Businesses, large and small, are increasingly turning to Business Intelligence (BI) and Predictive Analytics to help manage operations and improve company performance. These two disciplines are closely related and often intertwine, but there are some key differences as well.
Let’s briefly illustrate each of these in the context of a common business application. A BI analyst’s job could be to produce a financial dashboard for the CFO identifying the company’s year-to-date performance on several key metrics, such as sales revenue. To do so, the analyst may leverage a BI software platform to help collect, organize, and transform data, as well as create visualizations to display these insights.
On the other hand, that same company may turn to a data scientist using predictive analytics to forecast what the sales revenue will look like for the remainder of the year based on patterns and trends in existing data, plus identify what factors impact that revenue (and how). This, too, may require the use of a software platform, especially to execute the complicated mathematical and machine learning algorithms that predictive analytics often involves, as well as to coalesce and share the findings back with stakeholders.
At a high level, Business Intelligence and Predictive Analytics have common ground in analyzing data to deliver insights that inform and influence company decisions. Oftentimes, even the software utilized overlaps, as both require data intake and visualization.
The fundamental difference, is that Business Intelligence aims to answer “What happened?” and “What’s happening now?”, whereas, Predictive Analytics attempts to answer “What will happen?”. In other words, BI can tell you past events along with a post-mortem analysis of the “Why” aspect of those events, while Predictive Analytics looks ahead to future events and trends. Simply put, BI is reactive and Predictive Analytics is proactive.
Ultimately, it’s a combination of both Business Intelligence and Predictive Analytics that gives analysts and executives a full view of past, present, and future. This allows companies to both understand what has happened AND take actions toward a better future, setting themselves up for success in a competitive market.