What is Business Intelligence?

Business intelligence involves different technologies, practices and strategies. Small businesses use these tools to take raw data from various sources and interpret it. There are a variety of methods and applications used.

BI has evolved from essential reporting platforms to analytics that improve business operations. Read on to learn more about the term business intelligence and its uses.  

what is business intelligence

What does Business Intelligence (BI) Mean?

Business Intelligence (BI) is comprehensive. It involves analyzing, collecting and integrating business information to enable organizations to convert data into insights.

BI is about more than just collecting data. It transforms it into valuable knowledge, resulting in actions that boost a business’s performance.

what is business intelligence

How Business Intelligence Works

The BI  process involves several steps, including collection. Data from spreadsheets, social media, IoT devices, and other sources is structured and combined into a single view.

The data then gets warehoused and analyzed to extract actionable insights for business users. The final stage is reporting what’s found in easy-to-understand visuals, such as reports, dashboards, graphs, and charts.

BI can be used in industries like healthcare to identify patterns and diseases and improve patient care.

what is business intelligence

The Crucial Role of BI

Business intelligence contributes to effective operations in different ways. It can identify bottlenecks, streamline processes, or identify areas for improvement. Some tools offer real-time monitoring for improved decision-making after analyzing business data.

Benefits of Business Intelligence

BI can enhance a small business operation by supplying comprehensive views of predictive, current and historical data to help analyze patterns and trends. It can help business users identify bottlenecks and streamline processes. It helps to enhance strategic planning by analyzing competitor activities, customer behavior and even market trends.

Business intelligence software can also interpret business and historical data with visual representations like dashboards and graphs. Users can drill down into specific data sets to find the root cause of issues. For example, they can dig deep into a sales report to analyze performance by region or product category.

BI ApplicationDescriptionHow to ImplementBenefits
Market AnalysisUnderstanding market trends and customer preferences.Use BI tools to analyze market data and consumer behavior.Helps tailor products/services to meet market demand.
Customer InsightsGaining a deeper understanding of customer needs.Analyze customer data for patterns and preferences.Enables personalized marketing and improved customer satisfaction.
Financial ManagementStreamlining financial reporting and analysis.Implement BI for real-time financial tracking and forecasting.Aids in better financial decision-making and budget management.
Operational EfficiencyOptimizing business operations and processes.Use BI to identify inefficiencies and streamline workflows.Increases productivity and reduces operational costs.
Competitive AnalysisKeeping an eye on the competition.Analyze competitors’ data to understand their strategies and market positioning.Helps in strategizing to gain a competitive edge.
Sales OptimizationEnhancing sales strategies and performance.Track and analyze sales data to identify trends and opportunities.Improves sales tactics and boosts revenue.
Supply Chain ManagementManaging the supply chain more effectively.Use BI to track and optimize inventory levels and supplier performance.Ensures efficient inventory management and reduces costs.
Risk ManagementIdentifying and managing potential business risks.Analyze various risk factors and their potential impact.Helps in proactive risk mitigation and business continuity planning.
Employee PerformanceAssessing and improving team performance.Track employee performance metrics and identify areas for improvement.Enhances team productivity and employee development.
Strategic PlanningInforming long-term business strategy.Utilize BI insights for informed decision-making and future planning.Aligns business strategy with data-driven insights for long-term growth.

what is business intelligence

Business Intelligence Tools

Following is a list of the major business intelligence tools you’ll want to consider. Understanding the types of business intelligence tools available is crucial for selecting the right one for your business needs, whether it’s for data analysis, reporting, or other specific BI functions.

Ad Hoc Querying

This tool allows a user to run a custom query without using a template or report. They can get answers to specific questions. For example, a retail company can use particular data sources like sales data to create a custom query. They can set parameters like profit margins, and the BI generates a report. Tableau is an industry-leading company.

OLAP (Online Analytical Processing)

OLAP is a flexible tool allowing businesses to look at data from different angles simultaneously. It’s a flexible way to find patterns and trends so they can make intelligent business decisions.

A company can look at its sales data from different dimensions, like product category, sales by region, and time of sale, all at once.

Data Mining Tools

Data mining tools deal with large data sets, looking for patterns and correlations. Customer segmentation is an example of how they get used. A small business can use its tool to analyze customer data like preferences and purchasing history to help target marketing.
RapidMiner is a company that supplies predictive analysis and a user-friendly interface.

what is business intelligence

Mobile BI

This term refers to accessing data, analytics and data analysis on tablets and smartphones. Sales teams can use mobile BI to make good decisions during client meetings. They can access key performance indicators. Field technicians can access equipment data on the fly.

Real-Time BI

Real-time business intelligence analyzes data as soon as it’s generated or received. A real-time dashboard can track customer behavior, continuous inventory levels, and website traffic. It’s a bonus for different metrics like real-time sales numbers. For businesses looking to enhance their marketing strategies, considering free marketing tools alongside BI tools can be a cost-effective approach.


Operational intelligence is a type of real-time analytics that focuses on immediate insights. It uses current data to enhance a small business’s day-to-day operations. It’s different from traditional BI, which deals with historical numbers and trends. Companies can use operational intelligence to optimize supply chain routes effectively.

what is business intelligence


Software as a Service Business Intelligence (SaaS BI) uses a cloud-based subscription model. It’s a cost-effective technology that eliminates the need for on-premise installation and maintenance. SaaS BI scales up or down rapidly and can be used to analyze business metrics and other data, such as customer behavior.


Open Source Business Intelligence (OSBI) uses software that lets users access, modify and distribute the source code freely. That allows for cost-effective, flexible, customizable BI solutions.

BIRT is one such project for creating dashboards, reports and data visualizations.

Embedded BI

Embedded Business Intelligence (Embedded BI) allows users to access analytics and insights inside another application. For example, sales representatives can access embedded BI tools in a CRM platform.

what is business intelligence

Collaborative BI

Collaborative (BI) involves sharing analysis, reports, data and insights among different stakeholders, departments and teams. The practice is about fostering a collaborative environment.

BI tools allow departments like sales and marketing to share reports and dashboards from various regions. Teams can collaborate on items like inventory requirements and predicting sales trends.

Location Intelligence

This is a subset of BI that involves location-based information. A retail store with different locations can use location intelligence (LI) to look at foot traffic patterns. This can help them identify the best places to open new branches. LI incorporates a wide variety of data analytics.

what is business intelligence

Business Intelligence Vs. Business Analytics

  Business intelligence and business analytics differ in purpose and scope.

  • Business intelligence often deals with structured data. It focuses on historical data. It reports on what’s currently happening and what has happened in the past.
  • Business analytics includes predictive modeling, statistical analysis, advanced analytics, and data collection. It makes predictions about future outcomes.

The Role of Visual Analytics and Data Visualization

Visual analytics and data visualization work together to help businesses make informed decisions. Here are three ways they accomplish that goal:

  1. Visualization can help a user quickly grasp information by using sales data in pie chart form. Visual analytics can help people discover patterns that might not otherwise be apparent.
  2.  Visualizations can condense complicated data sets into user-friendly visuals. Visual tools allow users to drill down into specific details.
  3. These tools also show correlations and trends.

what is business intelligence

Choosing the Right BI Tools and Platforms

Scalability is essential for a BI tool to manage a large data pool. Consider a cloud-based solution. Remember to start with a list of must-have features, like predictive analytics and real-time reporting. For further insights into selecting the best tools, a hyper book review might provide additional perspectives and considerations.

Business Intelligence in Action

Retail chains can use BI tools to review sales data and manage inventory. They can draw data from point-of-sale systems and even CRM software. This allows these businesses to forecast demand accurately.

A hospital might use BI solutions to boost the level of patient care and its operations. It can pull data from electronic health records and create dashboards and reports for staff and clinicians.

what is business intelligence

Business Intelligence for Big Data

Tableau is a tool that effectively analyzes and derives insights from large amounts of data. These tools allow businesses to explore data sets and find insights quickly. Products like this can even track the effectiveness of marketing campaigns by analyzing conversion rates.

The Future of Business Intelligence: Emerging BI Trends

Artificial Intelligence (AI) automates insights and boosts data processing times. Analytics can help businesses forecast future trends and anticipate any market shifts.

Self-Service Business Intelligence (SSBI)

Self-Service Business Intelligence(SSBI) allows non-technical users to access, analyze and visualize data. It’s a user-friendly data analysis and visualization platform- a DIY toolkit.

what is business intelligence

FAQs: What is Business Intelligence?

What is the Difference Between Traditional and Modern BI?

Traditional BI relies on structured data and static reports. The modern version is more agile, with real-time insights and the ability to integrate diverse data sources.

How Can a Small Business Benefit from Location Intelligence?

Small businesses can gain valuable insights into local market trends, demographics and customer behavior. Those are just a few LI features. They can decide on operational strategy, expansion and marketing.

What is the main purpose of business intelligence?

The main purpose is to transform raw data into actual insights so that businesses can improve their processes and drive growth and success.

Image: Envato Elements, Depositphotos

Rob Starr Rob Starr is a staff writer for Small Business Trends and has been a member of the team for 7 years. He is a graduate of Ryerson University in Toronto with a Bachelor of Journalism degree. His print credentials include employment with various Toronto area newspapers and three works of fiction: The Apple Lady (2004), Creekwater (2006) and Sophistry By Degrees (2008) published by Stonegarden Press In California.