Sometimes, people loosely throw around the terms business intelligence (BI) and business analytics (BA), and this can be quite confusing. Many non-IT departments are increasingly using data management and analytics at work; interchangeably calling it BI and BA.
In this article, we take a closer look at BI and BA and highlight the differences between the two from the business user’s perspective.
From a high-level point of view, BI uses descriptive analytics to provide a better understanding of a business’ current operations. Meanwhile, BA usually looks forward and tries to inform future decisions.
Business intelligence (BI)
At its core, BI is a process of analyzing data and presenting information to decision-makers. This leds to a better understanding of a present situation and why certain events happened.
Today, BI is inherently associated with modern IT, however, the idea and process themselves have existed for a long time.
At the dawn of industrial manufacturing, engineers began to gather, formalize, and analyze production techniques to find efficiencies. This led to improved production. Obviously, their tools weren’t the same, in most cases they used pen and paper. However, the idea behind the process was the same (or at least very similar).
Nevertheless, BI as we know it today, became relevant with the widespread development of computers and modern databases. These allowed users to quickly calculate and store large numbers for business needs.
As a process, BI relies on data and descriptive analytics techniques to paint a present picture and provide insights. Descriptive analytics provides a look into the past numbers and can answer why, where, and how a company failed or succeeded. This happens in the form of capturing data, storing it in databases, finding insights, publishing reports and dashboards.
Business Analytics (BA)
As we said earlier, BI helps to understand what we did right or wrong to this point, and this is where BI and BA differ. Instead of focusing on historical data, BA focuses on providing actionable insights for decision-makers and predicting future trends.
To do these things, BA, like BI, also uses historical data points; however, instead of descriptive analytics BA relies on predictive analytics.
Many companies use BI and BA together. Using predictive analytics, BA finds correlations in existing information and builds models for future planning. The predictive nature of BA differs from BI in the tools that are used. BA focuses on complex statistical models and predictive modeling; meanwhile, BI uses simpler descriptive statistical toolbox.
As both BI and BA rely on the same data, many businesses traditionally start with using BI and then get into analytics. BI can show a full picture and point out areas where one could dig deeper. After that, BA tools go to work to uncover more insightful information and provide interesting predictions.