Data is everywhere. You probably have silos filled with it in every department of your organization. Enterprise resource planning (ERP) and customer relationship management (CRM) applications accumulate data at a furious pace. So much innovative technology has been focused on capturing, storing, replicating and archiving data, however, the intrinsic value of data as the raw material from which information is made has been obscured. Just coping with all of it has gotten all the attention. But we are starting to see that change.

Thoughtful executives on both sides of the business and technology aisle are peering into the stockpiles of data scattered around their organizations and finding gems of information: insights on how to become more efficient, how to market products and services more effectively and how to satisfy customers and win their undying loyalty. Using a variety of business intelligence (BI) techniques to distill information from data today has become the key to gaining competitive advantage in virtually every marketplace, including manufacturing.

Distilling raw data into useful information is the genius of business intelligence. There are a variety of software tools involved including data marts and a data warehouses, but business intelligence is not a project. You don't install BI the way you do VoIP, nor is it something that CEOs or CIOs can cause to happen on their own. It's more of an approach, an attitude even, and it can only be accomplished with the effective collaboration of both business and technology professionals.

The most fundamental way business intelligence impacts the balance sheet is by helping companies make better decisions at all levels, from executive decisions all the way to daily operational decisions. One of the questions often asked to determine the level of business intelligence in an organization is: Are your business users able to obtain accurate, timely and reliable reporting information about how the business is doing? You often hear "Yes" from an IT manager, but you almost never hear "Yes" from a business manager. This disconnect between business managers and IT needs to be resolved before information can be distilled from data. They are different sides of the same equation. Without the other's direct collaboration, the best intentions of either group amounts to the sound of one hand clapping.

The Makeup of Business Intelligence

Business intelligence has three closely interrelated components:

• Enterprise reporting
• Executive information systems
• Predictive analytics

The three components form a hierarchy of increasing sophistication and escalating value and are often combined with enterprise portal solutions to make the gathered intelligence available throughout an organization.

• Enterprise reporting includes basic ad hoc and templated reports generated from available data that create snapshots of specific aspects of an organization's operations. Often they draw on data from multiple sources and merge them together.
• Executive Information Systems (EIS) apply intelligence to the data that is reported and produce score cards and Key Performance Indicators (KPIs) that show whether standards are being met or not. Often presented in enterprise portal dashboards, EIS systems present an analysis of the current health of an organization.
• Predictive analytics uses techniques such as pricing optimization, market basket analytics, and clustering to identify and project trends. They look into the future and help you see where you are going instead of where you've been.

Most corporations never get to predictive analytics, which creates a significant opportunity to gain competitive advantage for those that do.

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