What is it?
A simply way to define business intelligence or competitive intelligence would be to say that it is a combination of tools which makes a business more 'intelligent'. Its tools arm the employees and the owners with information and business development ideas, which can help the business grow. These tools help tell the employees more about their business, product offering, standing in the market and in the minds of the consumers.
What are the Tools?
Most of the time, these tools refer to statistical data mining and data warehousing software. But more and more people are agreeing to the fact that, the definition of these tools ought to also include querying and reporting software. Here is a brief about working of these tools.
Businesses conduct market research to receive feedback about their products. They use questionnaires, client calling, and many different ways to receive feedback from the customers, which they feel will help them improve their product/service offering. This data which they receive is then fed into a data management package by the data entry operators. These software packages churn the high volume of information and try to figure out a logical sequence from the different responses of the customers. This is known as data analysis. The end products of it are graphs about the customer response that tell you about their responses. Below is the process in detail.
How does it Work?
Now suppose you're the owner of a restaurant. You know that a lot of restaurants have customer feedback card they send along with the bill. They ask you questions about how you rate the food, the ambiance, the service, and the overall experience. This data is fed into a particular software. This software will analyze the given data and show you the results. The results would show something like 63% of the people rated the food worth 5 stars, 25% said it was worth 4 star, and 12% of the people gave it three stars. While 25% thought the ambiance was worth 3 stars and the rest voted below 3 stars.
What does this tell you? It tells you that while the food your serve is clearly top class according to your clientele, they think that the ambiance and decor of the place could use some work. Which means that, in order to give more value to your customers, you would need to improve the ambiance of the place and make it more aesthetically pleasing, so that the customers enjoy it more.
So, while this was a very simple example, it is important to understand that it goes beyond that. The software are used by huge businesses that churn volumes and volumes of data to tell its decision makers what changes are to be made to make their product offering more likable to the customers. The volumes of data that is processed is quite enormous. The result of which is, an intelligent business, one which knows more about itself, and can use the data to improve its standing among the customers.