describe "concepts and methods to improve business decision making by using fact-based support systems." It was not until the late 1990s that this usage was widespread.
Business Intelligence and Data Warehousing
Often BI applications use data gathered from a data warehouse or a data mart. However, not all data warehouses are used for business intelligence nor do all business intelligence applications require a data warehouse.
The term business intelligence is often used as a synonym for competitive intelligence. A broad definition of Competitive Intelligence is the action of gathering, analyzing, and applying information about products, domain constituents, customers, and competitors for the short term and long term planning needs of an organization. Competitive Intelligence (CI) is both a process and a product. The process of collecting, storing and analyzing information about the competitive arena results in the actionable output of intelligence ascertained by the needs prescribed by an organization.
Key Points of These Definitions (Competitive Intelligence)
Competitive Intelligence is an ethical and legal business practice. (This is important as CI professionals emphasize that the discipline is not the same as industrial espionage which is both unethical and usually illegal).
The focus is on the external business environment.
There is a process involved in gathering information, converting it into intelligence and then utilizing this in business decision making. CI professionals emphasize that if the intelligence gathered is not usable (or actionable) then it is not intelligence.
A more focused definition of CI regards it as the organizational function responsible for the early identification of risks and opportunities in the market before they become obvious. This definition focuses attention on the difference between dissemination of widely available factual information (such as market statistics, financial reports, newspaper clippings) performed by functions such as libraries and information centers, and competitive intelligence which is a perspective on developments and events aimed at yielding a competitive edge.
The term CI is often viewed as synonymous with Competitor analysis but Competitive Intelligence is more than analyzing competitors. It is about making the organization more competitive relative to its existing set of competitors and potential competitors. Customers and key external stakeholders define the set of competitors for the organization and, in so doing, describe what could be a substitute for the business, votes, donations or other activities of the organization. The term is often abbreviated as CI, and most large businesses now have some Competitive Intelligences functions with staff involved often being members of professional associations such as the Society of Competitive Intelligence Professionals.
The Society of Competitive Intelligence Professionals (SCIP) is an organization for those who are interested in learning more about Competitive Intelligence. Established in 1986, it provides education and networking opportunities for business professionals, and provide up to date market research and analysis. Members of the SCIP have backgrounds in market research, strategic analysis, science and technology.
The Future of Business Intelligence
A 2009 Gartner Group paper predicted these developments in business intelligence market:
Because of lack of information, processes, and tools, through 2012, more than 35 per cent of the top 5,000 global companies will regularly fail to make insightful decisions about significant changes in their business and markets.
By 2012, business units will control at least 40 per cent of the total budget for business intelligence.
By 2010, 20 per cent of organizations will have an industry-specific analytic application delivered via software as a service as a standard component of their business intelligence portfolio.
In 2009, collaborative decision making will emerge as a new product category that combines social software with business intelligence platform capabilities.
By 2012, one-third of analytic applications applied to business processes will be delivered through coarse-grained application mashups.
Business Intelligence is the process of gathering meaningful information at any time to answer questions and identify significant trends or patterns, giving key stakeholders the ability to make better decisions.
Knowing exactly all the ins and outs of a company is a primary need for a successful business, and therefore getting the right data to the right person at the right time is essential.