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Business Intelligence Defined

Originally published July 6, 2005

Just what is “business intelligence” anyway? Among other things, I believe business intelligence has to do with using information to do the right things, such as giving a formulation of medication to a patient or to make the right decision, such as making an investment in a company.

However, in the first example, the patient died, because of a misunderstanding of the procedure to formulate the medication mixture. In the second example, a bank lost nearly $600 million because of non-standardized “risk” codes.

Not exactly examples of business intelligence, are they?

Business intelligence requires information quality. And information quality requires quality of data definition, so knowledge workers know the meaning of the data, both the base facts and the derived information results. Knowing the meaning of data helps knowledge workers interpret it properly. But quality of data definition is required for information producers to capture it correctly and completely. But the information must be presented to knowledge workers in a way that they can see the truth and significance of the message.

There are many software tools that provide excellent visual representation of the patterns found in the information. However, no presentation of information, no matter how intuitive or visually graphic, can compensate if there are errors or omissions in the data that distort the end message. This presentation and analytical representation of information can highlight the significance if the data is accurate and complete. And the data may be accurate and complete, but if the knowledge workers do not have access to clear definitions of both the base data and the derived results, they may “mis-interpret” the meaning of the results and take the wrong action. All of these are required in providing sound business intelligence.

Is there a standard definition of business intelligence? I’m not sure there is, but let’s explore some definitions. Then I will propose a definition from an intelligent learning organization perspective.

Business Intelligence definitions

  • “A broad category of applications and technologies for gathering, storing, analyzing and providing access to data to help enterprise users [for example, professionals or knowledge workers] make better business decisions.” Search Web Services.
  • “The use of high-level software for business applications. More specifically, the collection of cutting-edge technologies that help to make systems more intelligent.” MIT Sloan School Management.
  • “Software that enables business users to see and use large amounts of complex data.” The Business Intelligence and Data Warehousing Glossary.
  • “Software that allows business users to see and use large amounts of complex data” DataWarehousing.com.
  • “The key to thriving in a competitive marketplace is staying ahead of the competition. Making sound business decisions based on accurate and current information takes more than intuition. Data analysis, reporting and query tools can help business users wade through a sea of data to synthesize valuable information from it—today these tools collectively fall into a category called “Business Intelligence.” Gartner Group report (Sept 1996).

The problem with these definitions is that they speak only to the software or technology components. They do not define the human view or the concept of business intelligence. Here are some definitions that address the “concept of business intelligence:”

  • “The discipline of understanding the business abstractly and often from a distance. With business intelligence, you can see the forest and the trees.” Exploration Warehousing, by Inmon, Terdeman and Imhoff (p.225).
  • “Business intelligence is actually an environment in which business users receive data that is reliable, consistent, understandable, easily manipulated and timely. With this data, business users are able to conduct analyses that yield overall understanding of where the business has been, where it is now and where it will be in the near future. Business intelligence serves two main purposes. It monitors the financial and operational health of the organization (reports, alerts, alarms, analysis tools, key performance indicators and dashboards). It also regulates the operation of the organization providing two- way integration with operational systems and information feedback analysis.” Dm Review.

This last definition provides a comprehensive definition of the concept. I propose the following definitions that include the human factor. There is no such thing as business intelligence without the people to interpret the meaning and significance of information and to act on their knowledge gained:

  • Business Intelligence: “The ability of an enterprise to act effectively through the exploitation of its human and information resources.”
  • Business Intelligence Environment:Quality information in well-designed data stores, coupled with business-friendly software tools that provide knowledge workers timely access, effective analysis and intuitive presentation of the right information, enabling them to take the right actions or make the right decisions.”

Requirements For Business Intelligence

These definitions emphasize the human element and the requirement for not just any information, but information that meets the quality requirements of the knowledge workers. Poor quality information distorts the truth, leading knowledge workers to the wrong conclusions and wrong decisions that are sub-optimal (at best) or disastrous (at worst).

  • Larry EnglishLarry English

    Larry, President and Principal of INFORMATION IMPACT International Inc., is one of the most highly respected authorities in the world on how to apply information quality management principles to Total Information Quality Management. He has provided consulting and education in more than 40 countries on six continents. 

    Larry was featured as one of the “21 Voices for the 21st Century” in the American Society for Quality’s Journal Quality Progress in its January 2000 issue. Heartbeat of America, hosted by William Shatner, awarded him the “Keeping America Strong” award in December 2008 honoring his work in helping organizations eliminate the high costs of business process failure that enable them to eliminate the high costs of business process failure caused by poor quality information. Larry was honored by the MIT Information Quality Program for a Decade of Outstanding Contributions to the field of Information Quality Management in July 2009. You may contact him by email at Larry.English@infoimpact.com.


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