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Business intelligence – definition and meaning

Business intelligence or BI is a series of tools and techniques we use to transform raw data into useful and meaningful information. This information can help companies gain an edge in the marketplace. In other words, business intelligence can help companies compete more effectively.

Business intelligence helps managers make better decisions by analyzing their company’s historic information. From that data, they can project possible future trends.

Do not confuse the term with competitive intelligence. Competitive intelligence is all about data from external sources.

Business Intelligence, on the other hand, is mainly the management of a company’s internal data. Some people, however, may give BI a wider meaning. In that wider meaning, they include some aspects of competitive intelligence.

BI technologies can handle huge amounts of raw data. This data subsequently helps us identify, develop, and create new strategic business opportunities.

Business Intelligence
Business intelligence turns unintelligible raw data into information people can understand and find useful.

Business intelligence – past and current raw data

The aim of business intelligence is to turn these massive volumes of data into meaningful information. Above all, information that people can understand and use.

BI can detect behavioral patterns from which we can anticipate future patterns. This allows us to determine what actions to take well in advance.

After turning raw data into something that can help us identify new opportunities, we put effective strategies into motion. All this subsequently provides companies with a competitive edge. It also gives them long-term stability.

BI technologies gather and process historic and current data on business operations, analyze them, and make predictions.

Business intelligence has many uses

Business intelligence can help managers make decisions regarding a wide range of business issues. For example, it helps them position and price a product a product, as well as deciding on operations.

In fact, BI can even help us make strategic decisions.

Larger companies have their own in-house business intelligence group, while others will hire an outside agency.



Business intelligence experts gather data from within the company. They focus on how well the company has been performing and where they could make improvements.

The experts then analyze outside sources, which may include data on competitors, customer survey information, and market analysis by third parties.

Examples of business intelligence

Christine McGeever, writing in COMPUTERWORLD, gave the following two examples of BI applications being used by companies.

Example 1 – a hotel franchise company

With BI analytical applications, a hotel franchise company compiles statistics on average occupancy and room rates. It wants to work out revenue generated per room.

The company can also gather data on market share and customer surveys to gauge its competitive position in several markets.

People analyze all this information on an annual, monthly, and even daily basis. The data gives the franchise owner a good picture of how each hotel is performing.

Example 2 – a bank

A bank uses BI software to bridge a legacy database with departmental databases. It does this so that branch managers and other banking staff can determine who the most profitable customers are. In other words, it helps them determine which ones they should focus on when selling new products.

Ms. McGeever wrote:

“The use of these tools frees information technology staff from the task of generating analytical reports for the departments, and it gives department personnel autonomous access to a richer data source.”

Business intelligence – over 150 years old

Rob Meredith wrote in the Monash University Business Intelligence Blog that the term ‘business intelligence’ dates back to 1865. In that year, Richard Millar Devens used the term in his book ‘Cyclopædia of Commercial and Business Anecdotes’ (page 210).

Sir Henry Furnese profited by receiving information about his environment before his competitors and acting on it. Regarding Furnese’s actions, Devens wrote:

“Throughout Holland, Flanders, France, and Germany, he maintained a complete and perfect train of business intelligence.”

“The news of the many battles fought was thus received first by him, and the fall of Namur added to his profits, owing to his early receipt of the news.”

Market intelligence is another area where corporations spend money and resources. It is all about gathering and analyzing data on competitors, customers, and products.

Video – What is business intelligence?

This video, by Canada.Hitachi-Solutions.com, explains what business intelligence is.