What Is Business Intelligence? Definition, Examples, and Why It Matters

What is Business Intelligence?

Business intelligence (BI) is a comprehensive strategy that involves turning raw data into actionable information to support informed decision-making and improve organizational performance. Its primary goal is to help organizations better understand themselves so they can rise above the competition.

BI encompasses a combination of tools, processes, and practices designed to collect, integrate, analyze, and visualize data. These capabilities enable stakeholders to uncover patterns, identify trends, and respond effectively to business challenges across all levels of an organization.

The term “business intelligence” has evolved significantly over time. It first gained traction in the 1960s to describe how teams shared information across organizations. By the 1980s, with the rise of computing, BI began to refer to products and services that could turn data into insights. Today, it serves as an umbrella term covering both the processes used to transform data and the technologies that facilitate access to and analysis of that data.

BI is more than just dashboards and charts—it’s about understanding when data changes, why it changes, and what actions your organization needs to take in response. Through BI, businesses gain the clarity needed to make evidence-based decisions that drive growth and innovation.

Business intelligence or business analytics?

Though these two terms are similar, business intelligence and business analytics are not the same thing. Business intelligence relies on real-time and historical data. In essence, it tells organizations what’s happening and how things got to this point. Business analytics focuses on predicting what is going to happen in an organization in the future based on past trends and offering suggestions for things that could be done differently for improved outcomes. Business analytics can be a part of the business intelligence process.

Examples of business intelligence.  

The evolution of business intelligence means that modern BI includes a variety of processes and tools. Here’s a small sampling:

Descriptive Analytics

Analyzing data to understand what is happening at the current moment. This provides a snapshot of ongoing trends and patterns, offering insights into real-time performance and behavior.

Statistical Analysis

Using the results from descriptive analytics to dive deeper and uncover why specific trends or behaviors occur. This involves identifying correlations, patterns, and key drivers behind observed outcomes.

Querying

Utilizing a Business Intelligence (BI) tool to ask specific questions about your data and retrieve actionable answers. This helps turn raw data into meaningful insights by addressing targeted queries.

Data Preparation

Collecting data from multiple sources, cleaning it, and structuring it for analysis. This step includes identifying data characteristics, removing duplicates, and ensuring consistency to create a reliable dataset.

Data Mining

Applying advanced tools and techniques such as machine learning or algorithms to detect trends, patterns, and anomalies in large datasets. This is essential for uncovering hidden insights that aren't immediately obvious.

Benchmarking

Comparing current performance metrics to historical data to measure progress. This helps teams or individuals assess whether they are meeting goals, identifying areas that require improvement.

Reporting

Communicating the findings of your analysis to stakeholders. Reports can take various formats, such as written summaries, dashboards, or presentations, to ensure clarity and alignment.

Data Visualization

Presenting analysis results through visual elements like charts, graphs, or infographics. This makes complex data easier to understand, enabling quicker decision-making and better storytelling.

Core components of business intelligence

Business Intelligence (BI) is a powerful framework that empowers organizations to make data-driven decisions. By combining data collection, advanced analytics, and intuitive presentation tools, BI transforms raw data into actionable insights. Here’s a detailed look at its key components:

Data Collection and Integration

BI systems consolidate data from diverse sources, including internal databases, cloud storage platforms, third-party applications, and even simple spreadsheets. This process often involves Extract, Transform, and Load (ETL) techniques to standardize and centralize data into a single repository, such as a data warehouse or data lake. Centralization ensures that large volumes of structured and unstructured data are accessible for seamless analysis, laying the foundation for accurate reporting and decision-making.

Data Analysis

Once centralized, the data undergoes rigorous analysis through sophisticated tools within BI platforms. Techniques such as data mining, statistical modeling, predictive analytics, and machine learning are used to uncover patterns, detect anomalies, forecast trends, and extract meaningful insights. These analytical processes highlight opportunities and risks that may not be immediately apparent, adding depth to business strategies.

Data Visualization

The power of BI lies not just in analyzing data but in making it easily understandable. Visual tools such as dashboards, interactive charts, graphs, heatmaps, and reports transform complex datasets into clear, digestible formats. By presenting the findings visually, stakeholders can quickly grasp key metrics, identify trends, and make informed decisions without needing a technical background.

Actionable Insights

At its core, BI is about turning data into strategy. The insights derived from analysis and visualization guide businesses towards strategic decisions that drive measurable outcomes. Whether it’s optimizing operational processes, reducing costs, increasing revenue, or enhancing customer experience, actionable insights ensure that the data collected translates into tangible business value.

By integrating these components, business intelligence creates a seamless flow from raw data to strategic action, equipping organizations with the tools they need to stay competitive in today’s data-driven landscape.

Why is business intelligence important?

Organizations sit on huge amounts of data. Business intelligence helps organizations stay competitive by putting that data to good use. With BI, anyone can pull data insights and use them to inform decisions.

Businesses across industries that prioritize business intelligence experience significant return on investment (ROI) and improved performance. Those that don’t invest in business intelligence leave data unused and the decision-making process incomplete.

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Benefits of business intelligence.

Transparency  

Most business intelligence tools feature a dashboard interface that makes insights available to any stakeholder, not just those with analytics backgrounds. This increased transparency and data access keeps teams on the same page and improves decision making from the ground up.

Efficiency

BI tools help organizations run more efficiently by identifying areas for optimization where outcomes are lagging behind competitors and discovering issues or problems that have been overlooked.

Profitability

With insights gained from business intelligence, stakeholders can identify ways to increase profits by better analyzing customer behaviors and spotting market trends.

How does business intelligence work?

As organizations operate, they create raw data. That data is collected, processed, and stored as part of data integration. It could be stored in a data warehouse or directly within a tool like Domo. With the data consolidated in one repository, stakeholders can now initiate analysis to answer their business questions.

Simply put, every organization has goals, and every organization has questions — most about how to reach the goals. Business intelligence answers these questions by gathering data, analyzing it, and presenting the finding in an understandable way so that stakeholders can decide what steps they should take to meet their goals.

Traditional BI vs. Modern BI.

Traditional business intelligence tools were driven by IT departments and relied on static reporting. If a stakeholder had a follow-up question about the report they received from IT, they would have to initiate an entirely new data request. This process was slow and frustrating.

Modern BI tools are designed for interactivity and accessibility. Stakeholders can customize dashboards and create automated reports that give them the insights they need without having to go through IT.

Domo’s modern BI puts the power of data into more people’s hands throughout your organization, taking just minutes or even seconds to get the information they need. It also helps unlock dark data — data that has been inaccessible in the past. And, data governance is simple as administrators control who can access what data. Remember, modern business intelligence modernizes your business and helps you rise above your competition.

What tools do I need for better business intelligence?

There are many types of business intelligence tools available to organizations today. Some of these tools focus on one specific area of the business intelligence process, while others present a more holistic, end-to-end solution. Here are a few of the most popular types of business intelligence tools.

• Online analytical processing (OLAP). Computing that handles multi-dimensional analytical queries.
• Data visualization software. Provides visual representation of patterns and correlations.
• Location intelligence (LI). Brings together business data and geographic context.
• ETL tools. Gathers data into one location and prepares it for analysis.
• Ad hoc analytics. Answers specific analysis questions on the spot.
• Mobile BI. Optimizes desktop BI for mobile devices.
• Real-time BI. Delivers real-time information to stakeholders.
• Software-as-a-service BI (SaaS BI). A cloud-hosted, subscription-based delivery model for BI solutions.
• Open source BI (OSBI). BI software that doesn’t require a software license purchase.
• Operational BI. Integrates real-time data into an operational system so it can be used immediately.
• Collaborative BI. Brings BI software together with collaboration tools for seamless sharing.

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Choosing business intelligence tools.  

Your business intelligence solution should do more than make pretty charts and graphs. It should interact with the entire business intelligence process from raw data to acting on insights. You should be able to see the data and act on it within the BI software itself, instead of moving to another system before you can get started. And remember, your BI tool is only as good as your data.

Strategic value and benefits of BI across industries

Business Intelligence (BI) has a transformative impact across various functional areas and industry sectors, enabling organizations to thrive in today’s data-driven world. By leveraging BI tools and technologies, companies can:

Drive Decision-Making

BI eliminates guesswork by providing data-backed insights, ensuring actions are informed by real-world trends and evolving business needs.

Boost Operational Efficiency

Streamline processes by identifying inefficiencies and optimizing resource allocation.

Enhance Customer Insights

Gain a deeper understanding of customer behavior and preferences to improve engagement and satisfaction.

Identify Market Opportunities

Spot emerging trends and new market opportunities, giving organizations a competitive edge.

Mitigate Risks

Use data to predict potential challenges and proactively address risks before they impact the business.

By implementing BI effectively, organizations can turn data into actionable insights, driving growth and innovation across industries. 

How do different industries use business intelligence?

Every industry benefits from business intelligence. There are countless areas where BI solutions or capabilities could come into play. BI tools have proven especially useful during times of crisis in helping organizations identify problems and solutions and then quickly implement those solutions. Here are a few examples of how different industries use BI.

Manufacturing  

• Identifying where delays happen most frequently and where glitches exist in the shipping process.
• Discovering which products often face delays or which form of transportation is delayed the most.

Sales and Marketing

• Tracking new client acquisition and retention.
• Generating sales and delivery reports from CRMs.
• Illustrating where prospective clients are on the sales pipeline.

 Education

• Examining data on attendance rates and pass rates.
• Analyzing and tracking student performance.

Finance

• Viewing data from multiple branches or offices together in one place.
• Predicting trends and how they will affect clients.

Healthcare

• Improving operational efficiency to reduce overspending.
• Streamlining the insurance claims process to optimize patient billing.

How will business intelligence evolve in the future?

Business intelligence platforms will continue to offer more and more customization for organizations. Instead of opening up a company-wide dashboard, stakeholders will be able to access a custom app built specifically for their department. This approach will help streamline and automate workflows.

Also, the move toward self-service BI will give more individuals the ability to access information without involving the IT department. Modern BI will enable organizations to go beyond accessing data and move to actually take action on the data insights they see, whether that’s through custom apps where users can access and act in the same interface or through automating actions in other business systems.

We’ll also see better ways to share BI beyond its original organization. Domo customers can share BI within their organization as well as with customers or partners by embedding visualizations in their own app or website or by letting customers upload and combine data.