The advantages of Business Intelligence

The main advantage of Business Intelligence resides in an improvement of business performance. The following table shows the benefits that come from a BI system, connecting them to their final goal:

Slightly changing the analysis perspective makes it possible to highlight what makes a Business Intelligence system necessary and what complications might arise in the event the system fails.
Let’s examine the problem according to three important points of view:

• Data retrieval
• Knowledge of data and its documentation
• Report building

Data retrieval

The company data is stored in several databases implemented with different technologies such as SQL Server, Oracle, Mainframe, MySQL, Access. All this makes the polling operation rather complex as it requires not only access credentials for each system but also the knowledge of the specific technology and planningof each database. Also, in some cases the data is fragmented and spread over hundreds of spreadsheets making it a hard task for those who must analyze and write reports on it.

The existence of a variety of databases creates a further problem linked to possible data redundancy (e.g. each application has its own database and its own list with personal data of customers/suppliers/products/… Such registries might contain the same customers/suppliers/products but with small differences, inaccuracies, or omissions).
Another thing to add is that databases, which are the support of management software typical of business operations, are designed to promote integration and changes of existing data, but not query, data aggregation, and search operations.

Knowledge of data and its documentation

It happens very often that the knowledge of the data is fragmented and divided among various people whose interaction with one another is poor.
The situation described above can cause problems of data interpretation and can lead to the creation of inconsistent reports, the use of which can lead to non-optimal decisions. The problem could be solved through the documentation of the databases, which in the most cases is absent, insufficient, or outdated.
Data knowledge and documentation are key aspects of Business Intelligence:

• understanding and profiling data are necessary conditions for the construction of the data warehouse.
• documentation of information and of the “supply chain” that produced them is important in order to use them correctly.

Report building

The starting point for the construction of a report is represented by the process of data retrieval and from data knowledge. In the absence of a Business Intelligence system we must carry out the analysis on databases with the following peculiarities:

• fragmentation
• incompleteness
• lack of validation
• lack of documentation
• operation-oriented planning

These aspects make the reports building complicated, costly in terms of time, and sometimes impossible.
The most expensive operations are the identification of the data to be used as well as its cleaning and standardization, action that need to be repeated not only whenever necessary to implement a new report but also when changes are made to the source databases.
Because of the problems described above, it is easy to sense discontent in the company among those who, having to make decisions, find it difficult to obtain the necessary data to support them.

Recurring complaints concern:

• the difficulty of accessing databases that, although they contain a lot of data, don’t make it available to end users.
• difficulty in finding only useful data: too much detailed data isn’t relevant to the management!
• distrust in operational data sources which may contain inaccuracies.
• extremely difficult in analyzing data from different perspectives: the management wants to be able to aggregate and manipulate data in any way possible but what the company has are only static reports, prepared in response to a specific analytical need.

Economic Benefits

The implementation of Business Intelligence in a company leads to increased business performance and generate economic benefits in terms both of reduction or elimination of certain costs and of increase in revenues. Some of the economic benefits, easily measurable, are:

Category

Increase in revenues

Reduction of costs

Increase in profits

Identification of the most profitable customers.
Identification of opportunities for cross-selling.
Optimizing pricing policies.
Higher revenues.

Clear view of the cost centres.
Reduction of operating costs

Customer acquisition and retention

Improving service levels.
Improving sales thanks to the ability to provide accurate and timely information.

Reduction in marketing efforts.
Reduction of costs due to correction of errors, problem-solving, and customer dissatisfaction.

Operational efficiency

Better overview of the entire process, from order to collection.
Acceleration of cash flow

Identification of bottlenecks.
Optimization of production processes
Warehouse optimization.
Reallocation of labour resources.

Productivity of BI user

More time available to devote to customers and growth initiatives.

Faster access to information and therefore a reduction of the time dedicated to the analysis.
Better quality of data, which reduces the possibility of error and the time spent cleaning.
Fewer Excel experts to manipulate data.
Fewer database (Access, Excel, …) and fewer reports to maintain.

Productivity of IT systems

Possibility to offer reporting as an additional service to customers.
Reallocation of staff on strategic projects.

Possibility to offer reporting as an additional service to customers.
Reallocation of staff on strategic projects.

Apart from the benefits described above, there are other ones that are difficult to measure called “intangible benefits” and that still contribute to the improvement of business performance. Here are some intangible benefits of Business Intelligence:

• Better customer service
• Improved public relations
• Improved perception of the company by customers, shareholders, and the general public
• Increase in the effective competitiveness