The Real Difference Between Reporting and Business Intelligence
Have you succumbed to the common myth that "reporting" and "business intelligence" are synonymous? If so, read on to get your mind right.
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Reporting and business intelligence are often used to refer to the same thing — but wrongly so! The difference between reporting and business intelligence also goes further than charts for the first or data correlations for the second. To understand how they compare, it’s best to start with the separate business and end-user needs that each of these two functions is meant to satisfy.
Reporting and BI Serve Two Different Business Needs
Keep the following descriptions in mind. The different roles of reporting and business intelligence for your organization should then become much clearer.
- Reporting shows you what happened so far and what the status is. Reports often use standard or well-known formats to help people do their jobs better or more easily on a daily (or weekly, monthly, etc.) basis. They may also focus on one specific set of data or records. For example, a daily report of all the customer orders that must be shipped by the end of the day will show the shipping department what it must do to meet current business goals of prompt delivery.
- Business intelligence shows you why things happened and how to improve business performance in the future. Often using multiple sources of data, BI lets you discover data relationships you never knew existed and explore new business possibilities. For example, by analyzing shipping performance over time, customer satisfaction surveys, and seasonal variations in demand, you might gain insights into when and how shipping teams should be increased to maximize profitability, competitiveness, and customer loyalty.
Whether they know it or not, enterprises typically have both these needs.
A Change Is (Always) Going to Come
Reports often use the same format over time. The people using them can then get used to the format and see the information they need at a glance. They don’t need to spend time and effort to figure out what a new format means each time.
However, as business goals and conditions evolve, reporting needs to change, too. Modifications, extensions, and sometimes wholly new reports may be required. Yet in some reporting tools, report formats may be limited to a set of predefined templates. Users may be obliged to go back to their IT department or reporting tool vendor to get a new report made. This constraint that can be expensive and hinder the responsiveness of the business to its customer and market needs.
Business intelligence tools, on the other hand, are usually designed with agility and flexibility in mind. The whole process of deriving actionable insights from business data depends on users being able to mash up different and new sources of data in myriad, ad hoc ways. Although some BI software still requires IT specialists to use it, a BI application should ideally make it easy for non-technical users to ask random business and operational questions, and get meaningful answers and insights back immediately.
Convergence Between Reporting and BI Tools
Operational systems are increasingly offering a wider choice of reports, greater flexibility, and even analytics capabilities. Some of these enhancements can come from embedding BI applications or “widgets” into the system. Similarly, BI systems are becoming more interactive, giving end-users results in real time and extending to flexible, intuitive reporting capabilities.
Although the end-user needs are still separate, from the point of view of technology, the difference between reporting and business intelligence tools is decreasing. With the right BI system, for instance, the shipping department in our example above can get the report it needs for today’s orders, in the format it prefers. It can then also use BI to make data-driven business decisions to determine priorities and tradeoffs in the case of peak shipment requirements.
What to Do Now
Reporting tools are best designed to be used by frontline operational staff, among others. In that way, any delay between business needs and operational action is minimized — or even eliminated. Similarly, BI tools should be available to and usable by business people, who can then directly produce the BI insights they need and translate them into business opportunities.
If you have only used a reporting tool so far, without BI capabilities, the limitations in its ability to help you develop your business may already be obvious. Rather than trying to add BI capabilities in a piecemeal way with a data warehouse here, an analytics platform there, and so on, you may find that a full stack BI tool with end-to-end capabilities considerably more affordable and more effective.
Published at DZone with permission of Elana Roth Katzor, DZone MVB. See the original article here.
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