What are Business Intelligence Tools for?
Business intelligence is the information flow, the data on performance metrics, which enables companies to take tactical and operational decisions in line with the medium and long-term strategy of the company. At the outset, companies spell out their business strategy and their measurable operational goals, in the form of Key Performance Indicators (KPI) and balanced scorecards, as well as the tactics which will enable them to achieve their objectives. The expected performance metrics are tentatively set, in conformity with company strategy, and are continually reviewed via a business intelligence tool as data is rapidly accumulated. Company executives process the information delivered via business intelligence tools, size the emerging scenario and make adjustments when unexpected developments take place. A company's long-term goals, such as brand image, customer satisfaction levels, and customer acquisition are spelt out as leading indicators and the expected performance of a company is predicated on these non-financial measures. On the other hand, the financial metrics are the lagging indicators that are presumed to be predictable from the non-financial initiatives. The purpose of business intelligence is to rapidly review the financial and other operational metrics and ensure that the initial expectations are either met or action is taken to eventually achieve the initial goals.
The strategies for individual departments are derived from the overall corporate strategy and tasks are assigned to the managers of each of these departments.
Corporate executives can use business intelligence tools to
- Monitor and react to contingencies before their calculations go awry.
- Benchmark performance indicators against their company's own standards as well against best practices and take corrective action if necessary to ensure that pre-determined milestones are achieved
- Investigate business information at a granular level for greater transparency
- Co-ordinate the resources of the company so that common business goals are achieved
In terms of its technical architecture, business intelligence tools extract data from data warehouses and processed on OLAP (On-line Analytical Processing) and reporting tools. The cornerstone of business intelligence tools is that data is categorized in dimensions, such as region, products, financial categories, that are intuitive to decision makers. Spreadsheets, their predecessors, are unable to consolidate data because data is scattered in workbooks and their use becomes cumbersome as their numbers increase. On the other hand, business intelligence tools separate the data storage function from the processing of data. Consequently, data is more accessible with business intelligence tools as it resides at a single point. Also, data of several different dimensions can be aggregated at a single point and sliced and diced by an analytical tool which presents it graphically to decision makers.
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