Whoever tries the most stuff usually wins. Does your business put a priority on its business intelligence process? Does it monitor your competitive analysis, marketplace trends and its understanding of market change? And most importantly, does it put a priority on making changes as a result of insights from this analysis?
This is a four-part series on critical elements of business intelligence. This first part discusses an overview of business intelligence and the three types of business intelligence that are most critical to the average business.
Here are links to all parts of this series:
The Business Intelligence Process Part 2 Market Analysis
The Business Intelligence Process Part 3 Competitive Analysis
The Business Intelligence Process Part 4 SWOT Analysis
What is the meaning of business intelligence?
Business intelligence (BI) is an umbrella term that includes the applications, infrastructure and tools, and best practices that enable access to and analysis of information to improve and optimize business decisions and performance. It is the set of techniques and tools for the transformation of raw data into meaningful and useful information for business analysis purposes.
Keep exploring: Network Connection … 23 Actionable Tips for Relationships
BI technologies are capable of handling large amounts of unstructured data to help identify, develop and otherwise create new strategic business opportunities.
Goal of BI
The goal of BI is to allow for the easy interpretation of these datasets. Identifying new opportunities and implementing an effective strategy based on insights can provide businesses with a competitive market advantage and long-term stability.
BI technologies provide historical, current and predictive views of business operations. Common functions of business intelligence technologies are reporting, online analytical processing, analytics, data mining, process mining, complex event processing, business performance management, benchmarking, text mining, predictive analytics and prescriptive analytics.
This is a very large number of business intelligence tools. Most businesses would do very well with these three: market analysis, competitive analysis, and SWOT analysis. These are the ones we will discuss is this 4 part series.
These BI analyses can be used to support a wide range of business decisions ranging from tactical operational to strategic. Basic operating decisions include product positioning or pricing. Strategic business decisions include priorities, goals, and directions at the broadest level.
In all cases, BI is most effective when it combines data derived from the market in which a company operates (external data) with data from company sources internal to the business such as financial and operations data (internal data).
When combined, external and internal data can provide a more complete picture which, in effect, creates an “intelligence” that cannot be derived by any singular set of data.
Comparison with competitive intelligence
Though the term business intelligence is sometimes a synonym for competitive intelligence (because they both support decision making), BI uses technologies, processes, and applications to analyze mostly internal, structured data and business processes while competitive intelligence gathers, analyzes and disseminates information with a topical focus on company competitors.
If understood broadly, business intelligence can include the subset of competitive intelligence.
Comparison with business analytics
Business intelligence and business analytics are sometimes used interchangeably, but there are alternate definitions. One definition contrasts the two, stating that the term business intelligence refers to collecting business data to find information primarily through asking questions, reporting, and online analytical processes.
Business analytics, on the other hand, uses statistical and quantitative tools for explanatory and predictive modeling.
In an alternate definition, Thomas Davenport, professor of information technology and management at Babson College argues that business intelligence should be divided into querying, reporting, Online analytical processing (OLAP), and “alerts” tool.
Market analysis
A market analysis is really exactly what it sounds like: determining the characteristics unique to your particular market and analyzing this information, which will help you make both tactical and strategic decisions for your business.
By conducting a market analysis, you will be able to gather valuable data that will help you get to know your customers, determine appropriate pricing, and figure out your business priorities and vulnerabilities.
Target market
In the initial market analysis, you were able to look at the general scope. In this target market section, you’ve got to be specific. It’s important to establish a clear idea of your target market early on. A lot of new entrepreneurs make the rookie mistake of thinking that everyone is their potential market.
To put it simply, they’re not.
This is a good thing—by narrowing in on your real customers; you’ll be able to direct your marketing dollars efficiently while attracting loyal customers who will spread the word about your business.
The target market section of your business plan should include the following:
User Persona and Characteristics: You’ll want to include demographics such as age, income, and location here. You’ll also need to dial into your customers’ psychographics as well. You should know what their interests and buying habits are, as well as be able to explain why you’re in the best position to meet their needs.
Market size: This is where you want to get real, both with the potential readers of your business plan and with yourself. Do your research and find out who and where your competitors are, and how much your customers spend annually on your product or service. How big is the potential market for your business?
The competitive analysis
The competitive analysis is where you dissect your competitors, which is important for a couple of reasons. Obviously, it’s a good idea to know what you’re up against, but it also lets you spot the competition’s weaknesses.
Are there customers out there being underserved? What can you offer that similar businesses aren’t offering? The competitive analysis should contain the following components:
Market: How big is the market for goods and services similar to what you plan on offering? What’s the growth rate? Include the general outlook and trends for this market. Who are your main competitors? Are there any secondary competitors who could impact your business?
Competitor strengths and weaknesses: What is your competition good at? Where do they fall behind? Get imaginative to spot opportunities to excel where others are falling short.
The importance of your target market to competitors: Ideally, you’re going after customers whose needs aren’t being met by your competitors.
Barriers to entry: What are the potential pitfalls of entering your particular market? What’s the cost of entry—is it prohibitively high, or can anyone enter your market? This is where you examine your weaknesses. Be honest, with investors and yourself. Being unrealistic is not going to make you look good.
The window of opportunity: Does your entry into the market rely on time-sensitive technology? Do you need to get in early to take advantage of an emerging market?
