Concept of Business Analytics

Business analytics is a powerful tool in today’s marketplace that can be used to make
decisions and craft business strategies. Across industries, organizations generate vast amounts
of data which, in turn, has heightened the need for professionals who are data literate and
know how to interpret and analyze that information.

According to a study by MicroStrategy, companies worldwide are using data to:

 Improve efficiency and productivity (64 percent)

 Achieve more effective decision-making (56 percent)
 Drive better financial performance (51 percent)
The research also shows that 65 percent of global enterprises plan to increase analytics
spending.

In light of these market trends, gaining an in-depth understanding of business analytics can be
a way to advance your career and make better decisions in the workplace.

WHAT IS BUSINESS ANALYTICS?

Business analytics is the process of using quantitative methods to derive meaning from data
to make informed business decisions.

There are four primary methods of business analysis:

 Descriptive: The interpretation of historical data to identify trends and patterns

 Diagnostic: The interpretation of historical data to determine why something has
happened
 Predictive: The use of statistics to forecast future outcomes
 Prescriptive: The application of testing and other techniques to determine which
outcome will yield the best result in a given scenario
These four types of business analytics methods can be used individually or in tandem to
analyze past efforts and improve future business performance.
Business Analytics vs. Data Science

To understand what business analytics is, it’s also important to distinguish it from data
science. While both processes analyze data to solve business problems, the difference
between business analytics and data science lies in how data is used.

Business analytics is concerned with extracting meaningful insights from and visualizing
data to facilitate the decision-making process, whereas data science is focused on making
sense of raw data using algorithms, statistical models, and computer programming. Despite
their differences, both business analytics and data science glean insights from data to inform
business decisions.

To better understand how data insights can drive organizational performance, here are some
of the ways firms have benefitted from using business analytics.

THE BENEFITS OF BUSINESS ANALYTICS

1. More Informed Decision-Making

Business analytics can be a valuable resource when approaching an important strategic

decision.

When ride-hailing company Uber upgraded its Customer Obsession Ticket Assistant (COTA)
in early 2018—a tool that uses machine learning and natural language processing to help
agents improve speed and accuracy when responding to support tickets—it used prescriptive
analytics to examine whether the product’s new iteration would be more effective than its
initial version.

Through A/B testing—a method of comparing the outcomes of two different choices—the
company determined that the updated product led to faster service, more accurate resolution
recommendations, and higher customer satisfaction scores. These insights not only
streamlined Uber’s ticket resolution process, but saved the company millions of dollars.
2. Greater Revenue

Companies that embrace data and analytics initiatives can experience significant financial
returns.

Research by McKinsey shows organizations that invest in big data yield a six percent average
increase in profits, which jumps to nine percent for investments spanning five years.

Echoing this trend, a recent study by BARC found that businesses able to quantify their gains
from analyzing data report an average eight percent increase in revenues and a 10 percent
reduction in costs.

These findings illustrate the clear financial payoff that can come from a robust business
analysis strategy—one that many firms can stand to benefit from as the big data and analytics
market grows.

Related: 5 Business Analytics Skills for Professionals

3. Improved Operational Efficiency

Beyond financial gains, analytics can be used to fine-tune business processes and operations.

In a recent KPMG report on emerging trends in infrastructure, it was found that many firms
now use predictive analytics to anticipate maintenance and operational issues before they
become larger problems.

A mobile network operator surveyed noted that it leverages data to foresee outages seven
days before they occur. Armed with this information, the firm can prevent outages by more
effectively timing maintenance, enabling it to not only save on operational costs, but ensure it
keeps assets at optimal performance levels.

WHY STUDY BUSINESS ANALYTICS?

Taking a data-driven approach to business can come with tremendous upside, but many
companies report that the number of skilled employees in analytics roles are in short supply.

LinkedIn lists business analysis as one of the skills companies need most in 2020, and the
Bureau of Labor Statistics projects operations research analyst jobs to grow by 23 percent
through 2031—a rate much faster than the average for all occupations.

“A lot of people can crunch numbers, but I think they’ll be in very limited positions unless
they can help interpret those analyses in the context in which the business is competing,” said
Hammond in a previous interview.

Skills Business Analysts Need

Success as a business analyst goes beyond knowing how to crunch numbers. In addition to
collecting data and using statistics to analyze it, it’s crucial to have critical thinking skills to
interpret the results. Strong communication skills are also necessary for effectively relaying
insights to those who aren’t familiar with advanced analytics. An effective data analyst
has both the technical and soft skills to ensure an organization is making the best use of its
data.

5 Top Business Analytics Careers

There are many common business analytics careers for professionals at various points in their
careers. Entry-level business analysts, for example, may pursue titles such as Operations
Research Analyst, Computer Systems Analyst, Information Security Analyst, Business Data
Analyst, and more.

Business analysts who are already established in the field and are hoping to advance their
careers have an entirely different set of roles to consider. Below, we outline five of the most
common mid- to senior-level business analyst positions, their responsibilities, and their
average annual salaries.

Senior Data Analyst

Average Salary: $100,739 per year

Key Responsibilities: Senior data analysts gather, organize, and communicate data to
strategic business partners. Individuals in these roles may also oversee a small team, develop
a reporting system based on data insights, and provide maintenance and support to data
systems as needed.

Analytics Manager

Average Salary: $109,188 per year

Key Responsibilities: Analytics managers set the standard for data collection strategies
within their teams and oversee performance metrics, risk potential, and other key aspects of
data collection. Other duties include applying statistical analysis to data sets, extracting
information, and developing end-user reports that effectively communicate findings.

Project Manager (Data/Analysis)

Average Salary: $109,762 per year

Key Responsibilities: Project managers specializing in data or analysis have similar

responsibilities to general project managers. These individuals oversee data-specific projects
from conception to conclusion, keeping various team members on track to meet deadlines
and complete deliverables.

Principal Data Analyst

Average Salary: $117,321 per year

Key Responsibilities: Principal data analysts often take on a leadership role within a larger
data team in an organization. They may design complex data systems, develop an intricate
understanding of an organization’s business needs, and use both to help strategically guide
their organization in reaching its unique goals.

Analytics Director

Average Salary: $150,000 per year

Key Responsibilities: Analytics directors supervise entire teams of business analysts,

guiding their processes and cumulating their various data-based conclusions into actionable
strategies for business partners. These professionals also often layer market research on top
of data-driven insights and collaborate with leadership to identify and meet company-specific
needs.

How to Find the Right Business Analytics Role For You

Despite the breadth of opportunities available to business analysts, navigating the job search
can be difficult, often due to the fact that the rapidly growing field has left many
organizations not yet familiar enough with their data needs to know exactly what they’re
looking for when it comes to analytics, Chan says.

As a result, aspiring business analysts need to approach their search more broadly. If the
listing has the words “analytics,” “data” or “management” in the title, for example, Chan
explains that the role will likely still align with a business analyst’s training. Similarly, “don’t
be discouraged from applying if the expected requirements seem too onerous in terms of data
science skill sets, because really that’s not necessarily what they want,” he says. Instead, feel
confident in applying for roles that list at least one or two of your technical abilities, and then
spend some time in the interview obtaining a better understanding of what they’re looking for
to ensure you’re a good fit.

BUSINESS ANALYTICS EXAMPLES

According to a recent survey by McKinsey, an increasing share of organizations report using

analytics to generate growth. Here’s a look at how four companies are aligning with that
trend and applying data insights to their decision-making processes.

1. Improving Productivity and Collaboration at Microsoft

At technology giant Microsoft, collaboration is key to a productive, innovative work

environment. Following a 2015 move of its engineering group's offices, the company sought
to understand how fostering face-to-face interactions among staff could boost employee
performance and save money.
Microsoft’s Workplace Analytics team hypothesized that moving the 1,200-person group
from five buildings to four could improve collaboration by cutting down on the number of
employees per building and reducing the distance that staff needed to travel for meetings.
This assumption was partially based on an earlier study by Microsoft, which found that
people are more likely to collaborate when they’re more closely located to one another.

In an article for the Harvard Business Review, the company’s analytics team shared the
outcomes they observed as a result of the relocation. Through looking at metadata attached to
employee calendars, the team found that the move resulted in a 46 percent decrease in
meeting travel time. This translated into a combined 100 hours saved per week across all
relocated staff members and an estimated savings of $520,000 per year in employee time.

The results also showed that teams were meeting more often due to being in closer proximity,
with the average number of weekly meetings per person increasing from 14 to 18. In
addition, the average duration of meetings slightly declined, from 0.85 hours to 0.77 hours.
These findings signaled that the relocation both improved collaboration among employees
and increased operational efficiency.

For Microsoft, the insights gleaned from this analysis underscored the importance of in-
person interactions and helped the company understand how thoughtful planning of employee
workspaces could lead to significant time and cost savings.

2. Enhancing Customer Support at Uber

Ensuring a quality user experience is a top priority for ride-hailing company Uber. To
streamline its customer service capabilities, the company developed a Customer Obsession
Ticket Assistant (COTA) in early 2018—a tool that uses machine learning and natural
language processing to help agents improve their speed and accuracy when responding to
support tickets.

COTA’s implementation delivered positive results. The tool reduced ticket resolution time by
10 percent, and its success prompted the Uber Engineering team to explore how it could be
improved.
For the second iteration of the product, COTA v2, the team focused on integrating a deep
learning architecture that could scale as the company grew. Before rolling out the update,
Uber turned to A/B testing—a method of comparing the outcomes of two different choices
(in this case, COTA v1 and COTA v2)—to validate the upgraded tool’s performance.

Preceding the A/B test was an A/A test, during which both a control group and a treatment
group used the first version of COTA for one week. The treatment group was then given
access to COTA v2 to kick off the A/B testing phase, which lasted for one month.

At the conclusion of testing, it was found that there was a nearly seven percent relative
reduction in average handle time per ticket for the treatment group during the A/B phase,
indicating that the use of COTA v2 led to faster service and more accurate resolution
recommendations. The results also showed that customer satisfaction scores slightly
improved as a result of using COTA v2.

With the use of A/B testing, Uber determined that implementing COTA v2 would not only
improve customer service, but save millions of dollars by streamlining its ticket resolution
process.

Related: How to Analyze a Dataset: 6 Steps

3. Forecasting Orders and Recipes at Blue Apron

For meal kit delivery service Blue Apron, understanding customer behavior and preferences
is vitally important to its success. Each week, the company presents subscribers with a fixed
menu of meals available for purchase and employs predictive analytics to forecast demand,
with the aim of using data to avoid product spoilage and fulfill orders.

To arrive at these predictions, Blue Apron uses algorithms that take several variables into
account, which typically fall into three categories: customer-related features, recipe-related
features, and seasonality features. Customer-related features describe historical data that
depicts a given user’s order frequency, while recipe-related features focus on a subscriber’s
past recipe preferences, allowing the company to infer which upcoming meals they’re likely
to order. In the case of seasonality features, purchasing patterns are examined to determine
when order rates may be higher or lower, depending on the time of year.

Through regression analysis—a statistical method used to examine the relationship between
variables—Blue Apron’s engineering team has successfully measured the precision of its
forecasting models. The team reports that, overall, the root-mean-square error—the
difference between predicted and observed values—of their projection of future orders is
consistently less than six percent, indicating a high level of forecasting accuracy.

By employing predictive analytics to better understand customers, Blue Apron has improved
its user experience, identified how subscriber tastes change over time, and recognized how
shifting preferences are impacted by recipe offerings.

Related: 5 Business Analytics Skills for Professionals

4. Targeting Consumers at PepsiCo

Consumers are crucial to the success of multinational food and beverage company PepsiCo.
The company supplies retailers in more than 200 countries worldwide, serving a billion
customers every day. To ensure the right quantities and types of products are available to
consumers in certain locations, PepsiCo uses big data and predictive analytics.

PepsiCo created a cloud-based data and analytics platform called Pep Worx to make more
informed decisions regarding product merchandising. With Pep Worx, the company identifies
shoppers in the United States who are likely to be highly interested in a specific PepsiCo
brand or product.

For example, Pep Worx enabled PepsiCo to distinguish 24 million households from its
dataset of 110 million US households that would be most likely to be interested in Quaker
Overnight Oats. The company then identified specific retailers that these households might
shop at and targeted their unique audiences. Ultimately, these customers drove 80 percent of
the product’s sales growth in its first 12 months after launch.
PepsiCo’s analysis of consumer data is a prime example of how data-driven decision-
making can help today’s organizations maximize profits.

R Programming Language – Introduction

R is an open-source programming language that is widely used as a statistical software and
data analysis tool. R generally comes with the Command-line interface. R is available
across widely used platforms like Windows, Linux, and macOS. Also, the R programming
language is the latest cutting-edge tool.

It was designed by Ross Ihaka and Robert Gentleman at the University of Auckland,
New Zealand, and is currently developed by the R Development Core Team. R
programming language is an implementation of the S programming language. It also
combines with lexical scoping semantics inspired by Scheme. Moreover, the project
conceives in 1992, with an initial version released in 1995 and a stable beta version in
2000.
Why R Programming Language?

 R programming is used as a leading tool for machine learning, statistics, and

data analysis. Objects, functions, and packages can easily be created by R.
  It’s a platform-independent language. This means it can be applied to all
operating system.
 It’s an open-source free language. That means anyone can install it in any
organization without purchasing a license.
 R programming language is not only a statistic package but also allows us to
integrate with other languages (C, C++). Thus, you can easily interact with many
data sources and statistical packages.
 The R programming language has a vast community of users and it’s growing day
by day.
 R is currently one of the most requested programming languages in the Data
Science job market that makes it the hottest trend nowadays.

Features of R Programming Language

Statistical Features of R:
 Basic Statistics: The most common basic statistics terms are the mean, mode,
and median. These are all known as “Measures of Central Tendency.” So using
the R language we can measure central tendency very easily.
 Static graphics: R is rich with facilities for creating and developing interesting
static graphics. R contains functionality for many plot types including graphic
maps, mosaic plots, biplots, and the list goes on.
 Probability distributions: Probability distributions play a vital role in statistics
and by using R we can easily handle various types of probability distribution
such as Binomial Distribution, Normal Distribution, Chi-squared Distribution
and many more.
 Data analysis: It provides a large, coherent and integrated collection of tools
for data analysis.

Programming Features of R:
 R Packages: One of the major features of R is it has a wide availability of
libraries. R has CRAN(Comprehensive R Archive Network), which is a
repository holding more than 10, 0000 packages.
 Distributed Computing: Distributed computing is a model in which
components of a software system are shared among multiple computers to
 improve efficiency and performance. Two new packages ddR and
multidplyr used for distributed programming in R were released in November
2015.
Programming in R:
Since R is much similar to other widely used languages syntactically, it is easier to code
and learn in R. Programs can be written in R in any of the widely used IDE like R Studio,
Rattle, Tinn-R, etc. After writing the program save the file with the extension .r. To run
the program use the following command on the command line:

Advantages of R:
 R is the most comprehensive statistical analysis package. As new technology
and concepts often appear first in R.
 As R programming language is an open source. Thus, you can run R anywhere
and at any time.
 R programming language is suitable for GNU/Linux and Windows operating
system.
 R programming is cross-platform which runs on any operating system.
 In R, everyone is welcome to provide new packages, bug fixes, and code
enhancements.
Disadvantages of R:
 In the R programming language, the standard of some packages is less than
perfect.
 Although, R commands give little pressure to memory management. So R
programming language may consume all available memory.
 In R basically, nobody to complain if something doesn’t work.
 R programming language is much slower than other programming languages
such as Python and MATLAB.
Applications of R:
 We use R for Data Science. It gives us a broad variety of libraries related to
statistics. It also provides the environment for statistical computing and design.
 R is used by many quantitative analysts as its programming tool. Thus, it helps
in data importing and cleaning.
 R is the most prevalent language. So many data analysts and research
programmers use it. Hence, it is used as a fundamental tool for finance.
 Tech giants like Google, Facebook, bing, Twitter, Accenture, Wipro and many
more using R nowadays.