Business Intelligence

Business intelligence differs from business analytics. Business intelligence deals with the measurement of past business performance and is used as a guide to business planning.

What is Business Intelligence?

Business intelligence refers to computer-based techniques that are used in recognizing, extracting and analyzing business data like sales revenue by products and/or departments, or by associated costs and incomes. Business Intelligence or BI offers views of business operations in the past, present and future and its functions are reporting, online analytical processing, analytics, data mining, process mining, complex event processing, business performance management, benchmarking, text mining and predictive analytics.

Business Intelligence History

Hans Peter Luhn, an IBM researcher, used the term business intelligence in an article in 1958 defining intelligence as “the ability to apprehend the interrelationship of presented facts in such a way as to guide action towards a desired goal.”

Business intelligence has since evolved from the decision support systems that began in 1960’s and has developed through the mid-1980s. The origin of DSS is from the computer-aided models made to assist decision-making and planning. It was in the late 1980s when business intelligence came into focus which began from DSS, data warehouses, executive information systems and OLAP.

What is Business Intelligence Used For?

The aim of business intelligence is to support better business decision-making which is why it can be referred to as decision support system or DSS. Even if the term business intelligence is also sometimes used as a substitute for competitive intelligence since they both support decision making, business intelligence uses technologies, processes and applications to analyze mostly internal, structured data and business processes. Competitive intelligence, on the other hand, gathers, analyzes and distributes information focusing on the competitors of the company. Business intelligence on a broader scale can possibly include the subcategory of competitive intelligence.
The BI application usually uses data that are gathered from data warehouses or a data mart. But not all data warehouses are used for business intelligence; likewise, neither do all business intelligence applications require a data warehouse. To be able to differentiate concepts between data warehouses and business intelligence, Forrester Research, an independent technology and market research company that offers advice on existing and potential impact of technology to their client’s as well as the public, repeatedly defines business intelligence in one of two ways, the broad definition being “BI as a set of methodologies, processes, architectures and technologies that transform raw data to meaningful and useful information to enable more effective strategic, tactical and operational insights and decision-making”. Looking at the use of business intelligence in this definition, it will also include technologies like data integration, data quality, data warehousing, master data management, text and content analytics among many others that the market occasionally adds into the information management segment. Because of this, Forrester denotes data preparation and data usage as two distinct but closely related segments of business intelligence.

Business intelligence can also be responsible for a pro-active approach wherein there is an Alarm function which alerts end-users immediately. An example of an alert is when a company goes over the threshold value; the color of that amount in the report becomes red which alerts the business analysts.