What is the difference between BI and analytics?
Data is an incredibly valuable business tool and both Business Intelligence (BI) and business analytics are hinged on this data. While analytics is a sub-set of BI, both are effectively data management solutions which analyse business data for usable insights. Here’s a look at which one is best-suited for your business needs.
What is Business Intelligence (BI)?
BI is the collection, storage and analysis of data that emanates from all business operations. The interpretation of this data, by BI experts, allows company to discern trends and patterns in business operation, and increase compliance.
What is Business Analytics?
Analytics also uses a company’s data, including data mining, statistical analysis and predictive modelling, to make informed business decisions. Business analytics assists in realising the full potential of BI by interpreting data and predicting future patterns. As well as being used to strategise, analytics allows for the recognition of sales’ and market opportunities, while also decreasing potential risks.
How do they differ?
There is an overlap between BI and analytics, however the biggest difference between the two functions is the time factor.
– Business Intelligence
BI focuses on descriptive analysis, using historical and current data to indicate what has happened in the business previously, as well as what is happening in the business right now. Because BI manages all data from the past through to the present, it allows you to discover mistakes in previous operations, as well as identify what worked really well over time. Effectively, BI answers ‘what’ and ‘how’ so that you can expand on effective policies and eliminate what hasn’t been working.
– Business Analytics
Analytics focuses on predictive analytics, using existing data to determine the likelihood of future outcomes. Using data mining, data modelling and machine learning, analytics is able explain ‘why’ certain things work, and why they don’t. Because you are now able to anticipate what could happen, you are able to make informed decisions on changes to business operations for a better chance at future success.
Read more: Benefits of outsourcing business analytics
You might sell home-made furniture and want to find out where you should be focusing your attention. You opt for BI and a team of professionals will assess your past and current business data which tells you that your side tables are not hitting the right mark but there’s been a steady increase in the sale of your bar stools in one region. Taking this information, you will reduce your side table numbers – or change the design – and increase the manufacture of that bar stools, thereby meeting market demand.
But you might want to take it a step further, and find out why there’s such a demand in your bar stools. So, you bring in a team to perform a thorough business analysis and they’re tasked with finding out why this particular item is so popular. It might be revealed that a franchise is opening up a number of bars in the region, and they’re in need of your product. You could maximise on this data by contacting the company and offering other relevant furniture pieces at a discounted rate.
This is, obviously, a simplified scenario on the capabilities of these methodologies, but it does provide a bit of insight into how data analysis translates into real business value.
Which one does your company need?
BI and analytics provide valuable information for business operations, and while you might require either one of the methodologies, most businesses will benefit from both. You will need to determine whether your organisation will benefit more from descriptive analysis, or predictive analysis – but the reality is that you will likely require both for a comprehensive business forecast.