Our two new MBA specializations from the world of data are now published and live for all EDU students and alumni! But what’s the actual difference between Business Intelligence and Business Analytics? And how to choose wisely?
Hopefully, this article helps you find out, make the right decision and reach your professional goals.
Business intelligence and business analytics are two terms that are often used interchangeably by professionals. But business experts frequently debate whether business intelligence is a subset of business analytics, or vice versa, and there is often an overlap between how the two fields are defined. Understanding the differences between business intelligence and business analytics can help leaders choose the appropriate tools and talent to help grow their businesses. Current and aspiring business students can also use this knowledge to assess what educational programs can prepare them best for a successful career in their chosen field.
Traditionally, business intelligence has been defined as the use of data to manage day-to-day operational management within a business. Leaders employ business intelligence tools and experts when they want to collect and house data about current operations, maximize workflow, produce informative reports, and achieve their current business goals.
Business intelligence tools can include a variety of software tools and other systems. Some of these include spreadsheets, online analytical processing, reporting software, business activity monitoring software, and data mining software. Some experts would also argue that business intelligence tools also include the more predictive and statistical tools used in business analytics.
Overall, business intelligence helps leaders navigate organizational and industry-related challenges and ensures that companies stay focused on their primary target to successfully get where they want to go.
Business analytics has generally been described as a more statistical-based field, where data experts use quantitative tools to make predictions and develop future strategies for growth. For example, while business intelligence might tell business leaders what their current customers look like, business analytics might tell them what their future customers are doing. Some experts use business analytics as a term to describe a set of predictive tools used within the realm of business intelligence.
Business analytics tools are employed for many functions, including correlational analysis, regression analysis, factor analysis, forecasting analysis, text mining, image analytics, and others.Many of these tools require companies to hire or contract data scientists and have increased the demand for training in business analytics.
Business Intelligence vs. Business Analytics
As noted above, there are several key differences between how experts define business intelligence versus business analytics. These variances reflect trends in business language and job growth, the size and age of an organization, and whether an organization desires to invest in a present or future focus. Business leaders must consider these differences when they decide how much to invest in contracting business intelligence and analytical tools for their organizations.
1. Trends in Language and Jobs
Business analytics is a newer, trendier term than business intelligence, even though there is significant overlap in their definitions and usage. More people have conducted Google searches of business analytics than for business intelligence, reflecting the growth of business analytics as an umbrella term rather than strictly a description of statistical and predictive tools.3
This upsurge in references to analytics perhaps reflects the growth in the field of data science and analytics. There is a current talent shortage in the field, as companies compete to hire limited numbers of data scientists, data engineers, and directors of analytics.
2. Size and Age of the Organization
The size of an organization can also determine whether business intelligence or analytical tools are employed. Traditionally marketed toward larger enterprises, business intelligence tools may also be used at smaller companies that may lack staff with a background in data science but want to use corporate data to improve functioning or plan for the future. Regardless of size, most organizations want tools that can help with both current operations and predictive planning.
The age of an organization can also influence a manager’s decision to use intelligence or analytics tools. If a business is brand new or has recently undergone massive changes, then predictions about business trends via business analytics may be the most useful. They can be particularly appealing for start-ups that have access to large amounts of data and want to be competitive with larger, more established companies.
For well-established organizations that simply want to learn more about organizational process or employee performance, business intelligence tools might be more appropriate. However, most organizations generally will want some combination of the two.
3. Present vs. Future Focus
A common school of thought for distinguishing between business intelligence and business analytics is the disparity between focusing on the present or future challenges of an organization. Some experts argue that business intelligence involves using historical data to make decisions about how a company should run in the present day, whereas business analysis may use historical data to predict what might happen in the future or how an organization can move forward.
A present focus using business intelligence may be more useful for leaders who are generally satisfied with business operations but want to identify “pain points” in workflow, increase efficiency, streamline processes, or meet a specific goal. But for those who want to change their business model or major functioning within an organization, business analytics might provide more useful insights.
Businesses have both a present and future focus—they want to maximize their existing strategies but also make space for exploring new ones.
Here are our simplified definitions of business intelligence vs business analytics:
Business intelligence – Deals with what happened in the past and how it happened leading up to the present moment. It identifies big trends and patterns without digging too much into the why’s or predicting the future.
Business analytics – Deals with the why’s of what happened in the past. It breaks down contributing factors and causality. It also uses these why’s to make predictions of what will happen in the future.
Trying to decide if business intelligence or business analytics is better is not a helpful way to look at data management. In reality, a business needs both business intelligence and business analytics—descriptive and predictive analytics—to succeed. Plus, people throughout the business world often use these terms to mean a variety of things, so when choosing the type of technology, tools, and talent you want to invest in, you should focus less on BI vs. BA and more on what you need the data system to do and who will be using it. Developing a business intelligence strategy is an important first step in implementing a BI solution.
Lastly, ask important questions, such as:
• Who are the key stakeholders? Who will be using this system?
• What departments need business intelligence and what will be measured?
• What support do content authors and information consumers need?