Introduction to Business Analytics

1. Introduction
to
Business Analytics
1
Dr. Amitabh Mishra

2. • Analytics is a field which combines following into one -
1. Data,
2. Information technology,
3. Statistical analysis,
4. Quantitative methods and
5. Computer-based models
• This all are combined to provide decision makers all the
possible scenarios to make a well thought and
researched decision.
Dr. Amitabh Mishra 2

3. Meaning of Business Analytics
• Business analytics (BA) refers to
– “The skills, technologies, practices for continuous
developing new insights and understanding of business
performance based on data and statistical methods”.
– “the practice of exploration of an organization’s data with
emphasis on statistical analysis. Business analytics is used
by companies committed to data-driven decision making.
Dr. Amitabh Mishra 3

4. – “The statistical analysis of the data a business has
acquired in order to make decisions that are based
on evidence rather than a guess”.
– “A combination of data analytics, business
intelligence and computer programming. It is the
science of analysing data to find out patterns that
will be helpful in developing strategies”
Dr. Amitabh Mishra 4

5. Evolution of Business Analytics
• Business analytics has been existence since very long time and has
evolved with availability of newer and better technologies.
• It has its roots in operations research, which was extensively used during
World War II. Operations research was an analytical way to look at data to
conduct military operations.
• Over a period of time, this technique started getting utilized for business.
Here operation’s research evolved into management science. Again, basis
for management science remained same as operation research in data,
decision making models, etc.
Dr. Amitabh Mishra 5

6. • As the economies started developing and companies
became more and more competitive, management
science evolved into-
– Business intelligence,
– Decision support systems and into
– PC software.
Dr. Amitabh Mishra 6

7. SIGNIFICANCE AND USAGES
OF BUSINESS ANALYITCS
• To make data-driven decisions
• Converts available data into valuable information.
• Eliminate guesswork
• Get faster answer to questions
• Get insight into customer behavior
• Get key business metrics reports when and where
needed
Dr. Amitabh Mishra 7

8. • It impacts functioning of the whole organization. And
hence, can-
– Improve profitability of the business
– Increase market share and revenue and
– Provide better return to a shareholder
– Reduce overall cost
– Sustain in competition
– Monitor KPIs (Key Performance Indicators) and
– React to changing trends in real time
Dr. Amitabh Mishra 8

9. CHALLANGES FOR BUSINESS ANALYITCS
• Business analytics depends on sufficient volumes of high
quality data.
• The difficulty in ensuring data quality.
• Data warehousing require a lot more storage space than
it did speed.
• Business analytics is becoming a tool that can influence
the outcome of customer interactions.
Dr. Amitabh Mishra 9

10. • Technology infrastructure and tools must be able to
handle the data and Business Analytics processes.
• Organizations should be prepared for the changes
that Business Analytics bring to current business and
technology operations.
Dr. Amitabh Mishra 10

11. Scope of Business Analytics
• Business analytics has a wide range of
application and usages-
– Descriptive analysis
– Predictive analysis
– Prescriptive analysis
Dr. Amitabh Mishra 11

12. Descriptive Analysis
• This branch of Business Analytics analyses and finds
answer to the question-
“What has happened in the past?”.
• Descriptive analysis/ statistics performs the function
of “describing” or summarizing raw data to make it
easily understandable and interpretable by humans.
Dr. Amitabh Mishra 12

13. Predictive Analytics
• This branch of Business Analytics, uses forecasting
techniques and statistical models to find out-
What is going to happen in future?
• Predictive analysis helps us in predicting the future
course of events and taking necessary measures for the
same.
Dr. Amitabh Mishra 13

14. • Predictive analysis employ-
– Predictive modelling and Machine learning techniques.
• Predictive modeling uses statistics to predict outcomes.
• Machine learning(ML) statistical is the scientific
study of algorithms and models that computer systems use to
perform a specific task without using explicit instructions, relying
on patterns and inference instead. Machine learning algorithms
build a mathematical model based on sample data, known in order
to make predictions or decisions without being explicitly
programmed to perform the task.
Dr. Amitabh Mishra 14

15. Prescriptive Analytics
• This branch of Analytics, makes use of optimization and simulation
algorithms to find answer to the question-
“What should we do?”.
• Prescriptive Analysis is used to give advices on possible outcomes.
• This is a relatively new field of analytics that allows users to
recommend several different possible solutions to the problem and
to guide them about the best possible course of action.
Dr. Amitabh Mishra 15

16. USERS OF BUSINESS ANALYITCS
1. Students
2. Business man
3. Accountants and Auditors
4. Organization/Companies/Group of industries/
Small firm
Dr. Amitabh Mishra 16

17. MAIN SOFTWARE USED FOR BUSINESS
ANALYITCS
1. MS-EXCEL
2. SPSS
3. R
4. SAS
5. E-views
Dr. Amitabh Mishra 17

18. • SPSS-
– SPSS Statistics is a software package used for statistical
analysis. Long produced by SPSS Inc., it was acquired by
IBM in 2009. The current versions (2014) are officially
named IBM SPSS Statistics.
• MS-EXCEL-
– Microsoft Excel is a spreadsheet application developed by
Microsoft for Microsoft Windows. It features calculation,
graphing tools, pivot tables, and a macro programming
language called Visual Basic for Applications.
Dr. Amitabh Mishra 18

19. MS-EXCEL in Business Analytics
– Microsoft Excel is a spreadsheet application
developed by Microsoft for Microsoft Windows.
– It features
• Calculation,
• Graphing tools,
• Pivot tables, and
• A macro programming language called Visual Basic
Dr. Amitabh Mishra 19

20. The Business Analytic Process
Dr. Amitabh Mishra 20

21. Components of Business Analytics
• There are 6 major components/categories in
any analytics solution:
Dr. Amitabh Mishra 21
Components of
Business Analytics
Data Mining
Text Mining
Forecasting
Predictive Analytics
Optimization
Visualization

22. • Data Mining – Create models by uncovering previously
unknown trends and pattern in vast amounts of data e.g.
detect insurance claims frauds, Retail Market basket
analysis.
• There are various statistical techniques through which data
mining is achieved.
– Classification (when we know on which variables to classify the
data e.g. age, demographics)
– Regression
– Clustering (when we don’t know on which factors to classify
data)
– Associations & Sequencing Models
Dr. Amitabh Mishra 22

23. • Text Mining – Discover and extract meaningful
patterns and relationships from text
collections. E.g.
– Understand sentiments of Customers on social
media sites like Twitter, Face book, Blogs, Call
centre scripts etc. which are used to improve the
Product or Customer service or understand how
competitors are doing.
Dr. Amitabh Mishra 23

24. • Forecasting – Analyze & forecast processes that take place
over the period of time. E.g.
– Predict seasonal energy demand using historical trends,
– Predict how many ice creams cones are required considering
demand
• Predictive Analytics – Create, manage and deploy
predictive scoring models. E.g.
– Customer churn & retention,
– Credit Scoring,
– Predicting failure in shop floor machinery
Dr. Amitabh Mishra 24

25. • Optimization– Use of simulations techniques to
identify scenarios which will produce best results.
E.g.
– Sale price optimization,
– Identifying optimal Inventory for maximum fulfilment
& avoid stock outs.
• Visualization– Enhanced exploratory data
analysis & output of modelling results with highly
interactive statistical graphics.
Dr. Amitabh Mishra 25

26. Dr. Amitabh Mishra 26