Business intelligence (BI) leverages software and services to transform data into actionable intelligence that informs an organization’s 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.

How does BI differ from BA?

Business intelligence is also called descriptive analytics, in that it describes a past or current state. It doesn’t tell you what to do,it tells you what was and what is.

Compare that explanation of BI with the definition for business analytics (BA), a technology-aided process by which software analyzes data to predict what will happen (predictive analytics) or what could happen by taking a certain approach (prescriptive analytics). BA is also sometimes called advanced analytics.

How business intelligence works

Although business intelligence does not tell business users what to do or what will happen if they take a certain course, neither is BI only about generating reports. Rather, BI offers a way for people to examine data to understand trends and derive insights.

So many people in the business need data to do their jobs better. Business intelligence tools streamline the effort people need to search for, merge and query data to obtain information they need to make good 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.

Business intelligence in action

In the past, IT professionals had been the primary users of BI applications. However, BI tools have evolved to be more intuitive and user-friendly, enabling a large number of users across a variety of organizational domains to tap the tools.

There are two types of BI. The first is traditional or classic BI, where IT professionals use in-house transactional data to generate reports. The second is modern BI, where business users interact with agile, intuitive systems to analyze data more quickly.

The organizations generally opt for classic BI for certain types of reporting, such as regulatory or financial reports, where accuracy is paramount and the questions and data sets used are standard and predicable. Organizations typically use modern BI tools when business users need insight into quickly changing dynamics, such as marketing events, in which being fast is valued over getting the data 100 percent right.

But while solid business intelligence is essential to making strategic business decisions, many organizations struggle to implement effective BI strategies, thanks to poor data practices, tactical mistakes and more.

The value of business intelligence

Although much of today’s hype is around big data and advanced analytics (as well as the next step up: artificial intelligence and machine learning), BI is still relevant for multiple reasons.

First, experts say that many organizations still struggle with how to wrangle their data and leverage BI tools to their full potential. As a result, University of Dayton’s Gorman says most organizations tend to have pockets of BI capabilities rather than an enterprise-wide platform.

“You might have an executive dashboard that gives something like prices by region and another executive using a BI tool that gives vendor performance,” he says.

So these organizations remain focused on fine-tuning and then maximizing their BI initiatives before moving up to more advanced analytics capabilities. 

Gorman says that’s one reason why the market for BI tools is still growing, as organizations continue to add capabilities in different functional areas to meet growing demand.

According to its Global Business Intelligence Market 2016-2020 report, published in January 2016, global technology research and advisory company Technavio forecast the global BI market to post a compound annual growth rate (CAGR) of more than 10 percent by 2020. 

The research study says increasing adoption of data analytics, data availability and implementation of cloud BI as the three major factors driving the market.

Second, organizations will continue to need an accurate understanding of past events and current states. That’s why, experts say, that even as organizations increasingly use advanced analytics to forecast the future, they continue to invest in their BI operations.

“You need both, because you need to know what’s going on,” Howson says. “It doesn’t matter if I can predict the future if I don’t know what’s going on right now.”