Column: Business Intelligence – More than a Gut Feeling?

Smart technologies may provide valuable insights for managers

Business Intelligence is a term that is being seen more and more among companies, both large and small. A significant number of firms are using this set of skills, processes, technologies and practices, along with data warehousing and data mining, to help assist in managing their business and to make more intelligent decisions.

In a broad sense, Business Intelligence can be used to refer to someone's "gut feeling" or instinct about what is the right direction for a business. Data mining refers the process of extracting patterns from data. Data warehousing is a repository of an organization's electronically stored data. Data warehouses are designed to facilitate reporting and analysis. Though these three terms have different meanings, they are often used interchangeably to refer what is commonly known as Business Intelligence.

So how does Business Intelligence work and how is it tied to data mining and data warehousing? Let's take a look at a couple of examples by examining a grocery store application to see how they get the data in the first place.

As a grocery item is scanned a slew of actions take place behind the scenes. First, your purchase is recorded in the store's database, as is the time and day of the purchase, whether the item was on sale, where the item was located, whether it was a holiday season and a number of other criteria specific to each store. In short, everything the store can determine about that particular item may be recorded.

This process allows the store to track items and find out how well they are selling, helping to keep prices low. This also allows the store to refund your money for a purchased item without the receipt, as long as you've entered your club card or rewards number. Using the recorded data, the store may put the item on sale more often. Those are some of the more immediate benefits, but there are also long term benefits.

A good Business Intelligence setup could determine, by looking at historical data, if a product moves faster when they have their own aisle or when placed, for example, near the beer aisle or the snack aisle, leading to more strategic placement of items. It could also determine which products move more during certain times of the day or year.

Though Business Intelligence and data mining are more suited for some industries, such as retail, these techniques and principles can be applied to any business. Even the industries that would likely benefit from formal Business Intelligence, they do not use it.

Why not? Usually, it is because they do not know it is available to them or they feel it is too expensive.

Granted, Business Intelligence is not cheap. However, it is well worth the money. It can give managers insight into their business that might not otherwise be available to them, leading to increased efficiency and increased profit.

Adcock is an IT field engineer with Maxwell IT of Seattle and an instructor in network security at Charter College in Vancouver.

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