What is Business Intelligence (BI)? Gartner defines BI as, “An umbrella term that includes the applications, infrastructure and tools, and best practices that enable access to and analysis of information to improve and optimize decisions and performance.”
Although this definition is straightforward, confusion still stems from the many uses of BI. I have lost count of the number of times I have been asked by IT folks such as Business Analysts, Application Developers, and Quality Analysts working for companies that have BI in nascent stages: “Is Business Intelligence the same as Strategic Management?”
Surprised? Business Intelligence does drive strategic decisions, but it does this through the use of data, the same data sourced from the systems the IT folks create and maintain! This data stems from the transaction or operational systems and is collected and stored into analytical systems. The data is collected over time and analyzed to drive strategic business decisions. BI is about creating and using these analytical systems to create value.
Before moving into the analytical world of BI, let’s take a look at an example everybody is familiar with: An Automated Teller Machine (ATM), a classic example of a transaction system:
An ATM performs a transaction such as a deposit or withdrawal in a timely manner. It works great for what it’s designed to do. But what if the bank wanted to know which ATMs are more widely used, what time of day customers tend to use ATMs and if customers tend to use ATMs closer to home or closer to work? Is there a pattern of ATM usage in people who secure loans? The challenge is that an ATM system by itself cannot provide these answers. That’s where analytical systems become necessary in providing value to the Business.
The data from an individual’s transaction (such as name, time, account number, etc.) is extracted and transformed into useful form and then transferred to an analytical system (or specifically a data warehouse) in which information from numerous transaction systems are stored. The data warehouse not only contains data originating from transactions of all ATMs, but also from other banking systems that contain customer demographics, loans, and derivatives. The data is combined and pulled to determine numerous facts and trends beneficial to the banking industry. This type of information provides more significant data to determine and profile the customer so that the organization can meet customer needs and improve satisfaction. Without the use of Business Intelligence, data would be just that…data used for everyday tasks. Converting the data into useable form provides meaning and when acted upon, organizations see numerous enhancements such as improved customer satisfaction ratings, reduced costs, increased efficiency, etc.
As a Business Intelligence Consultant at SDLC Partners, I have had firsthand opportunities to see the valuable effects of capturing, transforming, and analyzing data. For instance, a national insurer’s customer service transaction system was set up so that when a complaint was voiced, it was sent to the general customer service line. If it was a Medicare complaint, the complaint was sent to the Resolution System. If not resolved, the complaint was then transferred to the Appeals Systems for formal processing by business rules. Each system had its own data for performing fundamental everyday business operations. However, the critical missing piece was a bird’s eye view of the subject matter due to the inability to combine and analyze complaints and appeals. At this point, the compilation of data for a transparent view was a manual process, proving to be time-consuming and inefficient. This made it difficult, if not impossible, to provide the required quarterly reports on-time or to make effective business decisions. The client knew there was a more efficient way to gather the data and called in external help to assist. That’s where SDLC Partners stepped in.
- “What percentage of complaints became appeals versus what percentage was resolved?”
- “Are the appeals/complaints stemming from a particular region of the country? If so, why?”
The new databases allowed the questions to be answered quickly and accurately. The client was now provided with the necessary information to further analyze consistent or reoccurring problems and even uncover business problems they never knew existed. These findings helped better align the Business to the needs of its customers.
Now going back to our initial question: “What is BI?”
BI is not just the data and not just the analytical tools or strategic decisions but rather the use of information to create and maximize value.
Has your organization used BI to make quicker and more effective decisions?
Komal Warty is a Consultant II at SDLC Partners, a leading provider of business and technology solutions. Please feel free to contact Komal at firstname.lastname@example.org with any questions on this blog post or to further discuss Business Intelligence.