BI and analytics are both umbrella terms referring to a type of data insight software. Many providers use them interchangeably, but some use them in conjunction, claiming to offer both business intelligence and business analytics. This of course makes us wonder: what’s the difference? The short answer is: it depends on who you ask. As Timo Elliot, Innovation Evangelist at SAP so eloquently put it, “everybody has an opinion, but nobody knows, and you shouldn’t care.” Elliot got it mostly right. You should care about the terms used to describe the applications you’re buying, particularly when it comes to embedded software destined to become part of your product.
The short answer is: it depends on who you ask. As Timo Elliot, Innovation Evangelist at SAP so eloquently put it, “everybody has an opinion, but nobody knows, and you shouldn’t care.”It’s important to enter sales conversations armed with the knowledge that BI and analytics have no universal definitions. It’s up to you, the buyer, to probe for clarity around these and other ambiguous terms. To aid you in this endeavor, let’s get into some common claims about the differences between business intelligence and business analytics.
BI for the Past, Analytics for the FutureThere are four modes of data analysis: descriptive, diagnostic, predictive, and prescriptive. Descriptive analysis, as the name implies, attempts simply describe what events took place, according to the data. Diagnostic analysis attempts to explain how or why those events happened. Both are concerned with the past. Predictive analysis uses past data to forecast what might happen in the future, and prescriptive analysis “takes that data and goes even deeper into the potential results of certain actions.” Here’s how we might look at the same data set using these four analytic modes:
- Descriptive: Sales increased by 2% this quarter.
- Diagnostic: There was exceptional variation in macro-widget sales in particular, and from that we conclude that the 2% boost was largely due to this product.
- Predictive: A linear regression of macro-widget sales suggests we’re on course to sell an additional 200 units next quarter.
- Prescriptive: Adjusting the shipping schedule to coincide with peak business hours will likely increase profits by an additional 0.7% per quarter.
Statistical Nesting DollsSo we know it’s not safe to assume that business intelligence and business analytics refer to different analytic modes. It’s also not safe to assume they’re two separate, unrelated entities. Some consider one to be a subset of the other. Elliot says that at SAP, “business analytics” includes business intelligence, along with “data warehousing…enterprise information management, enterprise performance management, analytic applications, and governance, risk, and compliance.”
So we know it’s not safe to assume that business intelligence and business analytics refer to different analytic modes. It’s also not safe to assume they’re two separate, unrelated entities.Dr. Rado Kotorov, by contrast, classifies analytics as a “function of a BI” — just one of the many things BI platforms do. So which belongs to which? We’re left with a sort of Russian nesting doll conundrum in which each doll paradoxically fits inside the other.