The Top Benefits of Business Intelligence (BI) Systems
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Date: Sat, 26 Nov 2011 |
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Business Intelligence Systems: Pros and Cons
Business intelligence represents a computerized approach to leveraging existing business information and data from disparate systems and producing management reports that can be used for strategy, decision-making, and identifying new efficiencies. Reference to business intelligence is commonly referred to as "BI" as well as a decision support system or "DSS". BI systems, due to tailoring can include a number of different tool combinations to meet expectations which can include:
- Business analytics
- Projections based on statistics
- Data mining
- Benchmarking and performance metrics
Uses
BI provides a number of valuable uses that can help further enhance an organization. Both the use of metric measurements and analytic tools can take a large amount of information about unit performance across a company and summarize it into clean reports. This allows management to get a high-level handle on whether a company's parts are performing as expected, above expectations, or falling behind.
On the consolidation side of BI, both enterprise reporting and collaboration platforms take separate business aspects and bring them together, using silo'd information in ways previously not thought of. For example, marketing can take information from production to anticipate whether various advertising campaigns are working or falling flat by comparing campaign launches with variables in production performance. Rather than guessing, managers can point directly to timing and production statistics on those time windows.
Ideally, business knowledge being shared outside of functional silos then creates new operational synergies. In this respect BI allows businesses to leverage their collective knowledge through computers and automation where it might not see the light of day to top management through traditional communications. Such assets become particularly valuable when a company has to ensure compliance with various regulatory requirements.
Necessary Elements
A trio of preliminary BI requirements need to be in place before any hardware or software implementation occurs. These include:
- Top management commitment to make the project happen successfully.
- A clear identification of what the business needs from a business intelligence solution.
- A clean definition of what data exists, the quality of the material, and where it is located.
If any of these preliminary components are left out the system implementation can go haywire quickly, with problems ranging from no organization support to completely inaccurate solution parameters and failing results.
From the planning stage begins the technical steps. The base foundation starts with what is called a business data dictionary. The dictionary provides all the definition parameters of data so the system can reference them easily and quickly when running analysis programs. All the typical organization's terminology is included.
Alongside the dictionary comes the identification of all the record or data sources where the raw information will be regularly pulled from. These are all the singular data pods that must be linked together by the BI system.
With definitions, parameters, and linkages identified, then comes the technical process of transforming the raw information into the program that will collect and crunch the information for analytics. Data warehousing works alongside this process realigning data to fit expected BI models and report parameters. Various layers are applied to filter data different ways, depending on the output desired.
Finally, the end user report functions are created to actually pull the summarized information and make it useful for management. These can be in the form of predetermined or canned documents, ad-hoc information requests for snapshots, problem reports where data or systems are not working right, and filtering reports that produce information depending on the user's subjective criteria.
Benefits
The first BI benefit, as mentioned earlier, is that business intelligence provides hard, summarized data and removes guessing about operational performance. The speed at which a report can be generated in a well-designed system cuts down days of waiting for manual, custom reports.
Second, metrics provide an objective standard of that performance, stripping out influence and biased reported.
Third, relationships in data open up new doors of how to sell products and services to the same customers. By tracking customer behavior, sales, order types, seasonal trends, and linkage of different products, businesses can leverage the combined information to generate more sales out of the same customers and new ones.
On the flipside, BI can make inefficiencies in existing operations stand out, giving targets for management to decide if improvements and changes to procedures are needed. Removal of such inefficiencies eventually leads to operational cost savings and improved profit margins. This approach also cuts down the guesswork on production costs and gives a clear picture what a product or service requires to get it to a customer. That improves accuracy of pricing when charging a customer.
Finally, BI has the potential to create a combined history map of a business' performance. This tells a story that businesses would otherwise have to have staff chase around to create a customized report every time. Instead, the BI historical performance report gets updated in real-time, producing a new picture every time the BI summary picture is run. This benefit reduces delays in planning, waiting for basic information to be collected and summarized for decision-makers.
Problems Implementing
BI systems are heavily reliant on planning and cooperation of the organization's operations to be successful. Similar to all computers systems garbage in means garbage out. Planning that doesn't take into account what is really desired in reports from a BI system can easily create a burdensome system. To avoid this scenario, the end user business manager needs to make sure the IT design stays true to the system goal. Having regular business users test the system before roll-out frequently finds many problems that work great for IT but produce garbage for the business user.
Alternatively, a BI system is only as good as the historical data and processes it crunches. In this respect, it will not capture unforeseen or previously unrealized events or data behavior. If a business relies too heavily on BI results for decision-making, they could easily miss the new operation problem facing the organization that it has never seen before. Decision-makers always need to keep their heads above the system cloud. Use the BI system for what it provides on performance and metrics, but managers still need to be managers and use their brains strategically for the unknown.
Visit WardyIT to learn more about the benefits of a microsoft business intelligence solutions for your company.
Source: The Top Benefits of Business Intelligence (BI) Systems
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