Businesses of all sorts have been running on the same planning and development principles for the longest time. The outdated way of running a business does not only cost money, but also its accuracy and effectiveness cannot be guaranteed. This is why a whole new revolution or business intelligence software is taking the business world by storm.
Since the start of this century, information technology has been shaping our lives. Modern technology has improved our way of life in every way and form. Most people cannot fathom the extent of its role. But who wants to complain as long as it is making our life easy, right?
Having said that, information technology has been able to make a breakthrough in the field of business too. And consequently, things are starting to change. Just as technology is taking over every aspect of our life, it can now help us run a business too.
What is Business Intelligence?
In the past five years, the developers and data scientists have been able to create an application that they call Business Intelligence (BI). This was achieved partly by combining Artificial Intelligence and Machine Learning. Though relatively young, it is already proving to be an essential tool for an entrepreneur.
But what is this software? How does it work? What are its functions? Is it costly? Does it invade my privacy? Well, let us break it down for you.
Business Intelligence is an application software specifically created to cater to a business executive’s need to plan, execute, and evaluate business models. It helps in showing us what will happen in the future if we follow a specific set of instructions. Of course, to accurately forecast future revenue, the software needs a particular set of data. Once we have given the input, it will be able to tell what is ahead of us or, more importantly, what is not.
What does it do?
Business Intelligence applications are able to process huge chunks of data. Whether the data is structured or not is no issue. It can also handle data mining and analytical processing and give insights into that specific industry’s past, current, and future trends. With the ability to devise a new strategy for maximum profit.
It can also pinpoint where a business can cut costs and keep the bills down. Also, it helps weed out unnecessary expenses. With the aid of Business Intelligence, management can also evaluate an employee’s performance better. It can provide sound advice on whom to promote or whom to lay off so that the business can run smoothly.
By doing a comprehensive analysis of the market, it can also help companies gain an advantage over the others. It will help them learn of the competitors’ weaknesses. By doing so, they can have the upper hand. It will also decipher the other firms’ strengths so that companies can improve products accordingly.
Target your Customers
One of the most important, if not the most crucial, functions of Business Intelligence Software is finding and detecting the target customer base. However, to take advantage of this function, businesses first need to have a strong base for future development. Otherwise, it will be difficult to cement a strong foothold in the market.
Another advantage is that it can let companies discover the interests of clients. For a business, it is of utmost importance to serve the interest of the target customer base. Business Intelligence Software is exceptionally efficient in tracking the wants and demands. A common mistake many new startups make is that they tend to follow the current trends. But Business Intelligence allows you to track trends as well as form the bigger picture of the market’s direction from buyers’ perspective.
For marketing and promotional purposes, this ground-breaking tool is a must-have, as it breaks down which aspects of its operation a business need to invest in to gain maximum outreach. For a business to do well, it must offer various offers in terms of discounts, giveaways, and other enticing deals. Business Intelligence Software can allow you to design a course of action as to when, how, and what to include in these promotional offers.
Business Intelligence Software can also conduct a cost volume analysis. That way, one would know what price to set for products and services and what volumes to sell to achieve the targeted revenue. So, for profit maximization, it can be really handy. It also helps in setting goals.
Business Intelligence Software can aid in research and development of new products too.
Overall, Business Intelligence is a powerful tool that helps businesses figure out the whole picture of the market. However, for its effectiveness, it is important to provide the software with the external and internal data.
Use of Business Intelligence in Real Life
Imagine this: you just started a pizzeria down the block. You have a 6-inch pizza and a 12-inch one. Now you find out that some of your valued customers are not content with the 6-inch one, and at the same time, they cannot afford the 12-inch pizza. So, you decide to create a 9-inch one, but what’s going to be its price? Business Intelligence Software can help you determine the best price that will not only be favorable for your customers but also for making profits.
Human calculations are always susceptible to mistakes, but not true with Business Intelligence.
Suppose, Bill has started a new briefcase shop. The first order of his business is to set a competitive selling price. Business Intelligence Software will establish a suitable selling price for him which buyers can afford and through which he can make profits too. Customers want value for money too. So, Bill can use Business Intelligence Software to keep the production costs down and, at the same time, maintain high quality.
Bill has taken a loan for his project, but he wants to make a sizable profit after deducting the monthly bills and taxes. I mean, who doesn’t want to? In order to reach that desirable point, Bill has to sell a specific number of products. Business Intelligence Software will do a comprehensive CVP analysis to derive that number. Perhaps the country is going through a recession, so Bill has to cut costs. But he is worried that it may disrupt his operations. Business Intelligence will let him know where to cut costs and what steps are necessary to keep the costs down and keep the processes running smoothly.
Perhaps Bill wants to decrease the fixed cost by cutting down the salaries of the salesmen while also keeping the salesmen motivated. What he can do is increase the commission per sale. So, he will need to have a proper plan to handle the increased variable costs. Business intelligence can help him develop one. Business Intelligence Software will also let him calculate the margin of safety so he can figure out where to make improvements.
How does it do it?
It is clear that Business Intelligence can assist businesses on various matters and devise an effective plan of action. But it can help in a more general sense as well.
After the debacle of the housing crisis in the 2007-2008 fiscal year, Business Intelligence Software has allowed companies to keep a watchful eye on the market to avoid another catastrophe. This way, they can prevent any future housing sector bubbles. Another sector whose credibility was heavily damaged was the mortgage industry. To keep out of any such trouble, mortgage business dealers are heavily reliant on Business Intelligence software.
This kind of application is also used to plan a countries’ economic policy. In fact, the belt and road initiative was undertaken by the Chinese government after their software analyzed the situation considering several variables and unstructured data as input. Besides that, it can predict a nation’s GDP, unemployment rate, and household median income too.
During the novel coronavirus pandemic of 2019-2020, all business giants used it to calculate the damage it would do to their companies and the future risk factors. Using business intelligence software, they can also come up with a plan on how to come back from this once in a century disaster.
But how is this software able to do such complicated things?
It’s really simple, to be honest. Just like any computer programming language, it has a library made up of a set of algorithms that have the sole purpose of carrying out the instructions. Web developers may write codes to make the software as interactive and user-friendly as possible. So, at the end of the day, you have a straightforward yet convenient interface to use. It’s a good thing you don’t get to see all the long codes and algorithms that are running the show!
Is it expensive?
All the functions of the software sound great. But what about the costs? What if I get broke by using something that was explicitly designed to do the opposite?
Well, you are in luck. Just a few years ago, it was very expensive to maintain Business intelligence software. only a handful of companies were able to develop this software. As it was extremely rare, the companies charged a hefty price for that. You would also not get as many updates as you do now. You would also need expert operators and engineers to run it. But as the old saying goes, “time changes everything.” Now, as there are many companies coming up with Business Intelligence Software of their own, its prices have dropped sharply.
The future of Business Intelligence
Business Intelligence Software will soon become an inseparable part of any business in the near future, whether small or big. When the tool first came into the market, many disregarded it, dubbing it as unnecessary. And they were clearly wrong to do so since those who did are now lagging behind.
So, do you want to be a few steps ahead of your competition and utilize Business Intelligence tools? Shoot me an email so we can review all the options available to your business!