What is business intelligence? Transforming data into business insights

Business intelligence definition

Business intelligence (BI) is a set of strategies and technologies enterprises use to analyze business information and transform it into actionable insights that inform strategic and tactical business decisions. BI tools access and analyze data sets and present analytical findings in reports, summaries, dashboards, graphs, charts, and maps to provide users with detailed intelligence about the state of the business.

The term business intelligence often also refers to a range of tools that provide quick, easy-to-digest access to insights about an organization’s current state, based on available data.

Benefits of BI

BI helps business decision-makers get the information they need to make informed decisions. But the benefits of BI extend beyond business decision-making, according to data visualization vendor Tableau, including the following:

Data-driven business decisions: The ability to drive business decisions with data is the central benefit of BI. A strong BI strategy can deliver accurate data and reporting capabilities faster to business users to help them make better business decisions in a more timely fashion.
Faster analysis and intuitive dashboards: BI improves reporting efficiency by condensing reports into dashboards that are easy for non-technical users to analyze, saving them time when seeking to glean insights from data.
Increased organizational efficiency: BI can help provide holistic views of business operations, giving leaders the ability to benchmark results against larger organizational goals and identify areas of opportunity.
Improved customer experience: Ready access to data can help employees charged with customer satisfaction provide better experiences.
Improved employee satisfaction: Providing business users access to data without having to contact analysts or IT can reduce friction, increase productivity, and facilitate faster results.
Trusted and governed data: Modern BI platforms can combine internal databases with external data sources into a single data warehouse, allowing departments across an organization to access the same data at one time.
Increased competitive advantage: A sound BI strategy can help businesses monitor their changing market and anticipate customer needs.

Business intelligence examples

Reporting is a central facet of BI and the dashboard is perhaps the archetypical BI tool. Dashboards are hosted software applications that automatically pull together available data into charts and graphs that give a sense of the immediate state of the company.

Although business intelligence does not tell business users what to do or what will happen if they take a certain course, neither is BI solely about generating reports. Rather, BI offers a way for people to examine data to understand trends and derive insights by streamlining the effort needed to search for, merge, and query the data necessary to make sound business decisions.

For example, a company that wants to better manage its supply chain needs BI capabilities to determine where delays are happening and where variabilities exist within the shipping process. That company could also use its BI capabilities to discover which products are most commonly delayed or which modes of transportation are most often involved in delays.

The potential use cases for BI extend beyond the typical business performance metrics of improved sales and reduced costs.

BI vendors Tableau and G2 also offer concrete examples of how organizations might put business intelligence tools to use:

A co-op organization could use BI to keep track of member acquisition and retention.
BI tools could automatically generate sales and delivery reports from CRM data.
A sales team could use BI to create a dashboard showing where each rep’s prospects are on the sales pipeline.

Business intelligence vs. business analytics

Business analytics and BI serve similar purposes and are often used as interchangeable terms, but BI should be considered a subset of business analytics. BI focuses on descriptive analytics, data collection, data storage, knowledge management, and data analysis to evaluate past business data and better understand currently known information. Whereas BI studies historical data to guide business decision-making, business analytics is about looking forward. It uses data mining, data modeling, and machine learning to answer why something happened and predict what might happen in the future.

Business intelligence is descriptive, telling you what’s happening now and what happened in the past to get your organization to that state: Where are sales prospects in the pipeline today? How many members have we lost or gained this month? Business analytics, on the other hand, is predictive (what’s going to happen in the future?) and prescriptive (what should the organization be doing to create better outcomes?).

This gets to the heart of the question of who business intelligence is for. BI aims to deliver straightforward snapshots of the current state of affairs to business managers. While the predictions and advice derived from business analytics requires data science professionals to analyze and interpret, one of the goals of BI is that it should be easy for relatively non-technical end users to understand, and even to dive into the data and create new reports.

Business intelligence systems and tools

A variety of different types of tools fall under the business intelligence umbrella. The software selection service SelectHub breaks down some of the most important categories and features:

Dashboards
Visualizations
Reporting
Data mining
ETL (extract-transfer-load — tools that import data from one data store into another)
OLAP (online analytical processing)

Of these tools, dashboards and visualization are by far the most popular; they offer the quick and easy-to-digest data summaries that are at the heart of BI’s value proposition.

Some of the top BI tools include:

Domo
Dundas BI
Microsoft Power BI
MicroStrategy
Oracle Analytics Cloud
Qlik
SAS
Sisense
Tableau
Tibco

Business intelligence jobs

Any company that’s serious about BI will need to have business intelligence analysts on staff. BI analysts use data analytics, data visualization, and data modeling techniques and technologies to identify trends. The role combines hard skills such as programming, data modeling, and statistics, with soft skills like communication, analytical thinking, and problem-solving.

Even if your company relies on self-service BI tools on a day-to-day basis, BI analysts have an important role to play, as they are necessary for managing and maintaining those tools and their vendors. They also set up and standardize the reports that managers are going to be generating to make sure that results are consistent and meaningful across your organization. And to avoid garbage in/garbage out problems, business intelligence analysts need to make sure the data going into the system is correct and consistent, which often involves getting it out of other data stores and cleaning it up.

Business intelligence analyst jobs often require only a bachelor’s degree, at least at the entry level, though to advance up the ranks an MBA may be helpful or even required. As of January 2023, the median business intelligence salary is around $72,000, though depending on your employer that could range from $53,000 to $97,000.

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