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Gartner, an information technology research firm, coined the term "business intelligence" during the 1990s. Business intelligence (BI) generally refers to the process of transforming the raw data companies collect from their various operations into usable information. Since data in its raw form is of fairly limited use, companies are increasingly electing to use business intelligence software to realize their data's full potential. BI software comprises specialized computer programs that allow an enterprise to easily aggregate, manipulate, and display data as actionable information, or information that can be acted upon in making informed decisions.
For example, let's consider the data collected at a supermarket. Tens of thousands, or even hundreds of thousands, of transactions are recorded at the checkout counter every day. Looking at this transactional data in its raw form, one could glean basic information such as which item was sold, when it was sold, and how much it was sold for. However, by implementing BI software, the supermarket can turn that raw product data into information and use that information to gain more profound insight into their business. In addition to determining how many containers of milk were sold on any given day, the supermarket can determine bigger-picture insight such as how discounts and promotions impact sales trends, which items are selling best in each department, and which of their store locations is best at selling a specific product line.
Armed with this knowledge the supermarket's management can better plan for the future. By tracking buying trends of the customers, the purchasing department knows which products to stock up on. Moreover, management can obtain such information as products that are commonly purchased together, like hotdogs and mustard, so that they can better position them on the shelves, thereby increasing revenue. Promotions that do well in impacting sales in a test location can be replicated across the chain in order to boost sales and profitability.
By providing this type of window into vital information, BI enables companies to improve the way they do business. Companies are empowered with the ability to offer products and services at the lowest possible cost and with the greatest amount of efficiency and productivity possible ? while returning the highest revenues and profits. Companies implement BI effectively through a fourphase business intelligence improvement cycle (BIIC).
A healthy BI strategy should be viewed as the sum of four major components that fit together in a constant cycle. These four components are Measure, Analyze, Plan, and Improve.
Measure
The measure phase is by far the most widely deployed and far-reaching component of business intelligence. Think of the process of establishing a BIIC as blowing up a long, thin balloon. As you inflate the balloon, the part closest to your mouth expands first, then that expansion extends down the length of the balloon. If you wrote the words measure, analyze, plan, and improve down the length of the balloon starting at the end you blow into, the measure section of the balloon would expand first before you see the analyze, plan, or improve sections. Try to blow up any section of the balloon before the measure section and you will find it impossible. The same goes for the BIIC.
In the measure phase, companies report the current and historical status of key metrics used to manage their business. These measures tell a company the "what," i.e., "What is the status or health of my business?" Although most companies know which fundamental indicators to measure, such as sales or profit, it is not necessarily easy for them to obtain and distribute the status of these measures to the individuals throughout their organization. By employing an effective BI solution, an organization can successfully distribute this information to all the people who affect business inside and outside the enterprise. And through a BI application, an organization can uncover new ratios and metrics that provide even deeper insight and that could potentially modify or enhance what is currently measured. Today, reporting and information delivery software used widely by IT departments provides the bulk of the functionality in this initial phase of the BIIC.
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