What Is Business Intelligence? Examples, Benefits, and How It Works

Key takeaways

Given the wealth of data businesses now have access to, it has become increasingly important to utilize that data to make informed decisions.

• Business intelligence (BI) is a comprehensive framework of tools, processes, and infrastructure that enables organizations to collect, analyze, and transform raw data into actionable insights.

• Organizations use these insights to make strategic, data-driven decisions and enhance operational performance.

• While every company can benefit from BI, it's especially useful at large companies, companies in competitive markets, and remote companies.

Learn more about what business intelligence is, different examples of how companies use BI, and the kinds of benefits it typically offers. Afterward, build your skills in business intelligence with the Google Business Intelligence Professional Certificate.

What is business intelligence?

In an era where data doubles every two years, organizations that can quickly transform information into data-driven decisions gain significant competitive advantages [1]. Business intelligence is the set of BI tools, systems, and processes used to collect and analyze data to improve organizational and operational performance.

Business intelligence eliminates guesswork from strategic planning, reduces operational costs through optimization, and helps companies respond rapidly to market changes. Instead of discovering problems after they occur, BI enables the early detection of trends, the identification of opportunities, and the prevention of costly mistakes. This shift from hindsight to foresight fundamentally changes how businesses compete and grow.

Business intelligence in action

Below, we outline three examples of how companies utilize business intelligence in various ways.

Example 1: Optimizing retail chain inventory

A clothing retailer's BI system analyzes sales data, weather patterns, and local events across 200 stores. When the system detects that stores in college towns consistently run out of certain items before football games, it automatically alerts buyers to increase inventory orders for those locations during sports seasons, preventing $2 million in lost sales annually.

Example 2: Monitoring a restaurant chain's performance

A fast-food franchise uses BI dashboards to track real-time metrics across locations, such as sales per hour, average order value, and customer wait times. When a location shows declining performance, the system alerts regional managers and provides comparative data from high-performing stores, enabling targeted coaching that improves underperforming locations by 15 percent.

Example 3: Allocating health care resources

A hospital network's BI system analyzes patient admission patterns, seasonal illness trends, and staff schedules. It predicts when emergency departments will be busiest and automatically recommends optimal staffing levels, reducing patient wait times by 23 percent while minimizing overtime costs.

How business intelligence systems work

Business intelligence systems operate through a systematic four-stage process that transforms raw data into strategic insights. Let's review those stages below:

1. Data collection and integration

BI systems automatically gather data from multiple sources, such as CRMs, databases, spreadsheets, web analytics, social media, and external feeds, to create a unified data repository.

2. Data processing and storage

Then, raw data is cleaned, standardized, and stored in data warehouses, ensuring consistency and accessibility across the organization.

3. Analysis and insight generation

The system applies three levels of analytics to extract meaningful patterns:

• Descriptive analytics: Analyzes historical performance data to understand the current business state through dashboards, reports, and KPI monitoring. Asks "What happened?"

• Predictive analytics: Uses statistical models and machine learning to forecast future trends, customer behavior, and business outcomes. Asks "What might happen?"

• Prescriptive analytics: Recommends specific actions and strategies based on data-driven insights to optimize business performance. Asks "What should we do?"

4. Visualization and distribution

Insights are transformed into interactive dashboards, automated data reports, and alerts that reach the right stakeholders at the right time.

This continuous cycle ensures organizations always have access to current, actionable intelligence for strategic decision-making.

Who needs business intelligence?

Business intelligence can be beneficial for various types of companies and teams. Learn more about who should be integrating BI.

• Growing companies: Organizations scaling beyond basic spreadsheets need centralized data management and automated reporting. When manual data compilation becomes a bottleneck, BI transforms hours of work into minutes of insight.

• Data-heavy businesses: Companies generating large volumes of customer, sales, or operational data need sophisticated tools to identify patterns and trends. Without BI, valuable insights remain buried in databases.

• Multi-department organizations: When sales, marketing, finance, and operations need to share insights and align on metrics, BI provides a single source of truth. It eliminates conflicting reports and ensures everyone works from the same data.

• Decision-makers under pressure: Executives requiring real-time visibility into performance metrics and KPIs can't afford to wait for manual reports. BI delivers instant access to critical business indicators.

• Remote teams: Organizations with employees across multiple locations require centralized dashboards that are accessible from anywhere. BI ensures consistent reporting regardless of physical location.

• Competitive industries: Businesses operating in fast-moving markets need rapid insights to stay ahead. BI enables quick pivots based on real-time performance data and market trends.

Benefits of business intelligence

Business intelligence is like a flashlight in the dark, helping you understand what’s happening with your company and customers, so you can plan more strategically and better manage risk. Here are some of the critical benefits that business intelligence offers: 

• Track performance in real-time: Access live dashboards and instant alerts that reveal performance changes as they happen, enabling immediate course corrections instead of discovering problems weeks later through manual reports.

• Set benchmarks for performance evaluation: Establish clear performance baselines and track progress against measurable KPIs, eliminating subjective evaluations and creating accountability across teams and departments.

• Identify customer preferences and behavior: Uncover hidden patterns in customer behavior, preferences, and buying journeys that reveal new revenue opportunities and allow rapid response to market shifts.

• Improve supply chain efficiency: Gain end-to-end visibility into inventory levels, supplier performance, and distribution efficiency.

• Faster, more accurate decision-making: Transform decision cycles from weeks to hours by providing executives with trusted, comprehensive data that reduces uncertainty and eliminates analysis paralysis.

Business intelligence careers

If the thought of using data to drive business impact sounds appealing, there are different business intelligence careers you might want to explore. These include:

• Business intelligence analyst

• Business intelligence developer

• Business intelligence engineer

• Business intelligence manager

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