After my recent blog on performance dashboards, I want to follow up by clarifying some IT terminology prevalent in the modern software factory: business intelligence (BI) and business analytics (BA). While superficially similar, there’s a very important distinction between the terms:
- BI uses past and current data to generate insights to improve near-term success for the organization
- BA analyzes the same data with a different goal: to help the organization make well-informed assumptions, uncover or anticipate trends, and prepare the organization for the future
We immediately see a distinct difference in these definitions: BI provides insights to optimize the organization for near-term success, while BA is used to prepare the organization to adapt to a foreseeable future landscape. Optimizing a business versus adapting a business is a huge distinction: A blacksmith in 1910 would use BI to understand that he needs fewer horseshoes in inventory, but BA would be more likely to tell him he needs to get into the tire business.
That’s not to say that BI is less important than BA; past and current data are always crucial in creating and maintaining efficiencies as well as identifying and resolving operational and strategic issues in order to optimize the business in the present. Despite the need to anticipate the future as accurately as possible and position our organization to thrive in a changing world, we’ll always need to understand our present state to increase productivity and limit costs—the perennial, all-important fundamentals.
While BI will always be useful, the modern economy is defined by change, and as we all know, change in IT leads to more change in IT—causing the pace of change to accelerate. For that reason, analysis of big data is very valuable in understanding where organizations (and society at large) are headed. Because consumer choice is a dominating force that compels technological change, collecting consumer data allows analysts to use data mining, quantitative analysis and predictive modeling—all elements of BA—to adapt a business to align with consumer trends.
Keep in mind that BA is different from data science. Most would agree that data scientists do not try to answer specific questions; rather, they examine data and allow the data features (aka the data itself) to guide the analysis.
BI—knowing how many horseshoes to keep in inventory—has always had a place in the business community. BA—learning that tires are the future of transportation—has become a more and more important tool. Organizations are investing more resources in data warehousing and huge data stores, cleaning up and maintaining data integrity, and new and sophisticated analysis techniques. As they do, organizations will look to CA and other state-of-the-art technology companies for the best tools and the best practices.
I'm a Sr. Services Consultant with CA Services; I look forward to using my experience to respond to your comments and questions.Please post them below—I value your feedback.