1. Business Analytics
What is Business Analytics??
Business Analytics is the process by which businesses use statistical
methods and technologies for analysing historical data in order to gain new
insight and improve strategic decision-making. It can help improve
profitability of the business, increase market share and revenue and provide
better return to a shareholder.
In other words, refers to the skills, technologies, practices for continuous
iterative exploration and investigation of past business performance to gain
insight and drive business planning. Business analytics focuses on
developing new insights and understanding of business performance based
on data and statistical methods. Business analytics makes extensive use of
analytical modelling and numerical analysis, including explanatory
and predictive modelling, and fact-based management to drive decision
making. Analytics may be used as input for human decisions or may drive
fully automated decisions.
Business Analytics versus Business Intelligence
Here is a useful way to differentiate business intelligence (BI) from business
analytics and decisions. Analytics simplify data to amplify its value. The
power of analytics is to turn huge volumes of data into a much smaller
amount of information and insight. BI mainly summarizes historical data
typically in table reports and graphs as a means for queries and drill downs.
But reports do not simplify data nor amplify its value. They simply package
up the data so it can be consumed.
2. In contrast to BI, decisions provide context for what to analyse. Work
backwards with the end decision in mind. Identify the decisions that matter
most to your organization and model what leads to making those
decisions. By understanding the type of decision needed, then the type of
analysis and its required source data can be defined.
To clarify, BI consumes stored information. Analytics produces new
information. Predictive business analytics leverages data within an
organizational function focused on analytics and possessing the mandate,
skills, and competencies to drive better, faster, decisions and achieve
targeted performance.
Queries using BI tools simply answer basic questions. Business analytics
creates questions. Further, analytics then stimulate more questions, more
complex questions, and more interesting questions. More importantly,
business analytics also has the power to answer the questions. Finally
predictive business analytics can display the probability of outcomes based
on the assumptions of variables.
The importance to apply Business Analytics
Today many business people do not really know what predictive modelling,
forecasting, design of experiments or mathematical optimization mean or
do. However, over the next ten years the use of these powerful techniques
will become standard. This is no different from applying financial analysis
and computers for businesses that want to thrive and survive in a highly
competitive and regulated marketplace. Executives, managers and
employee teams who do not understand, interpret and leverage these
assets will be challenged to survive.
Predictive business analytics is arguably the next wave for organizations to
successfully compete. This will result not only from being able to predict
outcomes but also to reach higher to optimize the use of their resources,
assets and trading partners.
3. It may be that the ultimate sustainable business strategy is to foster
analytical competency and eventually mastery of analytics among an
organization’s work force.
In short, the use of business analytics is a skill that is gaining mainstream
value due to the increasingly thinner margin for decision error.
Emergence of Business Analytics
Analytics have been used in business since the management exercises were
put into place by Frederick Winslow Taylor in the late 19th century. Henry
Ford measured the time of each component in his newly established
assembly line. But analytics began to command more attention in the late
1960s when computers were used in decision supporting systems. Since
then, analytics have changed and formed with the development of Enterprise
Resource Planning(ERP) systems, data warehouses, and a large number of
other software tools and processes.
In later years the business analytics have exploded with the introduction to
computers. This change has brought analytics to a whole new level and has
brought about endless possibilities.
Scope of Business Analytics
Cost-optimization and reduction, Maximizing customer satisfaction,
Boosting profits, Synchronizing financial and operational strategies,
Responding to customer/client demands in real-time, Keep pace with the
latest industry trends to gain a competitive edge etc are the goals of Business
Analytics.
4. Tools for Business Analytics
R, Python, Apache Spark, Apache Storm, PIG & HIVE, SAS, Tableau,
Excel, QlikView, Splunk etc.
If you are interested to know more about the business analytics, join
the Business Analytics Course by Henry Harvin®.
