When you’re driving a car, you look at the dashboard instruments to know what’s going on with the vehicle. You’re not measuring the gas flowing through the fuel line. You’re not taking readings of your oxygen sensor every few seconds to ensure the right mix of air and fuel. All of that data collection and far more is being handled by hundreds of assemblies, meters and sensors. The vast amount of related information is then summarized into usable displays for quick car driver decisions. Business analytics for strategic decision-making works the same way. Data needs to be measured and summarized accurately and quickly but also intuitively so that decision makers can change direction as needed. They don’t have time to read every data output or transaction dump. Decision makers need good trends, graphics, summary reports and encompassing metrics that can be trusted to act on.
Business intelligence is about making sense of a company’s in’s and out’s. When used correctly, the tool provides vast amounts of information at a person fingertips comprehensively. Done wrong, and it can lead to bad decisions as well ruin and failure. The beauty of the tool, however, is not in its product delivery; that’s expected. The advantage comes in being able to accurately make sense and interpret the daily goings on in a business and they mean for the future. Half of the value of statistical measurement is about probability, figuring out what’s going to happen tomorrow and making the right decisions ahead of time.
While there is no such thing as a business fortune teller magically knowing tomorrow, business data can predict a lot in terms of probability. A company’s transactional data is often a key sensor when sorted and measured correctly. And business intelligence provides a methodology that not only collects and summarizes company data but also explains it in a useful manner. Whether that is through graphs and visualization or key performance figures and indexes, the approach works like a car dashboard. Business intelligence takes the mass of data and turns into useful, quick-glance decision triggers.
The benefits of business intelligence also come with a deeper analysis of where a company has been. By being able to take the vast amount of past transactional data and summarize it clearly, a company can review its past activities and determine what may have caused mistakes as well as they type of outcome they produced financially. This is incredibly valuable for decision-maker reference and experience. And the same metrics can be particularly valuable for regular internal audits when looking for trends of irregular activity or outliers.
Ideally, the use of business intelligence measurements should produce far better decision information and far less data collection and miscellaneous reporting. When the process becomes automated, human error of multiple inputs is dramatically reduced, also reflecting a better picture of what the business data behavior actually reflects versus someone’s interpretation. With the above, a company should be able to identify how to:
- Regularly reduce costs and bureaucracy bloating that occurs in larger organizations on the natural.
- Increase a relationship of resource allocation to revenue generating functions like sales.
- Increase net profitability by reducing operating costs that eat into gross profits.
- Be able to invest better in capital and infrastructure resources.