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Business intelligence uses computer-based processes to capture and analyze data for operational improvements and selecting new business opportunities. It includes economic and accounting factors, and can help measure performance and trends.
Business intelligence refers to a computer-based set of processes that business owners and managers use to capture and analyze data related to their companies. A business intelligence model comprises the specific applications that help transform raw business data into understandable and relevant information in order to support business decisions related to operational improvements or selecting new business opportunities. An intelligence model helps companies spend less time sorting through information and allows them to develop applications that are easily repeatable for future business decisions. These models are usually related to economics or accounting, combined with some performance analysis techniques.
Economic factors play an important role in business decisions, which is why companies include them in business intelligence model applications. These factors may include current pricing of various goods and services, number of competitors in the market, availability of economic resources, and level of production required to offset sales. This economic information helps business owners and managers understand whether the company should increase or decrease production to meet future consumer demand for goods and services. The use of computers allows companies to collect this information electronically rather than manually, which can save valuable time and reduce the collection process and the time people spend gathering information.
Accounting is the business function responsible for recording, reporting and analyzing a company’s financial information. Management accountants are responsible for channeling this information into a business intelligence model that will provide business owners and managers with useful information. Accountants often use computer programs and applications to collect information from all departments in the company and put it into a statistical or accounting model. This model will process the information and report it according to predetermined standards, such as a financial statement or similar report. Where an economic model of business intelligence measures information external to the company, the accounting model reports information internal to the company.
Using a business intelligence model process can help companies measure their performance. Today, almost all companies include a mix of intelligence or knowledge management, as business technology increases the opportunity to gather and evaluate information from multiple sources. Performance analysis can help business owners and managers determine how well their operations generate income, both individually and within a single business unit. Consistent use of these models can also result in the potential for trending analysis, which allows owners and managers to review information from prior periods and compare that information to that of the current period. An upward or downward trend usually influences decisions made by business owners and managers.
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