10 top benefits of business intelligence for companies

1. More informed decision-making

It's easy to say "better decisions" without really specifying what that means. Better is better, right? But it's useful to be more precise about how BI helps improve business decisions.

First, BI tools provide timely access to information that's validated for accuracy, giving executives and operational workers a true picture of the business when it's needed for decision-making. Indeed, BI applications can approach near-real-time data insights for fast-moving businesses. They also discover or draw attention to trends and patterns in business data that might otherwise go unnoticed. In this way, BI reduces the reliance on intuition and guesswork in tactical decision-making and strategic planning.

These abilities to support timely and informed business decisions with relevant insights enable a more curious, data-literate culture to develop within a company. Taken together, all of this improves decisions and avoids flawed ones that can result in business errors and missteps.

2. Increased operational efficiency

One of the most time-consuming aspects of data analysis has always been preparing data and ensuring that it's high-quality. Designing these processes can still be a significant effort -- but once that's completed, BI tools can automate regular data collection and processing, even in desktop systems. They also automate the updating and distribution of reports and BI dashboards in various formats, from PDF files to mobile apps.

This saves time and effort, and because business users are freed up from manual data handling, they can focus on more strategic, higher-value tasks. In addition, some BI tools, through features such as process mining, can highlight inefficiencies in business intelligence workflows and provide actionable insights that guide additional optimizations and cost reductions.

Likewise, corporate executives and business managers can use the results generated by BI applications to make business operations more efficient. For example, BI helps optimize business processes and resource allocation to ensure that time, effort and money are put to the best use possible in companies.

3. Improved financial and strategic performance

BI software is frequently used to deliver detailed financial insights. Indeed, the office of the CFO is often the first significant adopter of BI in an enterprise. Real-time tracking of financial metrics enables businesses to quickly adopt new tactics in response to market changes. They can then allocate resources more effectively and optimize spending. In these scenarios, BI tools are often used alongside budgeting and planning applications, providing the analytics insights that in turn drive budgeting decisions.

From there, as businesses develop strategic plans and budget for them, monitoring progress against the plans becomes a must. Many businesses use key performance indicators (KPIs) or an objectives and key results (OKRs) framework for this continuous insight. KPIs and OKRs might even be used to manage incentives for business teams and individual employees.

Most BI platforms include features for setting KPIs and then monitoring and reporting on them with simple dashboards that enable managers to see the current state of their business against the strategic plan at a glance. Increasingly, business intelligence tools can also aid in tracking OKRs, which combine operational goals with various metrics for achieving them.

4. Deeper customer insights

Customer behavior is a complex topic for many businesses because it changes over time in response to economic conditions, competitive pressures and personal preferences. BI tools are frequently used by both product and marketing teams to gain a deeper understanding of customers and market trends. In particular, the tools provide a structured framework for analyzing customer interactions across multiple touchpoints. Customers can then be categorized for more effective marketing, and changes in their buying behavior can be tracked over time.

With these so-called customer intelligence insights, companies can develop new product and marketing strategies, to the extent of creating personalized recommendations for individual customers. This can increase customer retention and lifetime value, and it also feeds into improved customer support, product design and service delivery.

5. Better market intelligence

External data, such as competitive intelligence, economic and market data, provides crucial context for tactical and strategic planning. For example, in rapidly developing markets, such as new product categories, companies need to respond quickly to changing market conditions and emerging business opportunities. Integrating external data into BI software enables analysis of current business performance with that extra context, which is highly valuable for strategic decision-making.

Similarly, companies use BI not only to manage their internal performance but also to benchmark against other companies in their industry. It's one thing to know how your business is performing, but it's even more valuable to know how you're performing compared to your peers -- and competitors.

These benchmarking techniques require sophisticated analytics tools that can normalize and compare data across different organizations and market segments. The insights provided by BI tools enable companies to adapt their strategies with increased agility while also identifying opportunities to differentiate their products or services in the market.

6. Improved data quality and access

In contemporary businesses, data isn't used only by BI and data analytics teams. As mentioned previously, applications such as budgeting and planning are deeply informed by data. Similarly, project management efforts, product development processes and pricing strategies might extensively be based on data from customer and financial records as well as other sources.

While BI plays a direct role in strategy development for these scenarios, specialized applications are commonly used to manage the operational workflows. Even in such cases, though, data sets that are carefully curated and prepared for BI applications can be useful. As a result, business intelligence is not only valuable in and of itself, but it also provides a high-quality data platform for other business use cases.

BI systems consolidate data from multiple sources, providing a single, unified view with improved data quality and consistency. For BI users, this ensures that decision-making is based on accurate and up-to-date information, which minimizes analytics errors and discrepancies. For other users, the BI platform improves the accessibility of data by eliminating information silos across an organization. The wider access to data also promotes increased cross-departmental collaboration.

7. Predictive views of business trends and issues

BI tools increasingly include features that would have been considered quite advanced just a few years ago -- capabilities such as predictive analytics and machine learning, for example. These technologies uncover patterns in historical data, and by comparing the patterns to incoming new data, they can predict future trends and potential business challenges. That enables businesses to take a proactive approach to changes in the market, new opportunities and internal issues.

To make such technologies more accessible, they're now implemented in BI tools as augmented analytics features, which are designed to automatically discover insights and present them to business users with suggestions for action or further investigation. Such features aren't intended to replace more advanced data science practices, but they do provide useful information as part of BI applications.

8. Enhanced collaboration and communication

An important aspect of improved decision-making is the ability to collaborate with other users to validate decisions or gain additional insights before taking action. The dashboards and reports created in BI platforms can be easily shared across business teams for comments and collaboration. This access to consistent and up-to-date information also aligns teams toward common business objectives and helps improve communication and coordination.

Taking this further, BI tools also facilitate cross-departmental data analysis, enabling better strategic alignment across organizational boundaries. To safely enable that kind of collaboration, though, BI systems need good security and administration features. That ensures data and generated insights are shared only with the right people who have the proper permissions to access the data.

9. Reduced costs and financial waste

Many of the most difficult business decisions come at times of difficulty or crisis, and they often involve having to make cuts and reduce costs. This can be the result of economic changes, business difficulties or external problems, such as supply chain failures and natural disasters. In all cases, corporate executives and business managers need to make decisions under pressure, but they need to make the best decisions possible. Data-driven decision-making becomes particularly crucial at such times.

By analyzing operational data, BI tools provide systematic approaches to identifying areas where costs can be reduced without compromising core business functions, through measures such as eliminating redundant processes and financial waste. Similarly, BI tools are often used to categorize expenses in order to better understand where costs can be trimmed and the potential impact of any cost reductions.

10. Stronger compliance and risk management

Regulatory compliance is a necessary burden for businesses, some more so than others. While all companies face some degree of regulation, industries such as healthcare and financial services are subject to an increasingly complex regulatory environment that requires sophisticated monitoring and reporting capabilities.

BI software can be used to track compliance metrics and generate automated reports and benchmarks to meet regulatory obligations. It can also go further and help monitor potential business risks as they emerge, in real time, so organizations can respond quickly. For example, BI tools can aid financial services firms in fraud and credit analysis.

Similarly, in manufacturing, Total Quality Management practices require regular or continuous auditing of production and quality problems. Reports and dashboards are essential tools for quality managers working to keep on top of issues as they arise.

In scenarios like these, the integration of compliance, risk management and quality metrics in BI applications provides organizations with a comprehensive view of their operational integrity.

Beyond the immediate benefits

As you can see, implementing business intelligence software has a multitude of benefits that can improve a company's operations, decision-making and strategic positioning. However, some of the benefits of BI initiatives go further than that.

The accessibility of BI and its ease of use enable business users in all departments to become more skilled in asking insightful analytics questions. In short, they become more data literate. Combined with the collaboration features of modern BI platforms, this can create a compelling culture of data-driven strategic planning and operational decision-making. In the long term, it leads to stronger, more innovative and more agile businesses that can gain a competitive edge in the market.

New technologies, such as AI tools, likely will further augment BI platforms with additional capabilities -- but they won't replace these platforms. Business intelligence will remain a critical technology for companies long into the future.

Donald Farmer is a data strategist with 30-plus years of experience, including as a product team leader at Microsoft and Qlik. He advises global clients on data, analytics, AI and innovation strategy, with expertise spanning from tech giants to startups.