Most business leaders understand the why of digital transformation: the greater a company’s digital capabilities, the better that company will perform.

Joint research by AlixPartners and the Massachusetts Institute of Technology Center for Information Systems Research (MIT CISR), has shown that companies with advanced digital capabilities perform better than their less-digitally-savvy competitors across the board. A tool used by many digitally proficient firms is business intelligence (BI): the capability that forms the foundation of every transformation initiative. Companies that establish a robust BI environment at the outset of their transformation journey put them on the right track toward their digital future.

Business intelligence refers to a company’s abilities:

  1. To make well-structured, comprehensive information available across the business 
  2. To use it consistently and effectively

Companies that develop BI capabilities become able to strike the right balance between investments in customer experience and operational excellence. That balance is crucial because our research shows that companies that prioritize investment in customer experience over operational excellence increase revenues in the short term, but suffer profit declines as they struggle to handle more and more customer activity. Conversely, companies that prioritize operational excellence over customer experience tend to maintain their profitability at the expense of revenue growth.

Business intelligence uses software and services to transform data into actionable insights that inform an organization’s strategic and tactical business decisions. BI technologies provide historical, current, and predictive views of customers and business operations that business managers can apply in order to sell more—at higher profits. BI tools, for their part, access and analyze data sets and present analytical findings in the forms of reports, summaries, dashboards, graphs, charts, and maps that provide users with detailed intelligence about the state of the business. A company with strong business intelligence, including external information such as competitors’ prices and direct and indirect vendor costs, can identify in detail the company’s best customers; can optimize pricing, promotion, and offers; and can maximize the profitability of business across functions.