Importance of Business Intelligence and How the World’s Best Organizations Use It

Importance of Business Intelligence and How the World’s Best Organizations Use It

Business intelligence has become a central component in today’s most successful organizations, as evidenced by the current growth in revenue of BI software from $10.55 billion in 2010 to a projected $18.65 billion in 2017.

Big or small, startup or well-rooted enterprise, companies have recognized that data is power and are making business intelligence a priority by investing heavily in business intelligence technology.

What is Business Intelligence and why is it important?

Business intelligence (BI) refers to the set of technologies and procedures employed to collect, store, analyze and present the data generated by a company’s activities. BI includes the employment of descriptive analytics, data mining, process analysis and performance benchmarking.



By collecting information from a variety of sources, organizations can develop data-driven strategies to better inform executive decisions. If used properly, business intelligence can reduce costs, increase profit, increase efficiencies, productivity and enhance overall performance.


In this article, we provide real-world examples of how the best organizations use business intelligence so that you too will know how important it is to implement it within your company.

1

Gain Insights into Consumer Behavior like Amazon and AmEx

The use of BI enables organizations to bridge the gap between product or service, and sales. The most successful companies use the data provided by consumers to analyze and predict buying trends and improve customer relations, ultimately fostering consumer growth and retention, and driving sales.

Retail behemoth Amazon does this by using the wealth of data it collects from its customers -- such as purchase history and shipping location -- to tailor advertising algorithms and provide more efficient customer service.

One example of this is its collaborative filtering engine (CFE), which will take a look at things such as recent product purchases, items in your cart or wish list, items you search for most, or items you have rated.

business intelligence like amazon


For example, let’s say you added a cookbook to your cart. Amazon will use its CFE to find other customers who bought the same item, use the other data it has on you and this product, and present recommendations to capitalize on its timely suggestion. This method that we learn to appreciate and take for granted even, has increased Amazon’s revenue by as much as 30% annually.

American Express uses its big data to predict consumer behavior. Beyond intelligence-based hindsight reporting, the company makes use of predictive models that analyze historical transactions, incorporating more than 100 variables. As a result, the company is able to formulate a more accurate forecast of customer loyalty and potential churn.


They also use Big Data to help in the fraud detection department. By using machine learning algorithms, the company is able to analyze membership information, spending specifics, and merchant backgrounds to detect suspicious transactions and prevent them, saving millions in the process.

2

Turn Data into Actionable Information like Netflix and Starbucks

Another function of BI is to increase understanding of the ramifications of various organizational processes. These systems highlight key trends and patterns in data, ultimately enhancing the identification of suitable opportunities and facilitating more strategic planning for successful future performance.

Entertainment streaming service Netflix collects data on the viewing habits of its millions of consumers. It uses this intelligence to curate a database of shows and movies that will perform well with a global audience. Whether it be through the commissioning of original content or purchasing the rights to films and series, it continually appeals to and performs well with its consumer base.

how starbucks uses business intelligence

Alternatively, coffeehouse giant Starbucks uses Big Data to assess the profitability of new locations. It does so by analyzing information on traffic, area demographics, and customer behavior. Taking these factors into account prior to establishing a new store enables the company to choose locations based on the propensity toward revenue growth due to its calculated forecasts of success rate.

3

Improve Efficiency like General Electric


Beyond sales and growth, effective BI systems can improve organizational efficiency, thereby saving time and increasing overall productivity.


When data collected on processes is shared across departments, there is a reduction on the duplication of roles/duties within the organization as well as an improved accuracy and utility of the data generated by various departments.

More tangibly, the analysis of this data can greatly enhance a service or product. For example, GE uses the data from the sensors on its machinery to determine ways to improve machinery function and reliability. Embedded in devices such as hospital scanners and jet engines, these sensors are being used to improve fuel economy, reduce maintenance costs, and improve safety.


Estimates show that if GE’s data is able to improve the efficiency of their products and operations by just 1% across five of their main sectors, they’ll be able to save upwards of $300 billion each year.


4

Improve Profitability like Law Firms


Law firms are perhaps the most well known of all businesses to bill by a set rate or increment of time. However, coming up with these rates, and quantifying them for project/case estimates, has always presented itself as something of a challenge until the advent and use of business intelligence.


Today’s law firms are using business intelligence to help segment their time and billing data to provide more accurate estimates and forecasting methodologies.


Here are three major areas where law firms can benefit from time and billing BI:

  1. Individual attorney data: Law firms, even down to the individual level, can pull differences in revenue and profits from lawyer-to-lawyer. By comparing metrics as simple as annual fees to net profits, a firm, or individual, can extrapolate their profitability.

  2. Firm-wide data: A team of attorneys and their associates can use BI to see how effectively they are leveraging their time. If they considered that the amount of time required to reach a certain revenue would be equal amongst the firm, they’d also be able to look at the costs associated with each hour of work and how that factors into profitability. As many law firms who use BI soon find out, billing for more hours doesn’t necessarily equate to more profit; each hour of time can also produce its own variable costs.

  3. Client-specific data: Law firms can use BI to create a competitive advantage and earn more business. By providing clients with data-driven details on items such as open invoice status, capacity utilization, and the project sub-sets of their cases, they can have better client conversations that lead to more value, and more intelligent billing.



How will your Company Benefit from Business Intelligence?

The amount of information available through the use of business intelligence software can lend itself to companies scrambling to capture everything. The key is to filter out relevant sources and select data points that are representative of the overall health of a process or business.

Executives should then go beyond the visual charts and aim for a more nuanced understanding of what the data represents. By doing so, they will be better equipped to react to the information, developing more strategic action plans based on present insight.


Are you looking for business intelligence software designed with billable organizations in mind?

Allocable productivity analytics software cuts down hours of time and effort spent analyzing reports, managing spreadsheets, and interpreting data making it easier to visualize data. Evaluate the health of your business, manage your workforce and projects, and plan for the future with our business dashboards, made for executives, allocation managers, project managers, and employees.





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Allocable is a cloud-based automated time tracking and business intelligence (BI) software platform that provides  a complete visualization of your workforce and project productivity data empowering you to turn information into actionable insight to optimize and forecast performance with more certainty.

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