In this post, we have tried to gather the most important aspects of Business Intelligence you need to know. This is a complete guide that gives you who want to know what Business Intelligence is, what the benefits are, and what tools are available.
My hope is that after reading this guide you will know the basic concepts and understand how you could use Business Intelligence to make your business more efficient or competitive.
Our definition of Business Intelligence
Business Intelligence (BI), is a process, a collection of methods, and tools for
- Collect data
- Structure it
- Analyze it, and
- Finally, transform the raw data into insights you at the company can act on, or make decisions on
Who benefits from Business Intelligence?
Regardless of whether you are the CEO, CFO, owner, member of the management team, or the like, a business intelligence system can be used to provide a basis for smart and data-driven decisions. This is true for any organization and industry you are in.
Many companies continuously create amounts of information that is stored in the business system, various peripheral systems and/or in Excel.
Test yourself and your business:
- Can you come up with all the different systems your company is dependent on and which all save information about products, customers, transactions, events, hours worked etc?
- Are you sure that you and everyone else in the company at any given time have access to the right and easily accessible information to be able to make better decisions?
The goal of decision support is to turn all the passive information stored in business systems into active data that is used daily as a basis for supporting and improving the entire organization.
Remember – unused data does not contribute any value.
Do you want to know more about business intelligence in practice and which products are the most popular – read isf more on our product page via the link below
Business intelligence and decision support
You can use Business Intelligence for this
It’s about everything from:
- easier follow-up of income and expenses, to
- deeper analyzes of data to find unknown patterns, or to better understand and predict future customer behaviors.
Companies often have lots of data but lack the time/ability to use it fully on a daily basis.
The usual way of working is that the business system has some built-in reports, or that people around the organization make various extracts to Excel which they then process in different ways.
A real Business Intelligence tool can at the overall level:
- Automate these extracts and the subsequent processing of data. Here you can save lots of time, money & frustration if you today manually update Excel files with data (daily, weekly, monthly)
- Retrieve data from multiple systems and put this together into a unified view. Reports from the business system can be good, but they often contain only data from the business system and no other systems.
- Remove a lot of manual steps that are done today to handle data between different systems – and do so EVERYONE in the company ALWAYS has the latest updated information.
We return to different types of analyzes and concepts a little further down.
Data must trump salary/role when decisions are to be made
There is an expression called “Highest Paid Person’s Opinion” (HiPPO) and this can be a very costly trap a company can fall into.
Being a data-driven organization is very much about basing your decisions on data (facts) – rather than different opinions having to oppose each other.
By using a tool for Business Intelligence, data (internal or external) can be used as a basis for a decision.
The benefit of Business Intelligence
By highlighting and using all the data that is saved, you create the conditions for:
- find strengths/weaknesses,
- faster and better decision-making ability,
- improve internal processes,
- increase operational efficiency and identify bottlenecks
- easily find where you can make time or other types of cost savings
Much of Business Intelligence, as you notice, is about not having to handle data manually and redo the same processing at regular intervals.
If there is a system where data is automatically retrieved and the correct information (analyzes, graphs, tables) is displayed to the recipient, time is freed up within the organization that can be used for improvements.
Business Intelligence is not reports!
Reports are static information and things you usually look at daily, weekly, or monthly.
It is information that is shaped in exactly the same way every time.
What you think is important to look at differs from what your colleague thinks is important – and here also lies the disadvantage or problem of regular reports.
Unlike reports, Business Intelligence tools are intended to provide a broader and more dynamic picture. An image that is adapted to the person and the situation.
To get a complete and correct picture, you need to be able to drill down into details, move around and adjust so that the perspective fits the analysis that you want to do, right now.
A good Business Intelligent tool can do this easily by changing columns in tables, changing a chart to suit you, or making a whole new view to analyze something new.
This should be simple, fast and should not require you to know from which underlying system the data comes, or how it has been linked to data from other systems.
The important thing is that you can adapt the use!
This is possible if it is prepared in the system with data in the style of “Customer name”, “Order number”, “Order amount”, “Item number” etc etc. All of these should be constantly updated with the latest data and can be combined so they can help you to answer the questions YOU have.
It’s an answer to all the “IF?”
Something a report can never do that a powerful Business Intelligence tool can give you directly on screen is the answer to all “If?”, “How come ..?”, And “Why?” which arises at each step of your analysis.
An answer often begs a new question and it constantly places new demands on the analysis and the tools used.
A report gives you a flat overview but will never give you the whole picture or understanding.
Without being able to go to the bottom, see details, or answer all your “why?”, “What is the basis for this?” there is a risk that you make the wrong decision or miss opportunities.
Not all types of questions are equally common to answer via a Business Intelligence tool
Absolutely most common is to use a tool to get answers to “What happened?” and “What’s Happening Now?”
This way of using data is called Descriptive Analysis and aims to describe the collected data. Examples of this type of analysis are:
- “How much did we sell for to this specific customer?”
- “Which sellers sold what?”
With the help of descriptive analyzes, you can study (describe) your market or your internal processes to find bottlenecks or opportunities.
The predictive analysis aims to make forecasts and with the help of data try to predict what will happen.
To make forecasts of what something will look like in the future, the same historical data that has been collected and used in the descriptive analyzes is used.
In simple terms, it can be said that predictive analytics is a more advanced level of Business Intelligence, and often not where a business begins.
The next step is called prescriptive analysis and aims to use data to make predictive analyzes, and then suggest the best ways to get there.
Google’s self-driving cars that collect data, form an idea of the world around them, can understand where the car is going (predictive), and can decide for itself what to do next to achieve the best results – is a typical prescriptive analysis.
For obvious reasons, this is extremely difficult, or advanced, and is quite rarely applied in within “a regular business”.
How you succeed with Business Intelligence
If you have not worked with Business Intelligence before, here is a description of the different steps you can take to get a well-functioning tool in place.
Even if you already have a tool within your company, you can use these steps to secure or verify so you get the maximum value.
Important to remember: just because you have purchased a tool does not mean that you are ready, or will automatically create a lot of benefits for colleagues around the organization.
I have been with several companies that have made this mistake and forgotten the important aspects that lead to an easy-to-use tool that many can benefit from. These aspects include
- It has not been discussed in advance what is to be achieved.
- There has been no plan for where to start, ie which problems to tackle first (tip: start with those that provide the most value, ie those that today cause the most irritation or cost the most money)
- There has been no responsibility for the investment, or this person did not have the time or the energy to implement and distribute a Business Intelligence tool internally.
- There has been a lack of a common view on how key figures should be calculated or which data is “correct or true”. This has resulted in users not trusting the information in the tool
So, to avoid a failed project, and to facilitate the introduction of Business Intelligence, we recommend these steps.
Step 1 – Introduce Business Intelligence and ensure consensus
Start by explaining what Business Intelligence is to your colleagues and stakeholders.
Include both users and decision-makers. You need to have a common view of what it is and that it is mostly not about predicting the future with the help of predictive or prescriptive analyzes.
In this step, it is also a lot about discussing which problems should be solved, and not least agreeing on which KPIs (metrics) should be used for follow-up. Do not forget to ensure that everyone agrees on how these are calculated.
If you do not skip this step, you know what is to be achieved and how to measure or follow up, so you are later on the right path.
Set goals, KPIs and formulate requirements
Agreeing on what you want to achieve (at a high level) is to formulate which problems are to be handled.
By doing this, some important overall requirements fall out – at the same time as you create an image of what is required in the future.
These can be things like:
- What data sources do we need to use? (For example business system, CRM system, Excel files, other systems)
- What data do we need from these systems? (For example sales data, customer information, etc.)
- Who should have access to the information? (For example, CEO / LG needs to be able to see everything while salespeople should only be able to see their own numbers)
- How should the information finally be presented? (For example: should it be a dashboard that shows our KPIs, graphs/diagrams are needed, tables that show details) Remember that different people or roles may need the information in different ways.
- How should you measure that you are on the right path? (For example: are there different levels for each KPI that signal eg red/yellow / green?)
By discussing these things, you have set the framework and expectations for the project.
After this step, you have also gained a good idea of the requirements you need to place on a Business Intelligence tool.
You are now in a good position to be able to formulate what functions and abilities your tool needs to possess. If you write these down, you have the draft of a requirements specification.
Step 2 – Select a Business Intelligence tool
Step 3 – Assemble a Business Intelligence team
Step 4 – Implementation – getting the system in place
Often, the implementation of a Business Intelligence tool is quite a bit about the actual installation of the software.
This often goes pretty fast and is relatively straightforward.
What takes time in a project is, in the order these need to happen, that:
- Retrieve the desired data from the various data sources to the tool
- Process this data and structure it in such a way that data from one system can be linked to data from another system. For example, sales data from the business system must be linked to the correct customer data from the CRM system
- Verification of data where calculations, amounts, etc. are correct
- Creation of the graphs/tables etc. that are later used to analyze and understand data
It is not entirely uncommon to want to be able to follow up and analyze many different things – from different areas/functions in the company.
Salespeople want to track their numbers and understand their sales data.
Production people wants to be able to see how they perform, what they should improve, what are the most common reasons for problems etc etc
The CFO wants to follow financial data at the company level, group level, project level, or similar.
We recommend that you choose a place to start. Start small and work towards the end goal.
At first, it may be enough to be able to see a few key figures and the most important information.
Once this is in place, the recipient may be able to start using the Business Intelligence tool – while those working on the development may continue with the next key figure/graph/table.
The pace of development can be fast and often a “back and forth” is also needed between those who develop and those who will use the solution.
It is not until you actually see the information, the data or do the analysis that it becomes obvious which tables are needed, or what the graphs should look like.
Let the process be iterative!
Step 5 – Training and disseminating the use
The best results are often achieved when as many people as possible can use the system and understand how it works.
A good and practical way to get there is to arrange some form of training for the people who can benefit from working in the system.
These people may not have been involved in the process since step 1 and need to understand the background, ie the purpose, of introducing a Business Intelligence tool.
Practical questions about how to log in to the system often appear as a first threshold.
Then it is common that you do not really understand how the system has calculated or how to interpret a number, graph, or table.
This may be the first time someone is presented with a single image, ie data from several different systems that have suddenly been merged and become available.
By arranging training, it is usually quite easy to spread the knowledge and increase the understanding of the purpose of the system and how each individual can benefit from it.
It is not at all uncommon for the Business Intelligence tool to become the business system most used (especially by CEOs, people in the management team, department heads, project managers, etc.).
It is perceived as an easy way to quickly create an idea of how things are going and how the company is feeling.
The individual business systems can be great to work in and enter information into – but the Business Intelligence tool is often the only tool that can retrieve data from all systems, show how it works, and make it possible to do deeper analysis.