Business Intelligence

Updated on April 9, 2024
Article byGayatri Ailani
Edited byAlfina
Reviewed byDheeraj Vaidya, CFA, FRM

What Is Business Intelligence?

Business intelligence (BI), also known as business analytics, deals with the practical application of data analytic tools to solve business problems through data-driven decisions. It is a broad term covering various strategies that an enterprise can execute with the processing and management of business information.

Business Intelligence Meaning

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Business intelligence tools use data analytics for decision support in various aspects of an organization’s operation. This technology-driven approach encompasses data collection, processing, monitoring, visualizing, modeling, reporting, and forecasting. It then provides actionable insights to the businesses so they can make better and faster decisions than they could otherwise.

Key Takeaways

  • Business intelligence is an umbrella term that defines data-driven techniques such as data mining, process analytics, and data forecasting that help enterprises develop effective plans to increase productivity and profit.
  • BI encompasses tools and strategies that extract knowledge from data to make better decisions and improve processes.
  • It allows you to see patterns across multiple data sets and identify relationships between them, making it easier to spot trends and anomalies in the market.
  • It can become too complex for anyone outside management-level employees to understand fully. It can cause problems when people try to access the information available through the system.

Business Intelligence Explained

Business intelligence (BI) tools help companies better understand their customers and their markets, as well as how they compare with competitors. It allows businesses to make more informed decisions about their products or services, which may be more profitable or less risky—and ultimately contribute to increased revenue and profitability. It’s a set of methods, techniques, and processes used to gain insight into all aspects of an organization’s business, including customers, operations, processes, and more.

Business intelligence is a method of analyzing data to make decisions. It applies to all business information, including customer, financial, sales, and more. Companies also use it as data visualization software or tools that allow you to analyze your data in real time.

The most common kind of business intelligence is called reporting. In this scenario, the analyst or BI specialist uses their expertise to study data and produce reports that summarize it for their customers or clients. One can deliver these reports via email or through more advanced forms of communication like Slack channels or webinars.

A business intelligence system also includes predictive analysis. In this scenario, the BI specialist uses algorithms to predict future trends based on past performance to optimize operations as necessary. For example, marketing teams often use this analysis to expand their reach by anticipating customer behaviors and needs before they arrive at a store location.

The third kind of business intelligence is called prescriptive analytics. It involves using machine learning algorithms to suggest actions based on current behavior patterns within an organization’s system boundaries.

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Let us look at business intelligence examples to understand the concept better:

Example #1

A hotel owner employs BI analytical programs to collect statistical data on average occupancy and room pricing. It is useful to determine the total money generated per room. It also collects each hotel’s market share statistics and customer survey data to determine its competitive standing in various markets. By studying these tendencies year after year, month after month, and day after day, management can provide reductions on room rentals.

Example #2

Amazon uses a business intelligence system to optimize its supply chain. The company uses logistics, inventory, and production data to identify inefficiencies, improve forecasting, and optimize the supply chain. Amazon also employs business intelligence to analyze data from various channels, such as website traffic, social media interactions, and customer feedback. This data helps improve marketing targeting, optimize campaigns, and assess marketing efforts’ effectiveness. Thus, Amazon can use BI to comprehensively understand its customers and the market, allowing it to make better decisions and improve its business operations.


Some of the main tools of Business intelligence are:

  1. Reports: Business owners or managers who need quick access to relevant information about their company’s performance use these frequently.
  2. Dashboards: A dashboard is an interactive user interface (UI) that displays important data so people can easily access it from any device without having to go through different screens or menus. This tool lets users view all information in one place at once.
  3. Campaigns: Organizations with multiple campaigns use the campaign tool. This tool allows them to track each campaign separately.


Business intelligence can provide certain key benefits that help organizations, such as:

  1. Improved Decision-Making: Business intelligence helps make better decisions by giving an overview of a company’s financial and operational status. Anyone can use this information to make informed decisions about the business’s future.
  2. Increased Productivity: Business intelligence tools allow employees to work more efficiently by providing real-time data on products, services, or processes. It allows them to make better decisions about where their time should be spent and how they can improve the efficiency of their departments or operations.
  3. Reduced Costs: By using business intelligence tools, organizations can reduce costs related to management overhead, such as human resources and administration. The result will be lower costs for products and services provided by the company.


Even though it is highly beneficial to a business, several limitations are also associated with business intelligence systems. These include:

  1. Cost: The systems can be expensive and require significant investment in both time and money.
  2. Ease Of Use: The tools are often difficult for non-technical people, making them less effective for some organizations.
  3. Subjectivity: The tools are often subject to human interpretation, which can lead to poor results if used incorrectly.

Business Intelligence vs Business Analytics vs Data Science

The following are the highlights of the comparison between business intelligence, business analytics, and data science:

  1. It has been used in the business world for a long time. It refers to the collection and organization of data and its analysis. Business analytics is a subset of business intelligence, which means that it’s focused on using data to make decisions. Data science is the next level of business analytics because it involves using algorithms to analyze data and make predictions based on those predictions.
  2. Business intelligence is collecting, analyzing, and presenting information to help an organization make better decisions. It is a strategic approach to business analysis that aims to provide decision-makers with actionable information from various sources. On the other hand, business analytics refers to organizations’ techniques to acquire, analyze, and present data to improve operations.
  3. It is a subset of business data analytics. The three main areas in which BI applies are reporting self-service analytics and dashboards. Business analytics is the application of quantitative methods to solve problems in business. It involves using data mining and statistics to mine data from various sources (like Salesforce), then using an analytical method such as regression, correlation, or decision tree analysis to conclude the underlying relationships between variables to gain insight into how to improve decision-making processes.
  4. Business analytics is the use of analytics as a support for business decisions. At the same time, data science is an independent discipline that applies advanced statistical techniques and tools from statistics, mathematics, databases, and engineering to extract knowledge from data.

Frequently Asked Questions (FAQs)

Why is business intelligence important?

Business intelligence is important because it provides a framework for making the best decisions for your company and allows you to analyze data to help you reach your goals. In addition, companies today face more complex challenges than ever before, which means they need people who can use the right tools to get their work done.

What are business intelligence techniques?

Business intelligence techniques are a set of methods used to analyze and visualize data. They can help make decisions, improve your company’s efficiency, and more. They fall into descriptive statistics, predictive modeling, and simulation.

Is business intelligence a good career?

One should be aware that a business intelligence career is a wise choice if one considers it seriously. In recent years (2023), there has been tremendous growth in demand for this position.

How much do business intelligence analysts make?

In jobs listed from June 2018 to January 14, 2023, the median annual income for a business intelligence analyst was $87,742 in the US and £45,000 in the UK.

This article has been a guide to what is Business Intelligence. We explain its tools, examples, comparison with business intelligence and data science, and benefits. You may also find some useful articles here –