5 Ways Business Intelligence Aids Decision Making

5 ways BI aids decision-making

1. Transition from what you think you know, to what you should know

One of the first steps in implementing any business intelligence system is to help identify the real key indicators of company performance. Many-a-time, business leaders tend to focus on indicators that are revenue focused, which is completely understandable. However, there’s a long list of data-points that can provide significantly more detailed insight into how different parts of the business are performing, and how this is impacting overall success.

For example, the leadership of a retail company may focus heavily on sales numbers, while potentially ignoring performance in other departments, for example, the warehousing and logistics team might be bottlenecking performance due to an inefficient inventory management system.

By being able to track data from said inventory system, improvements can be made to this department that can build better efficiency, and relieve pressure from other departments.

2. Increasing decision-making efficiency by reducing misinterpretation

Another advantage of having identified key performance indicators thoroughly within a business is that it leaves little room for misinterpretation of the source of problems that may arise. If a group of leaders have agreed to run the business based upon certain KPIs, there is little negotiation or discussion necessary when the data is clearly pointing to the source of said problems. This reduces internal bureaucracy, and makes allocation of resources for problem solving easier, and more effective.

3. Reduction and classification of risk

With BI software feeding a steady stream of data to a business’s data dashboard, decision-makers find it easier to understand the implication of certain decisions that they may be considering.

For example, if a retail store has data from multiple outlets in multiple locations, and are considering opening another, the data available to them will give a clear indication of a number of factors, such as the increased workload on their logistics department, estimated payroll costs, and how much time will likely be required for said new outlet to begin turning a profit.

With this data in hand, risky decisions can be classified and their implications more thoroughly understood before actually being made. Then, the results can be measured – feeding into a continuous feedback loop for constant optimisation.

4. Informing sales & marketing strategies

BI can help make better sales and marketing decisions thanks to these departments having a clearer picture of the market they’re currently serving and what those markets want.

For example, if a retailer has a data collection method such as a loyalty program, customer trends based on accurate demographics can be generated through smart dashboards and monitored in real-time, creating a dynamic snapshot of consumer behaviour and market needs. This information can then be used in the generation of more accurate and effective marketing and sales campaigns that consider the current buying behaviour.

5. Preparing for the unexpected

Once enough data has been collected through BI channels, simulations of potential events can be created. Taking an example which is extremely relevant due to current global supply-chain issues – if a business loses access to a particular product, resource, or channel, how will this impact the overall operation?

Thanks to the ability to simulate such situations, business leaders can react much quicker to shifts in the business landscape than those trying to catch up once something has gone wrong. The ability to shift tacks and make very quick and decisive decisions in response to external factors can be the difference between success and insolvency, and this is what well-designed BI can provide.

6. BONUS: BI and Digital Transformation

After learning what business intelligence is and how it works, some business owners might think that it’s way too advanced for their current operational business model. That they need to digitalise their processes way before they can even think about using BI. That’s a mistake!

In reality, adopting a BI-focused approach can be extremely beneficial, no matter what state of digitalisation a business is in. Having a BI partner will significantly help with the identification of business processes that would benefit most from digital transformation, and where the most optimisation can be achieved in the long run.

Once that digital transformation has taken place, and the BI strategy implemented, KPI-focused reports can provide a clear picture of the success of the transformation, and provide insight into what more can be optimised. This entire process can be repeated for practically every other facet of the business until it’s a well-oiled machine.