Business Intelligence Explained
Business Intelligence Explained by MSH Consultancy
The term Business Intelligence (BI) is a relatively new one – having said that, you can expect to hear a lot
more about it in the future as businesses realise they
need to make better use of their data.
To a large extent
businesses have at best, under-utilised it and at worst, ignored it.
Before I jump into defining Business Intelligence let me deal with two words that are commonly used interchangeably, yet have very different meanings – these are “data” and “information”. From my experience most people do not understand the difference.
Data vs Information
If you can imagine a database or an Excel spreadsheet, they both contain fields (columns) and rows. Each column stores data of a similar type – for example a person’s first name – you would expect to see values like Paul, John, Peter and David. Another column is likely to hold data about a person’s surname – so you might see Smith, Jones, Brown and Wills.
Each of these values, either individually or as a column, is referred to as data. When data is in a tabular format, as described above, you are unlikely to be able to draw many conclusions based on the data in its current format. Only when data has been aggregated and arranged into a particular pattern can you start to draw conclusions.
One example of how data can be organised is as a pivot table which aggregates data by various headings, for example Month, Country and Product Group. We can now refer to this as information – you can now start to interpret and draw conclusions from the information which hopefully will help us to answer some questions like what were total sales to a specific customer category during week one of March 2016?”
The Data Explosion
Just about every business generates data of some sort. An example might be by creating an invoice. More data is generated when the invoice is emailed to the customer as well as when Credit Control send out debtor letters and finally, when the invoice gets paid, you guessed it – more data. If you extrapolate the above scenario across all areas of a business, you start to get a feel for how much data is being generated every day – and don’t forget that data is still being generated outside of business hours.
Here’s a staggering fact
90% of the world’s data has been generated in the last two years
It is estimated that in 1992 we were generating 100 GB of data a day – we now forecast that by 2018 this will increase to 50,000 GB of data/second. You don’t have to be a Data Analyst to realise that businesses need to engender a data centric culture and be able to collate, manage and interpret the vast array of data they generate on a daily/hourly or minute by minute basis.
Data is the life-blood of most businesses
It’s important to understand that to truly interpret, contrast and compare data, businesses need to combine it with other external sources such as socio-economic, political or even environmental data.
I hope by now you realise the important role data plays in almost every business. Today, there are more ways than ever for customers to engage with us and indeed, more ways for us to reach out to them. These new communication streams generate a significant volume of data and therefore it’s essential that all businesses learn how to harness it so they know all they can about their customers; what they want, what they like and need and how they perceive your business compared to others.
The real challenge however is to master and tame it in such a way as to uncover insights that might affect the businesses’ performance in the short, medium and long term. This becomes even more important and harder as ‘unstructured data’ (the type of data generated by social media and email for example) sky-rockets!
If you look at how most businesses develop over time, it tends to be at a steady and evolutionary pace. As a result, data is generally created and stored at a departmental level and more often than not, it’s generated by and stored using different technologies. As a result, data is rarely blended with other departmental data for the purpose of taking a holistic view of how the business is performing, not just in isolation, but compared to others within the same sector, geographical location or indeed at the same stage of growth.
Typically, data is stored in databases such as SQL and Access, but it’s also stored in Excel
spreadsheets, text files and many other disparate systems that speak different languages and have their own particular limitations. Business Intelligence is about bringing together as many of these data streams as possible so as to provide meaningful insight which will help to identify hidden opportunities or threats that management can recognise and act upon.
This might sound like good common business sense, which of course it is – however, up until about five years ago the cost of acquiring the technology to blend and transform data as described above was mostly prohibitive. One of the leading providers who have brought this technology to the masses is Microsoft.
Self-Service Business Intelligence
The above term is now common since the technology has become more widely available. As stated above, in the early days creating data models was the remit of the IT department. Having to rely on IT was not only time consuming but also expensive.
Now Microsoft and others have made this technology available at realistic prices, end-users can generate their own data models and visualisations on the fly, hence the name ‘Self-Service BI’ – this speeds up the decision making process and reduces cost.
For more information on any aspect of Business Intelligence or issues discussed above please get in touch.
Martyn Hale is a Business Intelligence Data Analyst and Microsoft Partner, at MSH
Consultancy. To contact him, call 07770 385157.