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What is a Business Intelligence Model?

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  • Written By: Osmand Vitez
  • Edited By: Kristen Osborne
  • Last Modified Date: 11 November 2016
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Business intelligence refers to a computer-based set of processes 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 relating to operational improvements or selecting new business opportunities. An intelligence model helps companies spend less time sorting through information and and allows them to develop applications that are easily repeatable for future business decisions. These models are typically related to economics or accounting, mixed with some performance analysis techniques.

Economic factors play an important role in business decisions, which is why companies include them in the business intelligence model applications. These factors can include current price points for various goods and services, number of competitors in the marketplace, availability of economic resources and the level of production output needed to break even from sales. This economic information helps business owners and managers understand whether their company should increase or decrease production to meet the future consumer demand for goods and services. The use of computers allows companies to gather this information electronically rather than manually, which can save valuable time and cut down on the gathering process and time individuals spend putting information together.

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Accounting is the business function responsible for recording, reporting, and analyzing a company’s financial information. Management accountants are the individuals responsible for funneling this information into a business intelligence model that will provide business owners and managers with usable information. Accountants typically use computer programs and applications to gather information from all of a company's departments and place it into a statistical or accounting model. This model will process information and report it according to predetermined standards, such as a financial statement or similar report. Where an economic business intelligence model will measure information external to the company, accounting model will report internal company information.

Using a business intelligence model process can help companies measure their performance. Most all companies now include a mix of intelligence or knowledge management, as business technology increases the opportunity for gathering and assessing information from a number of sources. Performance analysis can help business owners and managers determine how well their operations generate income, both individually and as a single business unit. Consistently using these models can also result in the potential for a trend analysis, which allows owners and managers to review previous periods’ information and compare this information with that from the current period. An upward or downward trend will typically influence the decisions made by business owners and managers.

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