What’s the Difference Between Business Intelligence and Business Analytics — And Why Does It Matter?

As an entrepreneur looking for insights into your business, you have a wide array of tools at your disposal.

It can be challenging, though, to make sense of all the options, especially when terminology is used interchangeably.

One notable example is the use of the terms “business intelligence” and “business analytics.”

Business intelligence and business analytics are two of the most common business buzzwords today and share many similarities.

In fact, some experts argue that there is enough overlap between the two concepts that attempting to differentiate is merely a matter of semantics and that they can be used interchangeably.

Others argue that despite certain conceptual overlaps, the methods and outcomes of analytics and intelligence are different, and it’s important to be specific and accurate when using the terms.

To determine an answer to this question, it’s useful to define the terms and then compare and contrast their differences and similarities.

Defining the Terms

The differences between business analytics and business intelligence are subtle, but important.

Generally speaking, business analytics refers to the tools and techniques that a business uses to capture and scrutinize data, with the purpose of identifying new insights that can help guide decision-making moving forward.

Analytics is often focused on statistical analysis and creating models; it’s the process of breaking down the information your business collects into its most basic parts to gain a better understanding of the whole.

At the risk of oversimplifying, business analytics is typically focused on finding out why certain things are happening and making predictions for the future based on the trends and insights contained in the data.

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Business intelligence, on the other hand, refers to the data outputs that managers can use to guide decision-making.

Some might say that business intelligence is the information that comes from business analytics, as it often takes the form of reports, dashboards, pivot tables and other tools that give decision-makers insight into what is happening and how.

In some ways, business intelligence is similar to analytics, as it does involve delving into potentially huge datasets using queries, statistical formulas, etc., but it’s less focused on why things are happening and making better future decisions than on understanding the current situation.

One difference between the two techniques that isn’t often discussed is the level of expertise required to manage such activities. Generally speaking, business intelligence is more accessible to the typical manager as it’s often presented in digestible formats, with the analysis conducted on the back end.

Business analytics, on the other hand, requires more in-depth knowledge as it is the actual process of analyzing the data. While those with quantitative or computer programming backgrounds can usually transition into analytical roles, advanced training like a master’s of business analytics online degree is often necessary to be successful in this area.

Comparing and Contrasting

We’ve established that business analytics and business intelligence have many similarities, in terms of the process of collecting and analyzing data.

However, the primary distinction between the two comes when you look at the use of the insights, primarily when it comes to making predictions.

Business intelligence is primary descriptive and diagnostic data. That is, it tells you what is happening and how. For example, it might summarize historical data for the year, telling you when sales were high or low or when call volume peaked and when it fell.

Using this information, you might opt to run promotions during historically slow months or reduce call center hours when calls aren’t coming in. It’s information to use right now, and when you do, you can make changes right away to be a more nimble and responsive organization.

Business analytics, on the other hand, is more predictive and prescriptive. By using the information uncovered by the descriptive and diagnostic data, you can better predict what will happen in the future — and determine what will work.

Ideally, your business should use a combination of the two to gain as much of a competitive advantage as possible and operate efficiently.

So the question remains: Does the difference between business analytics and business intelligence matter? In some ways, yes, as you want to accurately refer to the tools and techniques you are using and ensure that you get the information that you need.

However, given that in most business environments, the terms are used interchangeably, there isn’t a great deal of harm in doing so.