What is Business Intelligence

This week I want to do something a little bit different. I’m heading off to another conference and I am on the road to Boston to attend the Target Markets conference. It is an insurance conference. I started thinking about the last conference, which was WSIA Insurtech. As I’m talking to people at these conferences, the same issue arises, and that is our common understanding of business intelligence. There’s been different definitions as I’ve understood them, at least through the years, and it generates confusion. It’s confusing even for those of us that operate in this area every single day. It’s difficult to get your head exactly what these terms mean. And of course, to communicate them in a way that everybody can understand what we’re talking about.

So I decided that I would go in and instead of recanting what my definition is, I went into my browser and just simply typed in, “What is business intelligence?” I took the top few results, and I’m going to go through those results and just give my opinion on how others define business intelligence. I’ll just start off by saying for anybody that hasn’t listened to any of the prior podcasts, my definition of business intelligence is that business intelligence is a business function.

The goal of business intelligence is to ensure that everyone in the organization has the information they need to operate efficiently. That’s it. I don’t talk about tools. I don’t talk about technology, data warehousing methods, data visualizations, none of that stuff. It’s a business function, in my opinion. Now, let’s look at a few vendors and see how they define business intelligence.


I didn’t do deep research. I just took the top few results. The results that came up were from Microsoft, IBM, and Tableau. I also went to Wikipedia to see what Wikipedia had to say about business intelligence. I have to say, I’m not terribly impressed with that definition on Wikipedia. It’s also not terrible either.

One of the things that Wikipedia said, just on the side, they could have copied this directly from what I say, is that business intelligence is most effective when you combine both external data and internal data. So, where you take data that is helping you understand the environment that you’re operating in from an external perspective. It could be the physical environment, the competitive environment, or the financial environment. Then combine that with data that you have internally from your business applications. Those internal applications could be your operating systems, your ERP, your CRM, and so on. When you combine that together into one data solution that describes your business, that’s when business intelligence really moves to another level. So, let’s look at how a few of these vendors define business intelligence. 

In the past, I’ve been critical, I must confess. I’ve gone to these sites in the past and wasn’t very impressed with how they define business intelligence. It’s like when you’re in business, you want to drive how people think about the thing that you’re offering. If you’re selling soda, then you want to be like Coke. When people use the term Coke to represent soda, and I get it, its marketing, we want that to happen. 

When it comes to succeeding in an organization with business intelligence, there’s a different way of thinking about things. This time, I was impressed with some of the definitions that I found.

Microsoft offers Power BI, which is today the leading business intelligence tool. Microsoft says, “What is business intelligence?” Maybe they’ve done some keyword research over there and found that maybe I’m not the only one asking this question. Here’s what they say:

“Business intelligence, BI, helps organizations analyze historical and current data so they can quickly uncover actionable insights for making strategic decisions." And then they go on, "Business intelligence tools make this possible by processing large data sets across multiple sources and presenting findings in visual formats that are easy to understand and share."

I would say, the first sentence I agree. Business intelligence, I guess they left out, is a business function that helps organizations to analyze historical and current data, so they can quickly uncover actionable insights for making strategic decisions. I wouldn’t limit it to strategic decisions either. This is not only about the most strategic decisions that we’re talking about. This can be routine decisions that are made by individual contributors. It could be regional managers. It could be the highest-level executives in the company, in my opinion. But this is how Microsoft defines business intelligence. Not too bad. The problem is that they go straight into talking about tools in the second sentence. So, they say, “Business intelligence tools make this possible.” I am going to have to object to that.

If business intelligence is about ensuring everyone in your organization has the information, they need to make strategic decisions in Microsoft’s terms, why are we moving straight into tools? I’ve said this in the past, if you did this on notecards, you achieve a business intelligence function if you can deliver actionable insights, meaning the information people need to understand the environment that they’re operating in.

If you can do that using a process of distributing notecards, you’ve achieved the goal of business intelligence. I understand a software vendor like Microsoft is going to skew this definition a bit to move into the tool category. So, they’re now talking about tools making this possible, and they are exactly right. Tools do make this possible, not only business intelligence tools, what we call business intelligence tools is generally thought to be the front-end tool. It’s Power BI or Tableau, it’s those tools. It is not the tools that are underlying that enable business intelligence, like the ETL tool, the database engine, the cube engine, and so on.

A little bit more about the Microsoft definition of business intelligence. I really like the next section because the heading here is “How Business Intelligence Works”. They break it down into four categories. For those of you that know me, this might ring a bell. Here are the four steps that they point out.

  1. Collect and transform data from multiple sources. Basically, it’s the ETL process where you collect data from multiple data sources called your systems of record. Typically, that’s your business applications, and you transform data from all these sources. They don’t go too far into this, but it does say that you’re moving data into a central location. Just a big bucket step. They’re not trying to go into a technical definition. And I agree with this. The first thing is we need to get data into a format that supports the analytics that we need to create.
  1. Uncover trends and inconsistencies. Now we’re going into the discovery piece of this. This is where you are doing data mining according to this description. You’re doing data discovery, using automation to quickly analyze data to find patterns. They’re going deep here. I would say that in my experience that could be biased. The thing here is that most companies are not at the pinnacle of this process. Most companies are at the descriptive part of this process where they’re just trying to understand what’s happened in the past from a descriptive standpoint. There may be some statistical analysis going on, but generally the predictive side of things and the artificial intelligence or the mining side of things is limited, in most organizations. A lot of organizations are hoping to get there, don’t get me wrong, but just simply having descriptive analytics is where most companies are focused.

    So, when you read something like this and you’re working for a company that’s new, or maybe not new, but is trying to improve their business intelligence solution. It’s easy to get deflated. This is talking about fancy predictive tools and technologies. From someone that’s worked with many organizations, I can tell you that you’re not alone when you’re trying to get your descriptive information in front of the right people. So that was step two. It’s uncovering trends and inconsistencies.

  1. Use data visualizations to present findings. Now we’re going to move into the tool again. The tool is not unimportant. It’s extremely important. It’s just that it’s one of the tools. The front-end tool is the tool that you, the business user, is going to use to visualize data in a way that you can consume it easily. Looking at a bunch of raw numbers isn’t going to do the trick. You need to have that information put into a trend at an aggregated level, so you can use your brain to see when anomalies are occurring. So, the visualization is the third step.
  1. Taking action on those insights. I’m super glad they included step four. What I was alluding to in the earlier point that I made is that I had this term that’s called IKIDAF. It was the name of a tool that I’d created prior to the LeapFrogBI data warehouse automation platform. Anyway, IKIDAF stands for information, knowledge, insight, decision, action, feedback. It’s what I believe best describes this decision-making process that is part of business intelligence.

    It’s describing what we’re trying to accomplish and the action piece of that, where someone is using the insights that these solutions are creating. The follow up feedback to monitor those actions is even more important, or just as important. If you’re building solutions, and no one’s using them, you’re wasting your time and resources. If you’re building solutions and people are maybe consuming the reports, but they’re not actually acting on them, that’s also a waste of time and resources.

    But if we take action, if we try to use data to make decisions that help us move forward, help us reach our goal, now we’re doing something. If we’re honest about that, and we measure the results in a very critical way, and we use that measurement to further or improve future actions, now we’ve got a cycle of improvement. So, I’m happy to see that Microsoft included these steps here. I think it’s great, love that they did that. Overall, I think the Microsoft definition is not too, too bad.

I think someone could easily read these definitions and muddy the territory between business intelligence and business intelligence tools. That’s easily done, but overall, it’s not a bad definition. Good job, Microsoft.

The next one I looked at was IBM. They have a page, as best I can tell, that’s part of their Cognos solution. Cognos is not the newest business intelligence tool on the market, but it’s still around.

We still have clients that use Cognos. Maybe the search engine was ahead of the game. It doesn’t really matter frankly which business intelligence tool you use, what matters is that you are using insights to make better decisions. If it’s Cognos, a tool that was developed… I don’t know, 10 years ago, 15 years ago, I don’t know when Cognos was developed, but it’s one of the earlier versions of BI tools. 

What does IBM have to say about business intelligence? They have another top line H1 heading saying, “What is business intelligence?”

“Business intelligence, BI, is an umbrella term for the technology that enables data preparation, data mining, data management, and data visualizations. Business intelligence tools and processes allow end-to-end users to identify actionable information from raw data, facilitating data-driven decision making within organizations across various industries."

This is my pet peeve. This, in my opinion, is going in the wrong direction. Business intelligence as IBM defines it as an umbrella term for technologies. No, it is not. Business intelligence is empowered by technologies, but business intelligence itself in my opinion is not a term for the technology as IBM puts it. It’s not a tool. It doesn’t matter if you’re using Cognos, Power BI, or notecards. BI is a function of the business that’s aided by the use of tools, just like a house is not a hammer. 

You build a house with a hammer. A house is not the lumber. A house is not the shingles that go on the roof. A house is not the brick that goes in the wall. It’s all these things that help you build a house. The analogy, of course, the house is the successful implementation of business intelligence. Which I define as the use of data to help your organization make better decisions.

So the tools, just like the hammer and the materials like the shingles are very important here, but they are not the house. Same is true for business intelligence. Technologies are extremely important, but they are not the house. Now, some of the other things that IBM has on their page here I totally agree with, they go into some of the benefits of business intelligence, and they have a headline that says, “Business intelligence versus business analytics.” It goes into that. 

They break down some of the pieces of the BI solutions like data warehousing and data marts (ETL). They talk about OLAP, and so on. Some of the same old things that pretty much everybody’s been doing for quite a long time. So, I would say if I was to grade this definition, I would avoid it. This to me is why there’s confusion here. 

Again, if you are a tool vendor, you want people to associate the problem you’re trying to solve with your tool. I understand that. This is not a knock on the approach to sell a tool. Not at all. I understand what is happening. I just think that the industry would be better served if we can come up with a common definition of business intelligence that we all understand. I don’t think that definition is going to come from vendors.

However, as I just mentioned, the definition I got from the Microsoft site was not too far off. Let’s jump to the third vendor that showed up in my quick results. You can do this as well. Just go to your favorite search engine and type in, “What is business intelligence?” You’ll probably find these same definitions. Tableau has a page; it looks like it’s an article. I don’t know if it’s on their blog or what, but the heading is “Business Intelligence, what is it? How it works. It’s important, examples and tools.” Right there on the heading, I like it.

The reason I say that is because they are not co-mingling tools with business intelligence. This means that they have delineated the two, they’re not one and the same. Let’s move into what Tableau has to say. Tableau, by the way, was purchased by Salesforce. I don’t really track them as closely as I used to, but from what I can tell, it’s the same product as it’s ever been. It’s been progressing well. It’s very well-received. It’s one of the top business intelligence tools in the market today.

Tableau’s definition is:

"Business intelligence combines business analytics, data mining, data visualizations, data tools, and infrastructure, and best practices to help organizations make more data-driven decisions. In practice, you know you've got modern business intelligence when you have a comprehensive view of your organization's data and use that data to drive change, eliminate inefficiencies, and quickly adapt to market supply changes."

I like it. I’d say that’s good, I have no objections. I skipped down a couple of paragraphs on their page, because it’s a repeat up above. When I skip down, there’s one paragraph that Tableau has written that I think is just awesome. I’m so happy to see this on a vendor website. Here’s what it says:

“Much more than a specific “thing,” Business intelligence is rather an umbrella term that covers the processes and methods of collecting, storing, and analyzing data from business operations or activities to optimize performance. All of these things come together to create a comprehensive view of a business, to help people make better actionable decisions. Over the past few years, business intelligence has evolved to include more processes and activities to help improve performance. These processes include…”and they list out some of the processes like data mining, reporting, performance metrics, benchmarking, descriptive analytics, querying and so on and so on. 

I love this part, “Much more than a specific “thing,”” with thing being in quotes. “Business intelligence is rather an umbrella term that covers the processes and methods of collecting, storing, and analyzing data from business operations or activities,” and then the most important part here, “to optimize performance.” The optimized performance piece is critical.

It’s saying that this is the goal. This whole thing here, thing being the term that Tableau used, it’s not a thing. It is a process. And in their terms, it’s a process and method. In my terms, it is a business function to ensure that everyone in our organization has the information they need to operate efficiently. And I’ll say again, if you believe that the success of your organization depends on the collective ability of everyone in that organization to actually make good decisions, and I’m not talking about the most strategic decisions only.

On a daily basis, probably even more importantly, everybody that’s carrying out activities in that business, if you believe that those people doing their job efficiently is key to your business’ success. Then how important is it to make sure they have the information they need to do their job efficiently?

It is critical. That’s what we’re talking about when we talk about business intelligence. We’re not talking about tools. Yes, tools are important, but we’re talking about how we are going to meet our goals. One of the biggest investments nearly every organization has is people. It’s that human element, the human mind that is the most important, the unreplaceable part of an organization.

How do you get the most out of that investment? This is one way you do it. You give those people the information they need to operate efficiently. Don’t make them do manual things repeatedly. Don’t make them merge data from three systems together. Don’t make them deal with five different definitions of the same metric that they are trying to use as their goal post. Get that information in front of them in an efficient way, so that they’re all beating to the same drum and can operate efficiently.

I would also say that people are generally much happier when they don’t have to guess, when they’re armed with the tools and the information, they need to do their job efficiently. People are happier. I genuinely believe that.

Tableau, I think hit the nail on the head. It is much more than a specific thing, meaning it’s not a tool, it’s not a technology, it’s not a data warehousing method, it’s none of those things. It’s the process of making sure people have the information they need to operate efficiently, specifically to make good decisions.

So that’s three different vendor’s definitions of business intelligence. Overall, I was happy with what I found. In the past, I’ve seen some alarming definitions of business intelligence. I don’t even remember which ones I’m talking about, but the definitions have clearly caused confusion in the industry. I don’t know how everybody gets to the point where they understand business intelligence. 

But from my perspective, it’s important that we clarify the term, business intelligence. And again, this came top of mind while attending conferences and talking to people. It’s clear that we don’t have a common understanding of what this term means. I don’t think that anybody is confused about the goal, however. 



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