Business intelligence reporting: What it is, how it works

Benefits of effective BI reporting

BI reporting enables the following benefits:

• Enhanced data actionability. BI intelligence reporting makes it easier to recognize meaningful insights in data and take action based on those findings -- as opposed to identifying relevant trends but failing to act on them because people don't understand the findings.
• Faster decision-making. The more easily stakeholders can understand data-driven insights, the faster an organization can make decisions. BI reporting helps by allowing teams to present data to decision-makers in a digestible format, while also reducing the time it takes to generate data presentations.
• Operational efficiency. Effective BI reporting reduces the time and effort necessary to communicate insights to stakeholders, which improves operational efficiency. Instead of requiring data analysts to spend hours explaining findings to executives, for instance, BI reporting tools make it possible to summarize the findings quickly so analysts can focus their efforts on analyzing data.
• Flexible data presentations. People respond to different types of data presentations. Some might find it easier to recognize trends using data visualizations, for example, while others prefer a summary in natural language that identifies key takeaways. BI reporting provides the flexibility necessary to present data in multiple formats, which helps businesses reach diverse audiences.

Key BI metrics and KPIs to report on

The data included in business intelligence reports can vary depending on your BI use case and which insights you want to highlight. Here's a look at which BI metrics and KPIs might feature in different BI reporting scenarios.

Financial

When preparing financial reports based on insights derived using BI tools, teams might summarize the following data:

• Working capital. How much cash or other assets the business has on hand and is able to invest.
• Cash flow. The amount of cash flowing into and out of the business.
• Gross income. The business's total earnings.
• Net income. The business's earnings after subtracting expenses.

By presenting data points like these in a digestible format, teams can summarize insights that reflect the financial state of the business. This lets decision-makers identify and react to trends more quickly than they would if they had to interpret raw financial data.

Sales

In sales, BI reporting often summarizes metrics and KPIs like the following:

• Monthly sales growth. How much total sales are increasing or decreasing on a monthly basis.
• Churn rate. Which percentage of customers stop doing business with the organization.
• Customer acquisition cost. The cost of gaining a new customer.

These BI KPIs provide insight into the effectiveness and profitability of sales operations, helping decision-makers answer questions like what they can do to improve sales, or whether they should focus more on retaining existing customers or acquiring new ones.

Marketing

Marketing teams can benefit from BI reporting to summarize metrics such as these:

• Conversion rate. How many prospective customers make a purchase.
• Cost per lead. The money expended acquiring each prospective customer or lead.
• Impressions. How many prospective customers view or engage with marketing content.

Here again, the ability to summarize this data quickly and present it in an easy-to-understand format is key for ensuring that business leaders can make effective decisions based on the data.

Customer service

In customer service, BI reporting might focus on KPIs like the following:

• Average resolution time. How quickly it takes, on average, to resolve customer queries.
• Average wait time. The length of time customers wait to receive support or service.
• Customer retention rate. Which percentage of customers continue to do business with the company following a support or service request.
• Customer effort score. A measure of how much time and effort customers invest in receiving support and resolving issues.

By highlighting these insights, BI reports make it faster and easier for decision-makers to identify customer service challenges and optimize the customer experience.

Best practices for BI reporting initiatives

There are many approaches to the BI reporting process, and some are likely to prove more effective in certain scenarios than others. To get the most out of BI reporting, organizations should consider the following best practices:

Know your target audience

Because the preferences and technical skills of decision-makers can vary, it's important to understand the needs and priorities of your target audience before preparing BI reports. Consider, for example, whether stakeholders can understand technical jargon, or whether reports should steer clear of language that only data analysts would be able to digest.

Present reports in multiple formats

Sometimes, the needs and preferences of a target audience are too diverse to accommodate with just one type of report or data presentation approach. In this case, it's a best practice to offer multiple ways for your audience to interpret and react to BI insights -- such as representing takeaways using data visualizations while also presenting natural language summaries of key data trends.

Explain BI insights

The most effective BI reporting processes don't simply identify takeaways. They also provide the context necessary for decision-makers to understand where data-driven insights or recommendations came from, such as which data sources or data modeling techniques analysts used.

Keep it simple, but not simplistic

BI reports should present insights in the simplest way possible. However, they should avoid "dumbing down" information to the point that it becomes less useful or trustworthy. Avoid oversimplifying findings or failing to present all relevant data.

Update BI reports and data

If the data behind BI reporting changes, the reports should also change. This is especially important because the target audience for BI reporting might not always know when data has changed, so the onus is on data analyst teams to update reports when necessary.

Make BI reporting interactive

In some cases, decision-makers might have questions about insights or wish to see additional information. To this end, the BI reporting process should be interactive, such that audiences can pose questions or have conversations about the information with the people who analyzed it.

BI reporting challenges and issues to be aware of

While business intelligence reporting gives businesses powerful advantages for reacting quickly and effectively to data, it can also present some challenges. The following are common BI reporting challenges, along with tips on how to manage them:

Technical disconnect between analysts and decision-makers

Perhaps the most common challenge that arises from BI reporting is a mismatch in the technical skill sets of data analysts, who are adept at complex data processing and modeling techniques, and nontechnical decision-makers.

Addressing this disconnect by presenting findings in digestible ways is one of the chief goals of BI reporting. However, when the skills gap is especially large, it can become challenging to generate effective reports. Data analysts might use technical language their target audiences don't understand or base their insights on complex concepts the audience is not familiar with.

To mitigate this issue, it's critical to make a sober assessment of the target audience's skill set and then present BI insights accordingly. Presenting findings in multiple formats can also help ensure that all decision-makers are able to digest the data.

Overly complex reports

Attempting to include too much information in BI reports, or to present highly complex takeaways, is another common BI reporting challenge. When reports are too complicated, it becomes impossible for decision-makers to react effectively to insights.

To avoid this issue, ensure your BI reporting process aligns with the technical proficiency of your target audience. It might also help to break a complex report into multiple, smaller reports.

Incomplete information

Reports that lack important information such as critical metrics or KPIs are ineffective. For instance, you typically wouldn't want a financial report to include gross income but not income because gross income alone doesn't tell you whether the business is making money.

For this reason, the best BI reporting techniques ensure that decision-makers see all relevant data and have an opportunity to request additional information.

Irrelevant information

On the other side of the coin, BI reports can in some cases contain information that is not relevant and adds unnecessary complexity. For example, imagine a report whose purpose is to summarize recent sales trends. If the report also contains information about the ROI of a marketing campaign, the latter metrics are not likely to be relevant because they don't directly relate to sales performance. They would only distract from the real takeaways that the report is intended to provide.

Chris Tozzi is a freelance writer, research adviser, and professor of IT and society who has previously worked as a journalist and Linux systems administrator.