The sheer volume of data generated by even a single business presents both a challenge and an opportunity. The task is not merely to collect this data but to connect the dots and make sense of it all.
Business intelligence is a tool to interpret and strategically use data to guide decision-making. Ultimately, it should be a cornerstone for any business’s short- and long-term planning.
What is business intelligence?
Business intelligence (BI) is the collection of technologies, applications, strategies, and practices organizations use to collect, analyze, and transform data into actionable insights that guide their strategic and tactical business decisions. Using advanced analytics, predictive modeling, and interactive dashboards, BI toolstransform raw data into a format that is understandable and actionable.
This is critical because BI blends diverse data streams—like sales results, ecommerce metrics, and customer behavior information—into a coherent picture. With this intel in hand, you can upgrade your business operations, improve the customer experience, and, ultimately, increase profitability.
What are the benefits of business intelligence?
Above all else, BI gives people in key roles clear, accurate insight into information they need to make decisions. Such a powerful benefit can bring a host of additional benefits to the table, like competitive advantage, improved business operations, and more. Let’s take a look at a few in more detail.
Better business decisions, driven by data
Business intelligence tools let teams analyze data from multiple data sources, both historical and current. Business users can tap into advanced analytics and data visualization tools to make decisions by identifying trends that might otherwise go unnoticed. Using this analysis process, organizations can trust business intelligence software to help answer questions that are pivotal for their business strategy.
Greater operational efficiency
The data analysis capabilities of BI tools can help identify and eliminate operational bottlenecks, from more clearly understanding inventory management to parsing customer behavior analytics and beyond. Self-service business intelligence allows even non-data analysts to explore data, making business operations more efficient.
Elevated customer experience and satisfaction levels
By employing data mining and predictive analytics, business intelligence works to help businesses understand customer behavior and preferences. That way, teams can tailor their services to suit the needs of their target audiences, increasing customer satisfaction.
For example, if a retailer notices that online customers frequently abandon carts containing running shoes, they could send these customers a targeted discount code for those shoes to encourage them to complete the purchase.
Improved supply chain management
BI software simplifies data preparation and offers advanced analytics to uncover inefficiencies in a business’s supply chain. Through online analytical processing and data visualization software, teams can improve supply chain processes to better respond to market trends and changing demand.
For example, BI software might allow a retailer to visualize how their stock is moving through the supply chain. By sorting orders based on status and organizing the information into a chart, they’ll be better able to digest the current state of your supply chain.
Types of business intelligence
Business intelligence comes in various forms, each offering specific features tailored to different business needs and technological environments. Understanding the type of BI that best suits your organization can significantly enhance data utilization and offer clarity for decision-making.
- Traditional BI systems are often complex and expensive, making them best suited for larger businesses that can employ IT experts who can handle setup and management. These solutions are best for handling large volumes of structured data and integration with other enterprise systems.
- Self-service BI allows business users to create reports and dashboards without the need for IT assistance. This method is less costly and can provide quick responses to business questions, which often makes it the best choice for smaller businesses.
- Cloud-based BI solutions offer the advantage of remote data access and reduced on-premise hardware costs. They are scalable, and you can implement them quickly, which makes them a flexible option for businesses of all sizes.
- Mobile BI allows for the consumption of business data on mobile devices. This allows for real-time decision-making from anywhere, improving operational flexibility and responsiveness.
How to develop a business intelligence strategy
Creating an effective business intelligence strategy is crucial for retailers that aim to get the most out of their data—and transform it into insights they can act on. This typically involves five key steps, each helping to ensure that your business intelligence technology serves your needs.
1. Identify business goals and KPIs
Before diving into data analysis, it’s essential to establish clear business goals and key performance indicators (KPIs). Knowing what you want to achieve helps you focus on relevant data. Whether you’re analyzing sales and delivery reports or trying to improve customer satisfaction, these metrics serve as the roadmap for your business intelligence strategy
2. Select the right BI tools and platforms
There are numerous business intelligence platforms and tools available, each with its own set of capabilities. Some tools are tailored for data science, focusing on complex analysis and predictive modeling, while others are better suited for descriptive analytics, which involves examining past data to understand trends and patterns.
Choose tools that are compatible with your existing systems. Consulting with business intelligence vendors can provide insights into what tools might best suit your needs.
3. Collect and prepare your data
A strong business intelligence strategy relies on quality data. Business intelligence developers usually design a data warehouse for centralized storage. They streamline data collection methods to include sales reports, customer interactions, and inventory data. They then prepare and organize the data in a way that makes analysis easier. This often involves cleaning the data to remove inconsistencies and filling in missing values to ensure that analysis is accurate.
4. Conduct data analysis
Once the data warehouse and the business intelligence platforms are in place, it’s time for the actual data analysis. Depending on your goals, this could involve a range of activities—from uncovering trends in historical data to using data science techniques for predictive analytics. BI analysts and developers can work together to scrutinize and explore the data to derive meaningful business information.
5. Use an iterative review process
Building a business intelligence strategy is not a one-off event.—it requires continuous refinement. Based on the insights gained from your analysis, it may be necessary to adjust your business goals, KPIs, or even your data collection methods. An iterative process ensures your BI strategy stays aligned with organizational objectives and takes advantage of the most current tactics and technologies available.
Conclusion
One last thing to keep in mind is that the term business intelligence is often used interchangeably with business analytics, but they do serve different functions. BI provides descriptive and diagnostic insights by focusing on what has happened and why, often through data visualization and dashboards.
In contrast, business analytics employs statistical models and machine learning to offer predictive and prescriptive insights, forecasting future events and suggesting subsequent actions. Essentially, BI lays out the route already traveled, while business analytics identifies potential routes to reach specific destinations.
At Shopify, we’ve built powerful data and analytics tools right into the platform. With more than 60 reports specifically designed for commerce, clean data visualization and dashboards, and integrated insights from millions of stores that run on Shopify, you’ll have all the information you need to make the best decisions for your business.
Business intelligence FAQ
What are the benefits of business intelligence?
Business intelligence helps organizations make informed decisions by transforming raw data into actionable insights.
What’s the difference between Power BI and self-service BI?
Power BI is a specific business analytics tool from Microsoft, while self-service BI refers to a category of tools that help business users generate reports without IT assistance. Power BI integrates with Microsoft products, making it especially beneficial for organizations already using Microsoft services.
How do I implement a BI strategy?
To implement a BI strategy, you’ll need to identify business goals, select appropriate BI tools, collect and prepare data, and finally, analyze and visualize the data to make informed decisions.
