Catarining, Ma. Kristine Felix E.

November 13, 2019

BSMA-BBD-BBC 1102 Fundamentals of Business Analytics

Types of Business Analytics:

1. Prescriptive Analytics
The most valuable and most underused big data analytics technique, prescriptive analytics gives
you a laser-like focus to answer a specific question. It helps to determine the best solution
among a variety of choices, given the known parameters and suggests options for how to take
advantage of a future opportunity or mitigate a future risk. It can also illustrate the implications of
each decision to improve decision-making. Examples of prescriptive analytics for customer
retention include next best action and next best offer analysis.

 Forward looking
 Focused on optimal decisions for future situations
 Simple rules to complex models that are applied on an automated or programmatic basis
 Discrete prediction of individual data set members based on similarities and differences
 Optimization and decision rules for future events

2. Diagnostic Analytics
Data scientists turn to this technique when trying to determine why something happened. It is
useful when researching leading churn indicators and usage trends amongst your most loyal
customers. Examples of diagnostic analytics include churn reason analysis and customer health
score analysis. Key points:

 Backward looking
 Focused on causal relationships and sequences
 Relative ranking of dimensions/variable based on inferred explanatory power)
 Target/dependent variable with independent variables/dimensions
 Includes both frequentist and Bayesian causal inferential analyses

3. Descriptive Analytics
This technique is the most time-intensive and often produces the least value; however, it is
useful for uncovering patterns within a certain segment of customers. Descriptive analytics
provide insight into what has happened historically and will provide you with trends to dig into in
more detail. Examples of descriptive analytics include summary statistics, clustering and
association rules used in market basket analysis. Key points:

 Backward looking
 Focused on descriptions and comparisons
 Pattern detection and descriptions
 MECE (mutually exclusive and collectively exhaustive) categorization
 Category development based on similarities and differences (segmentation)
4. Predictive Analytics
The most commonly used technique; predictive analytics use models to forecast what might
happen in specific scenarios. Examples of predictive analytics include next best offers, churn risk
and renewal risk analysis.

 Forward looking
 Focused on non-discrete predictions of future states, relationship, and patterns
 Description of prediction result set probability distributions and likelihoods
 Model application
 Non-discrete forecasting (forecasts communicated in probability distributions)

5. Outcome Analytics
Also referred to as consumption analytics, this technique provides insight into customer behavior
that drives specific outcomes. This analysis is meant to help you know your customers better
and learn how they are interacting with your products and services.

1) Backward looking, Real-time and Forward looking

2) Focused on consumption patterns and associated business outcomes
3) Description of usage thresholds
4) Model application

Advantages and Disadvantages of Business Analytics:

ADVANTAGES:

Analytics helps you measure how much of your mission statement is accomplished

A good business has its own missions statement, which is a set of values presented to their
consumers either as a marketing plan or as basis of checking in on their own development. Many
businesses retain or promote employees using the values in their mission statements as guidelines.
Although this is helpful in determining who helps your company succeed, it isn’t strategic enough to
leave it at that. Values must also be quantified and expressed in a tangible way such as generating
more profit for the company.

Quantified values can help the business improve their analytical process because it defines a
common goal that should be followed by everyone involved in the business. When these values are
quantified, they will be evaluated by the employees in order to gain a clearer view of what is
expected from them. The more informed they are, the more productive they will become.

Analytics Encourages Smart Decision-Making

Accessibility to important data gives companies the power to make accurate decisions that could
leverage businesses. Not only does it provide useful data, it also allows companies to make
decisions faster and more efficiently than before.

Companies can maximize the use of analytics when they share the discussion to as many
employees as needed. Ever heard of the saying “two heads are better than one?” A group is usually
able to analyze data better and reach objective and informed decisions compared to just one person.
Analytics Provides Clearer Insights Through Data Visualization

Recent versions of analytics care about how you present your data to your analytics team.
Comprehensive charts and graphs can be used to make sure that decision-making is more
interesting. Through visual representations of extracted data, relevant and useful insights can be
extracted in a much clearer way.

With analytics’ data visualization, information that you need about your market is there on your table,
presented in a visually appealing and organized manner.

Analytics Keep You Updated

Modern consumers change their mind easily as fads come and go, and they are easily swayed by
“better” offers. Analytics can give you insight about how your target market thinks and acts. You will
be prompted to be dynamic at all times to serve the needs of your ever-changing consumers.

Changes in the industry can occur at a very rapid pace. It is not unusual to see larger companies
being devoured by promising start-ups. Protect your business from unpredictability with analytics so
that you may be able to innovate and pre-empt your products according to your consumer’s needs
and preferences.

Analytics Offer Efficiency

Efficiency for businesses has been improving since the advent of business analytics. With the ability
to gather a large amount of data at a fast rate and present it in a visually appealing way, companies
can now formulate decisions to help achieve specified goals. Analytics encourages a company
culture of efficiency and teamwork where employees are able to express their insights and share in
the decision-making process.

Analytics also provides companies with better choices on such matters like where to take the
business as well as determining the steps needed to achieve new goals.

DISADVANTAGES:

Piling of Historical Data

The major objective of Business intelligence system is to stockpile past data about a firm's deals
and reveal it in such a way that it permits professionals in decision making. On the flip side, this
information generally amounts to a small portion of what the firms actually require to function,
besides its restrained worth. While in other situations, the user may not have interest in historical
data as many markets that the company regulates are in frequent alteration.

Cost
Business intelligence at times can be a little too much for small as well as for medium sized
enterprises. The use of such system can be expensive for basic business transactions.

Complexity
Another disadvantage of BI could be its complexity in implementation of data. It can be so intricate
that it can make business techniques rigid to deal with. In the view of such premise, many business
experts have predicted that these intricacies can ultimately throttle any business.

Muddling of commercial settings

Business Intelligence can cause commercial settings to turn out to be much more muddled.

Limited use
Like all improved technologies, business intelligence was first established keeping in consideration
the buying competence of affluent firms. Even today BI system cannot be afforded by most of the
companies. Although, traders in the past few years have started modifying their services towards
medium and small sized industries, but the fact is that many of such firms does not consider them
to be highly essential, for its complexity.

Time Consuming Implementation

Many firms in today's fast paced industrial scenario are not patient enough to wait for the execution
of Business intelligence in their organization. It takes around 18 months for data warehousing
system to completely implement the system.