The benefits of Business Intelligence (BI) are measurable at every step of production, from minute-by-minute decisions to long-term planning. BI solutions help organize data so it can be easily accessed and analyzed. Organizations can deliver faster insights by putting data exploration in the hands of subject-matter experts who know the business. BI benefits the organization by treating data as a strategic asset to better plan and manage the business.
In this article, we will cover:
Key Benefits of Business Intelligence
Data-driven decision-making is the practice of making key decisions based on empirical data instead of a gut feeling or “what has always worked” mentality. BI benefits organizations that want to be data-driven, adaptable, and growth-minded. This section highlights the 7 benefits of business intelligence.
Increased Efficiency & Productivity
Work faster, not harder. Well-designed dashboards surface the most important insights to the forefront, speeding decision-making, efficiency, and ROI.
Manually compiling data from multiple sources, importing it into Excel, scrubbing the data, formatting it, and building reports is time-consuming and expensive. Automating the data gathering through dashboard creation saves a great deal of time and effort. It also allows you to focus on using the data versus building the reports. Depending on the amount of reporting you do the old way, this could save part of an employee’s time or the time of a whole team of folks.
Having very recent metrics on operational performance allows managers to optimize team schedules, re-order critical supplies before they run out, avoid down time and more. This can have a material impact on the bottom line as folks are better able to manage outputs. You get benefits from both the action being taken and from the action being taken in a shorter cycle of time. You can estimate the impact through a thoughtful discussion of what key experts think would be possible if they had access to the data when they needed it. You’ll hear things like a 5% reduction in driver downtime. Quantify that and include it in your case.
With effective dashboards, thought leaders have immediate access to the relevant data they need to make informed decisions. Faster informed decision-making can enable every department to react quickly to market forces to achieve and sustain competitive advantage. For example, a manufacturing firm can anticipate shortages in their supply chain before they happen and proactively address them to maintain velocity and meet demands. The value of deciding today versus weeks from today can be quantified by the speed to value generated.
Improved Customer Service
Business Intelligence software can help businesses identify customer appetite trends, process bottlenecks, and purchase off-ramps. This information can then be used to reduce customer friction and improve satisfaction levels.
Having easy to understand visibility into your customer relationships and interactions pays off by improving the actions you take to improve customer retention. For example, knowing expiration dates on all customer insurance policies allows you to proactively reach out and improve retention. We’ve seen a lift of 5-10% on retention numbers.
There is an example of a casino that uses player rewards cards to track play. They instruct their floor managers to intervene if someone has been playing too long or has lost too much money and give them something of value like a buffet voucher. It gets them away from the machine, gives them a break and improves their experience. It also increases the lifetime value of that customer to the casino.
BI-driven insight can provide a competitive edge by helping businesses track their competition and market trends to identify new opportunities. It can also improve speed-to-decision and allow companies to outpace their competitors by being faster to market.
By implementing a thoughtful BI solution, you can put information in the hands of subject matter experts. They can easily combine their understanding of how a business works with the information they are seeing to generate new insights. We’ve seen new insights that are a 5x to 10x multiple on the cost of a BI implementation. The hard part is knowing what they’ll be before they are uncovered. While you do not know what they’ll be, the discovery of new insights almost always occurs.
Enhanced Strategic Planning
Stop reacting and develop more effective strategic plans by identifying future trends as they are developing. If an employee spends all day or all week gathering data to do a job, it is not going to generate insights in time to respond to opportunities. Their time would be better spent using the data, making decisions, and acting on the data. Those are the activities that create value.
Finally, having a sound BI solution in place, improves data quality. In building and testing the system, many data quality issues are exposed and fixed. The BI solution itself also exposes data quickly to a wide cross section of users and helps uncover any new issues quickly. That ensures the data you are using for planning and decision making can be trusted.
Visualize Important Information
Visualize data to make data easier to consume. A well-designed BI dashboard can create instant insights that might take hours to figure out staring at a table of numbers. Humans process information visually and the right visualization can help uncover patterns and opportunities that may otherwise be missed.
With Business Intelligence in place, companies can index their performance against market peers as well as their toughest competitor: their own past success. Establish benchmarks and track to them continuously.
Taken together, these create a competitive advantage for firms that have well-designed BI solutions in place. They make faster decisions, run more efficiently, have more satisfied customers, see better retention, and often improve sales.
Costs of a Business Intelligence Solution
Unfortunately, all of these benefits do not come for free. Developing a BI solution does come with some fairly predictable costs. The costs of a business intelligence solution are around storing, organizing, and visualizing data. In some cases there may also be costs to acquire data from 3rd party sources. Below is a breakdown of the most common costs to support your development of a business case.
Hardware and Software Costs
A business intelligence solution will require you to automate the processing and storage of data. To do that you will need hardware that can either be on premises or in the cloud. The costs will be capital expenses for on premises or an ongoing expense for storing the data in the cloud.
You’ll also need a few different kinds of software. The minimum software you need includes a database and a business intelligence tool. You may want other sorts of tools for security, access control, and monitoring.
Database programs vary widely in terms of cost. Today, most cloud-based databases charge a minimal fee for storage and a bit more of a fee for compute power. The compute power is what you’ll need for organizing and visualizing the data.
Business intelligence tools generally charge a subscription fee per user. They may also require you to bulk purchase a minimum set of user licenses – say 10 at a time. Typically, these are in the four figure range per user.
You will need technical team members to build the end-to-end solution. This will involve developing automated processes to gather data, store data, organize data for use, and visualize the data. These same folks will also need to produce documentation and processes to manage the BI solution. A small BI solution can run in the low 6 digits and a large one can run several million dollars. The biggest driver of cost is the scope and state of the data.
Training / Operation Costs
Once the BI solution is developed, people need to be trained to use and run it. The training can come from the BI vendor, a consultant, or from your internal team based on the delivery team’s documentation. The training should cover the basics and get people’s hands on the tool right away. Over time the training can get more sophisticated and develop more advanced users.
How Does Business Intelligence Work?
Business Intelligence uses data engineering techniques to gather, analyze and report data so that it can be used to benefit business performance. Effective BI techniques include data mining, data visualization, and business performance management. BI software organizes the chaos and allows leaders to step back and see the big picture.
Great Business Intelligence begins with full data capture. Automated processes gather data from one or more business systems, contextualize it through data governance, and store it in easy-to-use relational databases. Power users can access this data to meet their bespoke needs, while BI professionals create easy-to-consume visualizations for non-technical business leaders. A well-designed Business Intelligence platform runs automatically and delivers insight continuously.
Technical roles necessary for effective Business Intelligence include:
- Data engineers who create efficient and scalable data pipelines
- Subject-matter experts (SMEs) who establish shared meaning of business terms
- BI developers who create shared reports and dashboards for wide use, as well as needs-driven ad hoc reporting
This setup allows non-technical users to consume insightful dashboards to enhance their understanding and decision-making.
Why is Business Intelligence Important?
Organizations that effectively leverage BI make better strategic decisions, improve performance, and compete more effectively. Investment in BI benefits organizations quickly by eliminating manual processes, reducing costly hybrid tech / business expert roles, freeing decision-makers to perform their most value-add activities, and minimizing misunderstandings from contradictory information.
Organizations without sound processes for data spend more time on processes because institutional knowledge will reside in numerous technical specialists instead of durable knowledge management systems. Also, a lack of formal processes will create the need for larger informal processes which can be contradictory, slow, and costly.
The goal of BI is to quickly surface insight necessary for data-driven decisions to improve performance. BI can help organizations answer important questions that directly impact decisions such as:
- What do my customers want? What do they need?
- What are my competitors doing?
- Which of my products or service are the most profitable?
- What is the best way to allocate my resources?
If you aren’t sold yet on the value of business intelligence, check out these 5 tasks you can automate with BI.
Decision-Making with Business Intelligence
Business Intelligence combines data and business context to create actionable insights that drive better strategic decision-making. Data without business context lacks sufficient reference points to enable workable insights. Incorporating business knowledge turns data into information, making it an asset that can support decision-making.
Today, BI touches our information workflows in intuitive ways. For example:
- Negative cashflows in red
- Easy-to-read numbers in dashboards with up-or-down trend arrows
- Projected future months in dotted lines
- Understand and forecast customer behavior
- Improve customer experience
- Understand which products and services are most successful
- Track employee performance
Business Intelligence itself can benefit from examination and continuous improvement. Quantifying the value of your BI program can help you target continued investment in the resources you will need to make a program successful.
Data-driven organizations treat data with care: clean capture, organization, and protection as an asset. Successful organizations plan for data deliberately by including it in their roadmap and guaranteeing the successful implementation of Data Governance, Business Intelligence, Analytics, and Data Science. A data roadmap helps organizations get better ROI from their investments in data, tools, methods, and people.
Who are the Leading BI Software Vendors?
The BI marketplace is dynamic. Market leaders include Tableau, Power BI, Qlik, Cognos, Looker, and Business Objects. Each vendor offers a mix of common and exclusive features. Typical feature sets include automation, visualization, subscriptions, and more. All platforms offer self-service BI, which allows users to easily create reports and dashboards without help from IT. This is a major advantage over traditional BI tools, which often require users to go through a complex technical process to get data ready for analysis.
Second, all the BI leaders offer interactive dashboards and reports, one of the key benefits of business intelligence software. This allows users to explore data and find insights quickly and easily. Third, all offer a wide range of connectors to various data sources, including both internal and external data. This allows users to get data from any source they need, which is crucial for accurate analysis. Finally, they all offer a variety of pricing plans, so users can find the right plan for their needs.
Since the BI marketplace is dynamic, technology choices must follow the analysis of the customer’s needs, comparative advantages, and challenges.
How to Establish a Business Intelligence Capability
Decision-makers need their information to be prioritized and contextualized so that they can go directly to planning and action. BI can help decision-makers:
First, you need to define your Business Intelligence requirements.
- What questions do you need to answer?
- Who will be using the data, and how?
- How often do they need the data?
- Daily and real-time data reporting can be costly, does your business have sufficient need to justify that effort?
Once you have a good understanding of the business questions you want to answer, you can start designing your Business Intelligence platform to maximize your benefits.
Second, you will need to identify the data source(s) for your platform. This is typically a data warehouse, reporting database, or data lake. Building a data warehouse involves extracting, organizing, and storing structured and unstructured data from your source systems. Once you have a data warehouse in place, you can evaluate your Business Intelligence tool needs. You’ll want to consider functionality, price, ease of use, support effort, and ability to source necessary talent.
Third, you will need to design and build the data pipelines to extract the data source(s) for your Business Intelligence tool. This step may also include data governance implementation if the raw source system data needs to be aligned with market or proprietary business definitions.
Fourth, you will need to acquire and build out the capabilities of your chosen Business Intelligence platform. Implementation partners can be helpful in right-sizing needs, negotiating terms, and deploying the BI solution. Business requirements gathered at the beginning, combined with expert insight such as that available at UDig, will help you make the best choice for your business.
Once you’ve procured and installed your tool, you can start creating reports and dashboards. This typically involves using data visualization tools to create graphs, charts, and other visual representations of your data.
Finally, you will want to train users and provide them with support and documentation to use the tools. Once they are trained, they can start using the reports as part of their day-to-day process and make better business decisions. You can also use the reports to track your progress and performance over time.
What is Data Governance?
One area of Business Intelligence that a lot of companies overlook is data governance. With the desire to enable speed and get reporting close to the point of consumption, democratizing data and allowing local control over reports is quite popular. That said, it is important to maintain consistency of definitions to ensure business and data alignment. Two leaders from different units should be able to discuss and evaluate data together without misunderstanding common terms.
Establishing a federated reporting organization that balances end-user empowerment and data governance is not easy, but the benefits are tremendous. Companies that get this balance right will drive an analytical culture into decision-making and business strategy.
What is the ROI of Business Intelligence?
The return on investment (ROI) of Business Intelligence depends on the specific implementation and expected benefits. Some benefits of BI that are often cited include increased efficiency, better decision-making, and improved competitiveness. Becoming an organization that uses data deliberately to make decisions strategically starts with an important strategic decision: how and why will you invest in Business Intelligence? Haphazard and poorly planned BI implementations will fail to deliver sufficient ROI of Business Intelligence.
We’ve created a template, available to download below, to help you organize the information you need about the costs and benefits of BI involved in deploying a Business Intelligence system. We can also help you complete an evaluation, tool selection, deployment, or development of reports and visualizations.