BI is the ability to take information resources using analytics and reporting tools and convert them into knowledge that is helpful in determining trends in historical data and in decision making. Raw data is converted into useful information for business analysis. The usual method of doing this involves examining data from past, cataloging and using this as a way of identifying, developing and otherwise creating new strategic business opportunities.
Forrester defines the business intelligence (BI) market as a set of methodologies, processes, architectures, and technologies that leverage the output of information management processes for analysis, reporting, performance management, and information delivery. Research coverage includes executive dashboards as well as query and reporting tools.
The most commonly used BI tools are:
- Process Mining
- Decision Engineering
- Data mining
- Reporting and querying software: tools that extract, summarize and present data
- Data warehousing
- Business Performance management
- Local Information System
Data is gathered from data warehouses or data marts for the BI applications. However, all data warehouses are not used for business intelligence, nor do all BI applications need a data warehouse.
The main distinguishing factor between analytics and Business Intelligence is that the latter gives insights which are determined by analytics in reports, dashboards, spreadsheets or interactive visualizations.
Business analytics helps develop new insights and understand business performance based on data and statistical methods. It uses statistical and quantitative tools for predictive and explanatory modeling. Data is at the heart of business analytics. Companies that are committed to data-driven decision making commonly use Business analytics as it uncovers patterns and relationships leading to meeting of the business goal on the whole.
In an alternate definition, business analytics is the subset of BI as it focusses on statistics, prediction, and optimization, rather than reporting.
The IIA (The Institute of Internal Auditors) states that at present, 95 % of analytic capabilities are based on either reporting or descriptive visualizations. Reporting is sure to become more automated and with approximately about 90 percent of analytic capabilities shifting toward predictive and prescriptive practices.
Enterprise analytic leaders are already growing in numbers as well as importance with increase in trained experienced managers.
The most commonly used BA tools are:
- MS Excel
- SPSS Modeler (Clementine) data mining software tool
- Salford systems
- MATLAB by MathWorks
- Statistica- A statistics and analytics software package by StatSoft.
- Weka (Waikato Environment for Knowledge Analysis)
Once organizations understand the exact capabilities of the two fields and how they relate to their business objectives, they can be tailored to focus on their particular IT initiatives to best exploit them.