Business Intelligence: What is it, really?
The term “business intelligence” gets tossed around a lot, often incorrectly. But when you distill it down to its essence, it’s really just a way for executives and other leaders to solve the too-much-data problem. Want to understand this problem? And why business intelligence matters? If so, it helps to view the company’s operations from the top down.
From the perspective of a CEO or other C-suite officer, the daily work of building a business can be frustratingly abstract. In the company’s early days, you measured success by physically making units and shipping them out to customers. And that same CEO spent endless nights coding and testing software until it finally started working as designed. But now other people handle those details.
Today, the leadership has to see the company’s entire existence in terms of opportunities, revenues, and risks. Of the three, risk is by far the hardest to manage. The job of any business leader is to make tough decisions, often with limited information. The fate of hundreds—or even thousands—of employees depends on the result of those decisions. To effectively manage these risks, business leaders need the best information available.
But what happens when there’s simply too much information to make sense of? We live in an era that’s drowning in data. Even the most casual online interactions can generate thousands of data points. Modestly successful online businesses may generate billions of data points every day. To make sense of all that information, businesses need new solutions. Then they can use that info to effectively manage risk.
Business intelligence tools are designed to:
- manage overload of data
- crunch it down into comprehensible chunks
- extract useful insights from it.
With this refined, clarified data in hand, executives and other leaders now have the information they need to do the hard work: managing risk, growing the business, and planning for the future.
But while these outcomes sound impressive, what do they actually mean in practice? What does business intelligence look like in action?
At a B2B company with a long sales cycle (e.g., heavy equipment manufacturing), every prospect matters. Knowing exactly which factors go into a prospect’s decision-making gives sales managers crucial insights into the most effective sales strategies for their teams. In other words, you can balance industry-wide data, market conditions, and other large trends by utilizing specific information about a prospect’s financial health, buying habits, growth data, and other factors.
Compiling and analyzing all this data by hand would be a massive, expensive undertaking, even a single prospect. But with the right business intelligence tools, it’s possible to generate highly accurate reports for an entire pool of prospects, which will allow the sales leadership to quickly prioritize the most profitable targets.
Supply Chain and Inventory Insights
No matter which industry you serve, efficiency is everything. So you need to make enough units to satisfy demand while you avoid making more than you need. The last thing any business leader wants is to spend money that could be revenue, just to warehouse units and parts that didn’t sell. Business intelligence tools allow companies to accurately predict real demand, which dramatically reduces lost profits in shipping, warehousing, and distribution.
Understanding Customer Trends
It’s one thing to notice a bump in sales, but another thing entirely to understand why it happened. Was it a one-time surge caused by a competitor’s mistake, or was it the result of a deeper shift in the marketplace? This question is at the core of risk management. If you make the wrong decision, it could result in a painful, costly mistake. Business intelligence tools can demystify the situation by providing clear, actionable insights.
No one at the C-suite level has time to break down raw business data, in order to find a key insight that might help them make better decisions. By the time they see this data, it should be refined and unambiguous, and it should allow them to quickly and confidently make the right decisions. So business intelligence tools are essential for reducing the risks that accompany success.
To learn more about building the right business intelligence solutions for your company, contact us for a free consultation.
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