BUSINESS ANALYTICS

UNIT 1
INTRODUCTION TO BUSINES ANALYTICS
Dr. KANCHAN KUMARI
International Business & Management
INTRODUCTION TO BUSINES ANALYTICS
• Business analytics (BA) is a set of disciplines and technologies for
solving business problems using data analysis, statistical models and
other quantitative methods. It involves an iterative, methodical
exploration of an organization's data, with an emphasis on statistical
analysis, to drive decision-making.
• Data-driven companies treat their data as a business asset and
actively look for ways to turn it into a competitive advantage. Success
with business analytics depends on data quality, skilled analysts who
understand the technologies and the business, and a commitment to
using data to gain insights that inform business decisions
How business analytics works
• Before any data analysis takes place, BA starts with several
foundational processes:
1. Determine the business goal of the analysis.
2. Select an analysis methodology.
3. Get business data to support the analysis, often from various
systems and sources.
4. Cleanse and integrate data into a single repository, such as a data
warehouse or data mart
Business Analytics - Terminologies
• Business analytics begins with a data set (a simple collection of data or a data file) or
commonly with a database (a collection of data files that contain information on people,
locations, and so on).
• As databases grow, they need to be stored somewhere. Technologies such as computer
clouds (hardware and software used for data remote storage, retrieval, and
computational functions) and data warehousing (a collection of databases used for
reporting and data analysis) store data.
• Database storage areas have become so large that a new term was devised to describe
them.
• Big data describes the collection of data sets that are so large and complex that software
systems are hardly able to process them (Isson and Harriott, 2013, pp. 57–61). Isson and
Harriott (2013, p. 61) define little data as anything that is not big data.
• Little data describes the smaller data segments or files that help individual businesses
keep track of customers. As a means of sorting through data to find useful information,
the application of analytics has found new purpose.
Types of Analytics (3 types )

• Descriptive- The application of simple statistical techniques that describes

what is contained in a data set or database. Example: An age bar chart is
used to depict retail shoppers for a department store that wants to target
advertising to customers by age.
• Predictive- An application of advanced statistical, information software, or
operations research methods to identify predictive variables and build
predictive models to identify trends and relationships not readily observed
in a descriptive analysis. Example: Multiple regression is used to show the
relationship (or lack of relationship) between age, weight, and exercise on
diet food sales. Knowing that relationships exist helps explain why one set
of independent variables influences dependent variables such as business
performance.
Types of Analytics
• Prescriptive: An application of decision science, management science,
and operations research methodologies (applied mathematical
techniques) to make best use of allocable resources. Example: A
department store has a limited advertising budget to target
customers. Linear programming models can be used to optimally
allocate the budget to various advertising media.
Business intelligence
• Business intelligence (BI) can be defined as a set of processes and technologies
that convert data into meaningful and useful information for business purposes.
While some believe that BI is a broad subject that encompasses analytics,
business analytics, and information systems (Bartlett, 2013, p.4), others believe it
is mainly focused on collecting, storing, and exploring large database
organizations for information useful to decision-making and planning (Negash,
2004). One function that is generally accepted as a major component of BI
involves storing an organization’s data in computer cloud storage or in data
warehouses. Data warehousing is not an analytics or business analytics function,
although the data can be used for analysis. In application, BI is focused on
querying and reporting, but it can include reported information from a BA
analysis. BI seeks to answer questions such as what is happening now and where,
and also what business actions are needed based on prior experience. BA, on the
other hand, can answer questions like why something is happening, what new
trends may exist, what will happen next, and what is the best course for the
future.
Process of Business Analytics
Business analytics is the process of
• analyzing huge datasets to unearth trends,
• patterns,
• correlations,
• outliers and anomalies to help organizations derive inferences and
make data-driven decisions.
Process of Business Analytics
• in the BA process, the first step is to recognize that databases may contain
information that could both solve problems and find opportunities to improve
business performance
• Step 2 of the ODMP, an exploration of the problem to determine its size, impact,
and other factors is undertaken to diagnose what the problem is
• BA descriptive analytic analysis explores factors that might prove useful in solving
problems and offering opportunities.
• The ODMP problem statement step is similarly structured to the BA predictive
analysis to find strategies, paths, or trends that clearly define a problem or
opportunity for an organization to solve problems.
• ODMP’s last steps of strategy selection and implementation involve the same
kinds of tasks that the BA process requires in the final prescriptive step (make an
optimal selection of resource allocations that can be implemented for the
betterment of the organization).
Importance of Business Analytics

• Importance of Business Analytics

Facilitates better understanding of available primary and secondary data,
which again affect operational efficiency of several departments.
Provides a competitive advantage to companies. In this digital age flow of
information is almost equal to all the players.
1) decision-making,
2) problem solving,
3) understanding,
4) improving processes
5) understanding customers.
Organisational Decision Making

• The BA process can solve problems and identify opportunities to improve

business performance.
• In the process, organizations may also determine strategies to guide
operations and help achieve competitive advantages.
• Typically, solving problems and identifying strategic opportunities to follow
are organization decision-making tasks.
• The latter, identifying opportunities, can be viewed as a problem of
strategy choice requiring a solution. It should come as no surprise that the
BA process described closely parallels classic organization decision-making
processes.
• As depicted in Figure , the business analytic process has an inherent
relationship to the steps in typical organization decision-making processes.
Organisational Decision Making in business analytics
Organisational Decision Making in business analytics

• Focused on decision making to solve problems

• Applied to finding opportunities in data and deciding what is the best
course of action to take advantage of them
• The five-step ODMP begins with the perception of disequilibrium, or
the awareness that a problem exists that needs a decision
Business Analytics for competitive advantage
Business analytics drives competitive advantage by
• generating economies of scale
• economies of scope
• quality improvement.
• Taking advantage of economies of scale is the first way organizations
achieve comparative cost efficiencies and drive competitive
advantage against their peers.
Gaining competitive advantage through business analytics
Thank You !
Dr. Kanchan Kumari