Surprisingly, the term business intelligence (BI) dates all the way back to 1958. It refers to technologies, applications, and practices for the collection, integration, analysis, and presentation of business information and also sometimes to the information itself. The purpose of business intelligence is to support better business decision making.

D. J. Power explains in "A Brief History of Decision Support Systems,

"BI describes a set of concepts and methods to improve business decision making by using fact-based support systems. BI is sometimes used interchangeably with briefing books, report and query tools and executive information systems. Business Intelligence systems are data-driven DSS."

Prior to the start of the Information Age in the late 20th century, businesses had to collect data from non-automated sources. Businesses then lacked the computing resources to properly analyze the data, and as a result, companies often made business decisions primarily on the basis of intuition.

As businesses started automating more and more systems, more and more data became available. However, collection remained a challenge due to a lack of infrastructure for data exchange or to incompatibilities between systems. Analysis of the data that was gathered and reports on the data sometimes took months to generate. Such reports allowed informed long-term strategic decision-making. However, short-term tactical decision-making continued to rely on intuition.

Hence the need for business intelligence, a term and a definition which date back to an October 1958 IBM Journal article by Hans Peter Luhn entitled A Business Intelligence System.

Luhn wrote,

In this paper, business is a collection of activities carried on for whatever purpose, be it science, technology, commerce, industry, law, government, defense, et cetera. The communication facility serving the conduct of a business in the broad sense) may be referred to as an intelligence system. The notion of intelligence is also defined here, in a more general sense, as "the ability to apprehend the interrelationships of presented facts in such a way as to guide action towards a desired goal."

In modern businesses, increasing standards, automation, and technologies have led to vast amounts of data becoming available. Data warehouse technologies have set up repositories to store these data. Improved Extract, transform, load (ETL) and even recently Enterprise Application Integration tools have increased the speed of collecting the data. OLAP reporting technologies have allowed faster generation of new reports which analyze the data. Business intelligence has now become the art of sifting through large amounts of data, extracting pertinent information, and turning that information into knowledge from which actions can be taken.

Business intelligence software incorporates the ability to mine data, analyze, and report. Some modern BI software allows users to cross-analyze and perform deep data research rapidly for better analysis of sales or performance on an individual, department, or company level. In modern applications of business intelligence software, managers are able to quickly compile reports from data for forecasting, analysis, and business decision-making.

In 1989 Howard Dresner, later a Gartner Group analyst, popularized BI as an umbrella term to describe a set of concepts and methods to improve business decision-making by using fact-based decision support systems.