Business analytics (BA) is not a new concept. It has been around for decades. Yet very few businesses are taking advantage of what it can contribute to their decision-making and ultimate success. Here we discuss what business analytics is, how it works, and the steps it involves.
BA is very much concerned with data. In fact, you need data that you can analyse. Thus, you need to determine which datasets will provide you with insights into the performance, efficiency, productivity, and revenue aspects of your business so that you can make decisions grounded in statistical analysis and not guesswork. At the same time, you need to know which datasets to exclude as they do not provide you with information that is pertinent to success factors.
To pin it down further, you could say that BA makes use of management techniques or practices, professional competencies, and the all-important ingredient, technology, to decide how to proceed best in the future. BA can be utilised to make predictions, anticipate market trends and consumer behavior, and improve processes, all in aid of adding to the company’s bottom line or revenue.
Nowadays, virtually all owners of medium to large companies have at least one degree in business. However, a much-overlooked qualification is a business analytics degree, which will maximise your ability to focus on core aspects of the business that determine success or failure. Studying for a master’s in business analytics from Aston University will prepare business leaders for the challenges of modern business.
What Is Business Analytics Used For?
While BA will not make your decisions for you, it will provide you with the best possible information from which to determine your course of action. It will enable you to compare different scenarios that will direct your ultimate choices. With statistical analysis to back your decisions, it makes it easier to convey these to your organisation and get their buy-in.
BA works in real-time thus allowing you to monitor your Key Performance Indicators (KPIs) and keep track of trends as they happen. This results in decisions being made as swiftly and appropriately as possible so that the company can recover quickly or take advantage of what the stats are showing.
A company collects data on numerous platforms, such as customer relationship management software, marketing databases, and other applications. With BA, you can analyse critical data from multiple sources. BA will identify patterns contained in your data. This will highlight trends so that you can choose how to respond to them.
Methods of Business Analytics
The four methods of business analytics are presented in stages from the simplest to the most complex. Although no method is better than another, they are utilised according to what type of information you need. At least one of these methods will be applicable to any problem or in aid of a decision that is required.
Descriptive analytics looks at patterns and trends in historical data. One example of its usefulness is in examining customer purchasing behavior to build a marketing campaign. Performance against KPIs can also be tracked.
Diagnostic analytics makes use of data mining, data discovery, drilling down, and correlation. This reveals what factors have influenced a past trend. It can indicate the possibility of a recurrence of a pattern.
Predictive analytics produces forecasts of future trends. This is done by machine learning and the use of statistical models. Data from social media is one example of what this method of BA could assess.
Prescriptive analytics proposes decisions for future events that may occur based on what happened in the past and how it was handled. Based on artificial intelligence, prescriptive analytics employs complex neural networks (similar to the human brain) and deep learning.
Processes and Strategies in Business Analytics
Data mining techniques that sort through voluminous datasets include outlier detection, clustering, and regression. Data mining is done to observe trends and patterns in data. It can be used, for instance, to segment customers who purchase the same product every year.
Text mining searches through internet data and online apps. It then extracts text which can be used to inform management about competitors, products, and customer care. Data comes from diverse online sources such as blogs and social media posts.
Data aggregation sources the data and summarises it. Between collection and summary, the data is cleaned and filtered for accuracy. This information can be used to improve marketing with more targeted messages.
Forecasting is used to predict the future based on the past. It can highlight consumer behavior at certain times, such as how they respond to discounts or sales. Forecasting is useful to estimate how many conversions will be achieved by a particular strategy or how to optimise call centre staff based on call volumes.
Data visualisation uses charts or graphs to display information. This is a useful format for making presentations to higher management or subordinates. Data visualisation software is essential for displaying real-time KPIs, call centre answering times, and business metrics, to name a few.
The Significance of Business Analytics to Your Business
Regardless of which industry your business operates in, BA can play a significant role in a number of ways. Performance is enhanced as you can readily see which strategies are working and which are not adding value. Decision-making takes place more quickly and is supported by statistical analysis. Risks are reduced as the best decisions avoid wasting time and money. BA helps to paint an accurate picture of your customers and their behavior. Your organisation is in a better position to claim more market share and increase profits. Shareholders are more satisfied. BA is a great tool for making your business more competitive in your industry.
Businesses tend to collect a lot of data. But without BA, this is just random information. With BA, your datasets form the basis for a decision-making tool using specific techniques and methodology. These have been tried and tested extensively.