Who invented Business Intelligence? These two words were first used in 1865 by the banker Henry Furnese, who became very successful because he used political and market information to act ahead of competitors. In more recent times, IBM was the first company to value the importance of data, as they were the inventors of floppy disks for storing information. The problem, however, was to analyse these data wisely and to do this we had to wait until the 2000s.
Business Intelligence has revolutionised the way companies make decisions, analyse performance, and plan for the future. At the heart of this process is data, but often, the focus is solely on internal data. However, capturing and analysing external data is crucial to gaining a comprehensive and informed view of the business landscape.
Without data on the different opportunities offered by various markets, the probability of incorrectly evaluating one or the other strategy is high.
Luigi Bidoia
Integrating external data into BI means gaining a broader perspective on the environment in which a company operates. Information from external sources, such as market data, industry trends, and consumer behaviours, enables companies to anticipate change, identify opportunities, and mitigate risks more effectively. Luigi Bidoia was a forerunner of this new trend when, in 2015, he developed two tools: Pricepedia, which analyses commodity trends, and ExportPlanning, which focuses on the analysis of foreign markets. Since then, Bidoia has become one of the leading experts in the use of external public data to support business decision-making.
“Public institutions in the world’s leading countries make significant amounts of data available. It is not always easy to access this information, and, above all, it is not easy to extract from it the information that can be useful for the decision-making processes of companies. For this reason, we have created PricePedia and ExportPlanning, two dedicated platforms for the optimal use of data from public sources, respectively, for the purchasing office and the foreign office of industrial companies,” says Bidoia.
Data produced by public institutions is important not only because of the amount of data produced but also because of its reliability. Their collection follows well-defined and well-established procedures. The information that can be extracted from this data is more reliable than other sources of information.
“This is a very important aspect that increases the value of the data produced by public institutions. Think of the greater reliability of the price of Brent oil listed on the Intercontinental Exchange (ICE), derived from numerous effective and transparent transactions, compared to, for example, the market prices declared by commodity producers, often interested in creating expectations of price increases.”
Better contextualisation of internal information
Internal data can provide a detailed view of business operations, but without external context, it risks being interpreted in a limited way. By integrating external data, companies can contextualise their metrics, better understanding how external factors affect internal performance. For example, analysing global economic trends can explain changes in a company’s sales.
“Using only internal data, it is not easy, for example, to compare the effectiveness of different commercial strategies, implemented in foreign markets. A strategy can produce better results than others, not because it is objectively better, but because of a greater dynamism of the foreign market on which it has been implemented. Without data on the different opportunities offered by the various markets, the probability of incorrectly evaluating one or the other strategy is high, with the risk of favouring strategies that are not very effective for the company, which have produced good results only thanks to a particularly favourable market situation,” says Luigi.
External data is a crucial pillar for making informed strategic decisions. Market indicators, competitor analysis, and economic forecasts can guide business choices, allowing you to adapt to changing market conditions. BI powered by external data provides a reliable compass for navigating through complex business dynamics.
Powering business Intelligence through AI
AI is entering every area of business management, and BI is not exempt. AI enables rapid data analysis, automating the process of extracting meaningful insights from large data sets. This allows companies to save valuable time and gain real-time insights, improving timeliness in business decisions.
“In 2023, thanks to ChatGPT, AI has become a concrete experience for many professionals. In the current state of technology, however, AI cannot replace BI in any way. In special cases, when there is a lot of data available (in this case we speak of Big Data), AI can contribute information to BI. This, however, continues to be the backbone of the production of information useful for business decision-making processes”. The techniques for extracting information from economic data, used, for example, in Pricepedia (from data visualisation to statistical and econometric processing), are much more efficient and have lower costs. Above all, business decisions require transparency and demonstrability, and at the moment, with AI techniques, it is complicated to achieve these two aspects.
Anticipating market trends
Constant monitoring of external data allows companies to identify and capitalise on emerging market trends. Being able to anticipate and adapt to consumer demands or regulatory changes quickly, gives you a significant competitive advantage. An informed company is able to strategically position itself in response to market dynamics.
Making decisions with a forecast scenario in mind is strategically fundamental to management in order to optimise business decisions. “Take the cost of warehousing, for example. Holding a commodity in stock depends directly on the future change in its price. Warehousing costs can be known, or approximated, at the time of purchase if the company knows – or predicts – the future change in the prices of the goods in stock. The characteristic of the structural forecasting models used by PricePedia is to be as accurate as possible”.
External data analysis is critical for risk management. External events such as economic crises, regulatory changes, or emergency situations can significantly impact business operations. Integrating this data into BI allows companies to develop more robust and responsive risk mitigation plans.
The economic world is increasingly variable. No company can escape this reality. The variability of the environment leads to alternating negative and positive phases. What the company can do is to use tools to better manage negative but also positive phases. “In the case of a company that purchases, for example, plastic extrusions, it can hedge itself with financial instruments against possible increases in the price of plastics, which the supplier will certainly pass on to its own extrusions. However, you can also ask your supplier to decrease your prices when the price of plastics decreases, and your supplier does not advertise the fact. Even if it doesn’t buy plastics directly, this company certainly has the convenience of monitoring changes in plastics prices.”
Business intelligence powered by a combination of internal and external sources is the key to making informed decisions, anticipating trends, and staying competitive in an ever-changing business environment.
__
Sign up for our newsletter and get the latest innovation news and more sent to your inbox.
Federico Bastiani is a freelance journalist, TEDx speaker, innovator, communication specialist. He writes about innovation for different media and he is also an innovator himself. In 2013 he created Social Street, a social innovation which spread all around the world and featured in the New York Times.
