Business Intelligence (BI), is one of the most important use cases for information technology in a company. What does this name stand for? What are the benefits of using Business Intelligence?
Data, information, knowledge
In his book entitled ‘Organisation Theory and Design’, Richard L. Daft defined data as being made up of numbers, words, phone calls or computer printouts, sent or received. Without being given the proper context, they mean nothing. Once they are used to improve their understanding, they become information. For instance, a person’s name and telephone number are merely data until you need to call that person. Knowledge, on the other hand, is defined as ‘information in action‘, that is, the result of the deduction made.
Data can include, for example, financial reports covering the most recent several years. Information will then include a comparison of revenues from the sale of goods and services over specific periods, while knowledge will be the perceived correlation between the increase or decrease in the sold volume and the price and time of the year.
The final stage is wisdom, which means the ability to use the knowledge acquired through the analysis of information. Examples include placing Christmas decorations on supermarket shelves in mid-November and increasing toy prices two weeks before Christmas Eve.
There is no wisdom without data
It is, however, difficult to predict which of the stored values will prove useful in the future. This is all the more important because often seemingly unrelated or even irrelevant data have a significant impact on the broader picture. This means that, in order to correctly analyse certain events, Business Intelligence uses Big Data. These are large sets of diverse and variable data aimed at generating knowledge, far too extensive and comprehensive to be analysed by humans.
Statistics meets IT
Data collected from multiple databases functioning within a company are aggregated in so-called warehouses, that is, structures optimised for a certain slice of reality. They are only intended for reading and analysis. Their contents cannot be changed, however, they are cyclically fed with further data sets and retain whatever has been transferred to them previously. This way, Business Intelligence procedures can be used to perform long-term analyses in order to gain developmentally relevant information. Tools used for supporting data warehousing include, for example, Amazon Web Services.
Finding statistically significant information and drawing conclusions can be difficult, especially when you are operating using data spanning several years or looking for things that are not obvious. The contemporary IT allows you to build Business Intelligence systems that significantly facilitate this process. It is possible to create algorithms that produce comprehensible reports based on data that are periodically sent to the warehouse. Afterwards, BI specialists can use this information to examine specific indicators – for example through data mining. However, good knowledge of statistics is extremely important here. A properly written algorithm will be objective, but it is the person who ultimately converts information into knowledge. It is therefore their responsibility to draw the correct conclusions.
What can BI give your organisation?
Every company seeks to maximise its efficiency and profits. With small companies geared towards a narrow target group, this effect can be achieved quite simply, but the larger the player involved, the more variables affect its profitability. There is no room for operating without prior knowledge, a cross-sectional analysis of historical data is essential. However, it must be not only accurate, but also fast. This is only attainable with correctly implemented Business Intelligence technologies.
