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Karl Aguilar

Business Intelligence vs. Business Analytics: Understanding the Differences



With today’s organizations able to access vast amounts of data which they seek to harness as means to achieve success and growth, there are two key approaches critical in leveraging data for insights. These are Business Intelligence (BI) and Business Analytics (BA). While these terms are often used interchangeably, they represent distinct concepts and methodologies, which is what we are going to delve into today.

 

Business Intelligence

 

Business Intelligence is defined as the collection, integration, analysis, and presentation of data. It primarily deals with descriptive analytics, answering questions about what has happened in the past. BI aims to provide a holistic view of an organization’s performance and operations, enabling stakeholders to monitor and evaluate key metrics and performance indicators that will facilitate in making more informed decisions.

 

BI’s emphasis is on providing a clear and concise representation of data through visualizations, charts, and graphs that will enable stakeholders to assess the organization’s past performance and identify areas for improvement. Such output can come in the form of standardized reports, dashboards, or key performance indicators (KPIs). It does not provide suggestions or actions they need to take but rather focuses on the outcomes of past decisions that will educate them on the possible next course of action to take.

 

Another thing to note is that Business Intelligence primarily relies on structured data from internal sources, such as transactional databases, CRM systems, and ERP systems. The data is cleansed, transformed, and stored in a data warehouse or data mart. BI tools then perform aggregations, summarizations, and generate reports and dashboards to provide users with a consolidated view of the data.

 

Business Analytics

 

In some ways, Business Analytics is similar to Business Intelligence in gathering, analyzing, and interpreting data, creating simplified reports to easily understand the organization’s status. However, BA goes beyond providing insights on what has happened by also explaining why it happened by pointing out the factors that contributed to the situation, utilizing statistical analysis, predictive modeling, and data-driven decision-making to extract insights from data.

 

In particular, BA delivers a more advanced and dynamic output that includes predictive models, forecasts, and actionable recommendations that is founded on historical data patterns. Because of these attributes, BA is considered as more potent in the decision-making process as it can generate predictions of how the data will change in the future based on the decisions to be made and provide useful suggestions to improve business planning and boost future performance.

 

Business Analytics encompasses a broader range of data sources, including structured and unstructured data from both internal and external sources. BA leverages advanced analytical techniques, such as statistical analysis, data mining, machine learning, and text analytics, to uncover patterns, correlations, and insights from the data in generating information that goes beyond mere reporting to predict future trends and outcomes.

 

Using Business Intelligence and Business Analytics Together

 

Depending on the organization’s needs, it may opt to adopt either one of these approaches for data, opting to just have business intelligence tools or just business analytics. However, there is value in adopting both approaches. Indeed, the most successful organizations today are the ones that not only know how to utilize business intelligence and business analytics in certain situations but, more importantly, know how to utilize both approaches in making strategic decisions.

 

In combining BI and BA tools, business leaders and decision-makers not only get to better understand the factors that are associated with the business’ success or failure but also gain greater insights as to the causes for the situation to arise in the first place. Such knowledge is vital in making such strategic decisions that will enhance the company’s position and ensure its success in the long term. Combining the two systems will give the business a competitive edge that will contribute to its growth.

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