Introduction to Business Intelligence
Any plan is only as good as its intelligence – in a corporate world, where does this information come from, and how is it used?
The core of any company, from the smallest startup to the most gigantic of giants, is the corporate strategy, the direction the company is taking in terms of future plans, goals and ideals. These are often called the company values, and are used as the basis of a mission statement. This is a summary of the company’s strategy worded in such a way that it can be used as a blueprint, once a company has grown to the size that the management can no longer personally oversee each section of it.
But the translation from the Mission Statement to strategy can be difficult. Each department has its own focus (Marketing has other priorities than HR or Procurement) and some are in direct competition (Operations might want efficiency, while Sales wants Innovation). You need proper information in order to make these decisions, and for that you need to look at many different things, both inside and outside of the company. Business Intelligence or Corporate Intelligence is the blanket descriptor for all these information-gathering and analysis activities and technologies.
Types of Business Intelligence
You can divide Business Intelligence into Internal and External sources, so from within or without the company, and you can divide them along how the information will eventually be used.
Internal sources are things like employee surveys, headcount census and investigative meetings. External sources can be customer or supplier surveys, information gathered from social media, gathered by third party agencies, public information such as from a statistics bureau or many others.
Then, there are many different “kinds” of Intelligence, based on how it will be used. For example, Market Intelligence looks at your customers and the circumstances of your company’s industry. It seeks to find out what people want, how many people are supplying it, the prices and quality ranges, changes caused by upcoming innovations and how quickly it changes based on current news. Market Intelligence is a primary input for Sales and Management, where the information is used to drive what the company provides to its customer and what strategy on delivering it will be most successful. It can be an early warning system for when your products are losing popularity, priced too high or no longer supporting your customer’s needs, giving you time to adjust and maintain relevance.
A subset of this is Customer Intelligence, looking specifically at your industry and customers to find out what can maximize your engagement with them. What problems do your customers face in their daily life (whether consumers or other customers) and what can you offer to fix them? But this form of intelligence also looks at developments that happen when your customers innovate, merge, alter their strategy or go out of business. Being able to predict this and prepare for it makes your company much more able to survive and remain relevant.
This is especially important when combined with Competitor Intelligence, where you look at what other suppliers in the market are doing. How strong is your competition, what are their price and quality levels, how stable and aggressive are they? Are they innovative, keen to enter niche markets, or slower players who rely on a few stable technologies? Who manages the company, and if they hire new managers, what will this likely change in their strategy. Asking these questions, Competitor Intelligence hopes to find a way for the company to succeed despite opposition from other, similar companies.
While not often specifically named, each of your major business functions also has its own line of inquiry, needed to make specific decisions. Human Resources needs information on wages, labour law, developments in education and the workforce, and third parties who offer HR-related services. Finance and Procurement need to be kept updated on business law and financial systems. Operations and Internal IT likely need to remain updated on project management and technological innovations in their field. While smaller in nature than the three major types mentioned above, they are critical to each department itself.
Business Intelligence Activities
In a nutshell, business intelligence covers five phases (although each has many subtypes and variations):
- Frameworking (Definitions)
- Information Gathering and Validation
- ETL (Entry, Transform, Load)
- Analysis and Secondary Validation
You first need to create a framework on what information you need to gather. So if you are doing Market intelligence, you need to define what that market is, who is in it, and what information you need to gather. Then you gather this information (or have it gathered by a specialized company) and validate it to make sure it indeed conforms with your framework, and if the information matches up with reality. This step is important because any errors here can cause you to make decisions based on very wrong information.
Raw data needs to be somehow placed in a system (Entry), which is often called a Data Warehouse, and all the work surrounding it called Data Warehousing. This data all needs to be merged and then processed so that it all follows a single methodology (Transform) and finally made available for analysis (Load). For a simple example of the Transform phase (often misunderstood as changing the data), imagine that you have to combine several excel sheets together. The columns may contain similar data, but they are all named differently, are in a different order, and some sheets were made in different countries so their time/date and currency information is in a different format. Transformation here means that you fix all these things up so that you end up with a single sheet (one Data Source) which combines all that information but with a single naming convention. This is the only way you can analyze that data without making mistakes, it all has to be consistent.
Then the analysis starts, which is usually done using scripts and algorithms. The raw data is transformed into graphs and summaries based on the questions that were asked. Often, people with a particular talent for seeing patterns in numbers and graphs will do their own analysis on the data, because people can sometimes infer patterns that scripts cannot. This whole process is followed by another validation, to make sure that the raw data lines up with the Data Source, and the Source lines up with the outcomes.
Even now, this information is not “pretty”, it needs to be converted into a Report. Effectively these are the answers to the questions asked in the format of numbers and graphics, and the conclusions that may be drawn reliably from the data. It is usually accompanied by a Management Summary which drills down to the main outcomes and conclusions, and likely will have recommendations on how to act on some of the information. For example, it might conclude that the data has shown a particular laptop to sell very badly because it uses an outdated monitor connector and an older model of USB. The recommendation might be to update the configuration, or to create a new laptop to meet with modern standards and greatly lower the price of the old model.
This form of advice often takes up the form of Consultancy, and companies specialized in it will often take up these conclusions and attempt to formulate strategies and advice that go beyond a direct translation of conclusions into action. With the laptop mentioned above, consultants might suggest that if the laptops are very rugged and high quality, to instead sell upgrade packages. Or perhaps that considering upcoming improvements in USB, it might be better to skip a generation and invest in the next upcoming type and that way head off competition and lead the field rather than following it.
One thing management really appreciates is the potential for real-time analytics, where the results are displayed in graphs and bars, made available a-will. This form of information management is called Dashboarding, and it allows for very fast responses to things happening in the company or the market. This will depend on how fast your company “moves”. If your company is in the stock trade, financial markets, helpdesk or some other high-tension market, then real-time dashboarding makes sense. If instead you sell household appliances which take a week to manufacture and are purchased once every two years, then you may be well off with a weekly or monthly analysis instead.
A topic sideways related to Business Intelligence is Information Management. In a large company the head of this endeavour is called a Chief Information Officer (CIO). In the old days CIOs used to focus mostly on technical assets and projects, but today they are responsible for the technological and information-related strategies for their company. This often includes how information is gathered, handled, secured and made available within the company, and that includes Business Intelligence.
Skills needed for Business Intelligence
If you are interested in a career in Business Intelligence, you will need to know how to perform research correctly and ethically to be able to gather data. This includes data in the form of numbers (quantitative research) and things like questionnaires, interviews and surveys (qualitative reviews). You need to know how to transform data so that it can be analyzed, how to analyze the data and create a report from your discoveries including conclusions that are clear and useful in a corporate world.
In a starter position, this also involves generating reports and documents using word processing and graphics programs, and skill in producing reports that please the eye as well as being informative will generate quite a boost in prospective career options.
Preferably you are capable of also performing some minor consultancy in the form of recommendations, if you want to grow into the field of Consultancy. This would also require some soft skills, such as presenting or negotiating. Being able to transform difficult abstract concepts into graphics or a simple story is a definite asset.
Many of these skills are acquired through formal training at college or university. Research, analysis and reporting are foundation skills for most sciences, but business and economic educations may also include them. Before deciding on a university education, be sure that it has research and analysis as core skills, or that they can be added through facultative studies.
Project Management can also be a useful skill if you want to lead a team performing research and analysis, and when combined with management and leadership talents can lead to a role as CIO or freelance Management Consultant. These promotions tend to grow organically though, and it is not easy to base a career on acquiring a C-level role at any time.