# What Is Business Intelligence (BI)? Types, Benefits, and Examples

![Business Intelligence (BI): The technical infrastructure that collects, stores, and analyzes company data.](https://www.investopedia.com/thmb/YWwsIYjZfDJSaQztBrhtFAwEKBU=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/business-intelligence-bi.asp-Final-96640b2a1f8d43f7803afb193b675f1a.jpg)

*— Investopedia / Yurle Villegas*

> **Definition**
>
> Business intelligence (BI) analyzes business data to provide actionable insights for executives and managers.

## What Is Business Intelligence (BI)?

Business intelligence (BI) is a technology-driven process that analyzes business data and transforms it into actionable insights, helping executives and managers make better-informed decisions.

Business intelligence is a broad term that encompasses [data mining](https://www.investopedia.com/terms/d/datamining.asp), process analysis, performance benchmarking, and [descriptive analytics](https://www.investopedia.com/terms/d/descriptive-analytics.asp). It parses all the data a business generates and presents easy-to-digest reports, performance measures, and trends that inform management decisions.

Business intelligence should not be confused with business analytics. Business intelligence analyzes current operational data to drive decision-making, while business analytics delves deeper into predictive insights for future growth. Ultimately, business intelligence drives global economic growth, as it helps organizations identify trends, optimize operations, and seize new opportunities.

### Key Takeaways

*   Business intelligence represents the technical infrastructure that collects, stores, and analyzes company data.
*   BI translates raw data into actionable insights, providing managers with reports and information to make informed business decisions.
*   Software companies produce BI solutions for companies that wish to make better use of their data.
*   BI tools and software come in various forms such as spreadsheets, reporting/query software, data visualization software, data mining tools, and online analytical processing (OLAP).
*   Self-service BI is an approach that enables non-technical users to access and analyze data on their own, making analytics more accessible.

## Understanding Business Intelligence (BI)

The need for BI was derived from the concept that managers with inaccurate or incomplete information will tend, on average, to make poorer decisions than if they had better information. Creators of [financial models](https://www.investopedia.com/terms/f/financialmodeling.asp) recognize this as “garbage in, garbage out," highlighting the importance of quality information in decision-making.

BI aims to solve this problem by collecting, transforming, and analyzing data, ideally presenting it through dashboards and other visual formats to [support better decisions.](https://www.investopedia.com/terms/d/decision-support-system.asp) The process typically follows four steps: data collection, analysis, visualization, and action. BI tools automate much of this process, allowing companies to make quicker, more accurate decisions by identifying trends, uncovering inconsistencies, and providing actionable insights in real-time.

> **Important**
>
> Most companies can benefit from incorporating BI solutions; managers with inaccurate or incomplete information will tend, on average, to make worse decisions than if they had better information.

## How BI Can Be Useful

Businesses can streamline their operations, improve customer experience, and optimize sales and marketing efforts. However, to be useful, BI must seek to increase the accuracy, timeliness, and amount of data.

These requirements mean finding more ways to capture information that isn't already being recorded, checking the information for errors, and structuring it so that broad analysis is possible.

In practice, however, companies have data that's unstructured or in diverse formats that make it difficult to collect and analyze. Software firms thus provide business intelligence solutions to [optimize the information gleaned from data](https://www.investopedia.com/ask/answers/041415/what-are-some-common-functions-business-intelligence-technologies.asp). These are enterprise-level software applications designed to unify a company’s data and [analytics](https://www.investopedia.com/terms/d/data-analytics.asp).

Although software solutions continue to evolve and become increasingly sophisticated, data scientists still need to manage the trade-offs between speed and the depth of reporting.

Some of the insights emerging from [big data](https://www.investopedia.com/terms/b/big-data.asp) have companies scrambling to capture everything, but data analysts can usually filter out sources to find a selection of data points that can represent the health of a process or business area as a whole. This can reduce the need to capture and reformat everything for analysis, saving analytical time and increasing the reporting speed.

> **Fast Fact**
>
> The demand for professionals skilled in business intelligence has surged across industries, making it a highly sought-after skill set in today's job market.

## Types of BI Tools and Software

BI tools and software come in a wide variety of forms. Here is a quick look at some common types of BI solutions.

*   **Spreadsheets**: Microsoft Excel and Google Docs are some of the most widely used BI tools.
*   **Reporting software**: These tools report, organize, filter, and display data.
*   **Data visualization software**: Tools like Tableau and Power BI translate datasets into easy-to-read, visually appealing graphical representations to quickly gain insights.
*   **Data mining tools**: These tools "mine" large amounts of data for patterns using things like artificial intelligence, machine learning, and statistics.
*   **Online analytical processing (OLAP)**: OLAP tools allow users to analyze datasets from various angles based on different business perspectives.

## Benefits of Business Intelligence

There are many reasons why companies adopt BI. Many use it to support functions as diverse as hiring, [compliance](https://www.investopedia.com/terms/c/compliance-program.asp), production, and marketing. BI is a core business value; it's difficult to find a business area that doesn't benefit from better information to work with.

Some of the many benefits companies can experience after adopting BI into their business models include faster, more accurate reporting and analysis, improved data quality, better employee satisfaction, reduced costs, increased revenues, and the ability to make better business decisions.

If, for example, you're in charge of production schedules for several beverage factories and sales are showing strong month-over-month growth in a particular region, you can approve extra shifts in near real-time to ensure your factories can meet demand.

Similarly, if a cooler-than-normal summer starts impacting sales, you can quickly idle down that same production. This production manipulation is a limited example of how BI can increase profits and reduce costs when used properly.

## Examples of BI

Coca-Cola Bottling had a problem with its daily manual reporting processes: they restricted access to real-time sales and operations data. However, by replacing the manual process with an automated BI system, the company completely streamlined the process and saved 260 hours a year (or more than six 40-hour work weeks). Now, the company's team can quickly analyze metrics like delivery operations, budget, and profitability with just a few clicks.

Another example: HelloFresh, a meal kit company, faced challenges with manual, time-intensive digital marketing reporting. By implementing a centralized BI solution, the marketing analytics team saved 10-20 daily working hours by automating the reporting process. It also allowed HelloFresh to create regional, individualized marketing campaigns based on customer behavior data, leading to higher conversion rates and improved customer retention.

## What Is Power BI?

Power BI is a business analytics product offered by software giant Microsoft. According to the company, it allows both individuals and businesses to connect to, model, and visualize data using a scalable platform.

## What Is Self-Service BI?

Self-service BI is an approach to analytics that allows individuals without a technical background to access and explore data. In other words, it gives people throughout the organization, not just those in the IT department, a way to have control over the data.

## What Are the Disadvantages of Self-Service BI?

Drawbacks to self-service BI include a false sense of security in end-users, high licensing costs, a lack of data granularity, and sometimes too much accessibility.

## What Is IBM's BI Product?

One of IBM's main BI products is its Cognos Analytics tool, which the company touts as an all-inclusive, AI-powered BI solution.  

## The Bottom Line

Part of the responsibilities of executives and managers is to make their companies more efficient, profitable, and competitive, along with improving the workplace environment for employees. Companies can do this with technology-driven processes, known as business intelligence, allowing them to achieve these goals faster and correctly.  

> **Article Sources**
>
> 1.  Harvard University - Business Analytics Program. "[Business Intelligence vs. Business Analytics](https://analytics.hbs.edu/admissions/business-intelligence-vs-business-analytics/)."
>     
> 2.  Howard University - Center for Digital Business. "[Breaking Down the Basics of Business Intelligence](https://digitalbusiness.howard.edu/breaking-down-basics-of-business-intelligence/)."
>     
> 3.  Microsoft. "[What Is Business Intelligence?](https://powerbi.microsoft.com/en-cy/what-is-business-intelligence/)"
>     
> 4.  Howard University - Center for Digital Business. "[Breaking Down the Basics of Business Intelligence](https://digitalbusiness.howard.edu/breaking-down-basics-of-business-intelligence/)."
>     
> 5.  Tableau. "[Coca-Cola Bottling Company Empowers the Enterprise with Tableau Mobile Dashboards to Drive Bottom Line](https://www.tableau.com/solutions/customer/eliminating-reporting-bottleneck-ccbc)."
>     
> 6.  Tableau. "[Real-World Applications of Business Intelligence](https://www.tableau.com/learn/articles/business-intelligence-examples)."
>     
> 7.  Microsoft. "[What Is Power BI?](https://powerbi.microsoft.com/en-us/what-is-power-bi/)"
>     
> 8.  IBM. "[IBM Cognos Analytics With Watson](https://www.ibm.com/products/cognos-analytics)."