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What Is Business Intelligence? The ABCs of BI

Jamie Brooks, Phocas Software
Jamie Brooks, Phocas Software

Jamie Brooks, VP, Marketing & People
Phocas Ltd.


Business Intelligence (BI) is a common phrase in today’s business jargon, and yet there are still misconceptions about what it is and how it benefits the companies that use it. Is it an analytics tool that spits out sales reports with the press of a button? Is it a performance-tracking tool that monitors everything from salespeople and customers, to branches and regions? Or is it a financial solution that connects budgets with sales and customers? The answer is yes. BI is the tools, systems and processes that allow organizations to collect, manage and analyze data to improve their decision-making and business performance. This post goes back to the basics of BI to help automotive parts manufacturers, distributors and suppliers understand the real value of BI for their business.

A: About BI

While the phrase ‘Business Intelligence’ was popularized in 1997, the concept of BI has always been prevalent, in most instances, in regards to analytics. In 1958, IBM researcher Hans Peter Luhn defined BI as “the ability to apprehend the interrelationships of presented facts in such a way as to guide action towards a desired goal.” Thirty years later, in 1989, a Gartner analyst defined BI as “concepts and methods to improve decision making by using fact-based support systems.”

Most recently, Forrester Research explained BI as “a set of methodologies, processes, architectures and technologies that transform raw data into meaningful and useful information used to enable more effective strategic, tactical and operational insights and decision-making.”

B: Business Case for BI

Minimize uncertainty about the future

Benjamin Franklin once said there were only two certainties in life – death and taxes. This is especially true in the business world. Automotive industry leaders are constantly faced with unstable economic conditions, increased competition and changing buyer behavior. What we know for certain is that nothing is certain. BI gives you one way to overcome this uncertainty.

In the case of a new product development, businesses need to understand buyer behavior, the market’s perspective, and competitive products and performance before they go into the development stage. This information can help the product to be more successful once it hits the market. BI provides the information you need to analyze market conditions, your business performance and the competition so you can project future conditions. Armed with this knowledge you will be able make more informed strategic business decisions that can benefit your organization going forward. 

Improve performance to achieve objectives

Every business has its own goals and objectives. Some would like 20 percent growth year over year, and would deploy every available resources to achieve it. But how do you know what parts of your business need to improve in order to achieve those goals? Do you know what products are underperforming? Do you know who your top customers are and what products your customers not buying? What regions present opportunities for growth, and does weather play a factor in performance?

Business Intelligence allows you to analyze past performance and review inputs and outputs to help you determine the changes you need to make to improve performance. From this business data will come the actionable items you need to implement that will directly contribute to achieving your set objectives.

Due to its contribution to strategic decision-making, a BI tool is sometimes known as a decision support system (DSS).

C: Comprehend BI

The image above is a simple depiction of the three layers of BI. It begins with the source system layer, which includes the individual sources of data, such as ERP, finance, CRM and HR systems. The middle layer is the data warehouse layer where all the information from the individual data sources is aggregated. The top layer is the reporting layer where data from the warehouse is presented in easier to analyze dashboards and reports.

Within the source system layer of BI, there are several types and formats of data, also known as raw or unstructured data. Gathering value from raw data can be challenging. Just like a car dashboard gives you a quick glance of a vehicle’s performance, a BI tool gives value to the raw data, revealing actionable product, customer and financial information pulled from your ERP, CRM and financial systems. From the raw data, BI unlocks the value of the information so you can:

  • Better understand sales trends;
  • Improve sales through better inventory management;
  • Integrate data from across your business for a more comprehensive picture of your operations and performance;
  • Prevent customer leakage through analysis of purchase, aftersales and repurchase behavior;
  • Improve purchasing and warehouse management by tracking inventory, sales and orders side-by-side; and
  • Use analytics to improve supply chain and delivery times.

The Missing Link?

For automotive parts businesses with large product portfolios and customer bases, BI can be the missing link between the data you create and collect in your internal systems and an optimized sales and fulfillment strategy. The ultimate goal of any BI tool is to empower you with the information you need to make better strategic, tactical and operational decisions so that you can be more successful in our constantly changing business environment.

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