1

Introduction to
Business Analytics
Chapter 1

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2
Because learning changes everything. ®

1.1 1.4
Define a business process and Describe how business
explain why increased data functions use business
availability has given rise to the analytics.
role of business analyst.

1.5
1.2 Identify the components of the
Differentiate between data and SOAR analytics model.
information.

1.3 1.6
Summarize the role of the Describe the use of exploratory
business analyst. data visualizations and
explanatory data visualizations

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 Businesses Create
Value
LO 1.1

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 Business Value and Business
Processes
 Business value refers to all the items, events, and
interactions that determine a company’s financial health.
 A business process is a coordinated, standardized set of
activities conducted by both people and equipment to
accomplish a specific business task.
 Companies perform thousands, and sometimes millions,
of processes each day to create business value.
 Examples include:
 DoorDash pays its drivers, who are independent contractors, for making deliveries.
 Tesla produces an electric vehicle to sell in China.
 Procter & Gamble (P&G) addresses customer complaints, sometimes by giving
refunds.

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 The Increasing Availability of Data

EXHIBIT 1.1 Data Growth Since 2010 Source: IDC Global DataSphere, November 2018, p. 6, https://www.seagate .com/files/www-
content/our -story/trends/files/idc-seagate -dataage-whitepaper.pdf (accessed July 3, 2019)

5
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 The Business Analyst

 A business analyst is a data specialist who curates and

uses data to help an organization make effective
business decisions.

Source: How Much Data Do We Create Every Day? The Mind-Blowing Stats Everyone Should Read,
https://www.forbes.com/sites/bernardmarr/2018/05/21/how-much-data-do-we-create-every-day-the-mind-blowing-stats-everyone-
should-read/#6ddf004d60ba, accessed 2/8/19

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 Data Helps and Hinders the
Analyst Role
 Helps: More Data = More Data-derived
Insights for Decision Making
 Hinders: The increasing amount of data may
hinder the work of the analyst through data
overload, where too much data may not be
properly synthesized or interpreted.

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 Progress Check 1.1

Q: How does increasing the

amount of data available to
address business questions
help the business analyst?

8
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 The Difference
Between Data and
Information
LO 1.2

9
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 Information Value Chain

 Data - Raw Facts that have Little Meaning on their Own

 Context – The Setting, Event, Statement or Situation
 Information - Data Organized in a Way to Be Useful to the Analyst or User
Combining Data with Context
 Knowledge – Understanding or Familiarity With Information Gained
 Decisions - Conclusion reached after Consideration of Knowledge is Considered

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 Information Value Chain
(Example for Tide Pods)

 Data – Data Dump of Instagram Posts

 Context – Instagram Posts regarding Tide (detergent) Pods
 Information – Current Level of Consumer Sentiment Regarding Tide Pods
 Knowledge – Knowledge of Current and Planned Marketing Campaign and
Consumer Response on Tide Pods
 Decisions – Decisions Regarding Future Marketing Campaign of Tide Pods

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 Progress Check 1.2

Q. How could a set of Instagram

posts about the quality of a new
Ford Maverick Truck turn into
knowledge capable of affecting a
decision at Ford?

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 The Role of the
Business Analyst
LO 1.3

13
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 Who Gets Involved With
Data?

 Decision Maker – Needs Knowledge and Information

to Make Decisions
 Data Scientist – a specialist who knows how to work
with, manipulate, and statistically test data
 Business/Data Analyst – The Interpreter or Liaision.
The one that knows business, knows what data is
needed, and knows how to communicate with both
the decision maker and the data scientist

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 The Role of the Business Analyst –
Interpreter or Liaison

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 Progress Check 1.3

Q. Choosing between the data

scientist and the business analyst,
which individual is likely to know
which data will most directly address
business questions?
 What skills does each one have?

16
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 Business Analytics
Across the Different
Business Functions
LO 1.4

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 Business Analytics

 Defined as the use of data to create knowledge, to help

draw conclusions and address business questions.
 Different business functions have different business
analytic needs.
 Marketing needs are different from financial analytics;
accounting analytics different from operations analytics.

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 Marketing Analytics

 Marketing is the act or business of promoting and selling

products or services.
 Marketing analytics measures and attempts to improve
its marketing performance.
 Arguably, the most important component of marketing
analytics is providing insights into customer preferences
and trends.
 Chapter 7 is focused on Marketing Analytics.

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 Accounting Analytics

 Accounting works to measure, record and communicate

financial performance to decision makers, including
shareholders, management, customers, suppliers and
regulators.
 Accounting Analytics uses business analytics to help
measure accounting performance and address
accounting questions in the audit, financial accounting,
managerial accounting and tax areas.
 Chapter 8 is focused on Accounting Analytics.

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 Financial Analytics
 Finance is the management of money by investing,
borrowing, lending, budgeting, saving and forecasting
financial capital (money).
 Financial Analytics uses business analytics to help a
company measure and evaluate its financial
performance, from predicting receivables collection from
its customers to helping management evaluate future
investments based on expected investment
performance, such returns to investments in equipment
or employee training or stocks and bonds.
 Chapter 9 is focused on Financial Analytics.

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 Operations Analytics
 Operations includes an evaluation of a company’s human
resource (evaluation of employee efficiency and
turnover), IT operations, and supply chain (e.g., sourcing,
manufacturing, distribution and logistics).
 Operations Analytics measure and improve the efficiency
and effectiveness of the company’s operations, since
operations is all actions needed to run the company and
generate income.
 Getting the “Right Product in the Right Place at the
Right Time” requires extensive data analysis to ensure
product fulfilment.
 Chapter 10 is focused on Operations Analytics.

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 Progress Check 1.4

Q. Which type of business function

analytics is more likely to address the
most efficient way to source a
cigarette lighter from Shenzhen, China
to a convenience store on Green Street
in Champaign, IL?

23
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 The Analytics
Mindset and the
SOAR Analytics
Model
LO 1.5

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 Analytics Mindset

An analytics mindset is the ability to:

► Ask the right questions;
► Extract, transform and load relevant data;
► Apply appropriate data analytic techniques; and
► Interpret and share the results with stakeholders.

Source: Ernst & Young Foundation: E&Y Academic Resource Center (EYARC). 2017. The Analytics Mindset.
Available online at http://aaahq.org/Education/Webinars/6-7-17-EY-Academic-Resource-Center-An-
Overview-of-Analytics-Mindset-Competencies-and-Case-Offerings.

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 The SOAR Analytics Model

1. Specify the Question

2. Obtain the Data
3. Analyze the Data
4. Report the Results

EXHIBIT 1.4 The Recursive SOAR Analytics Model

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 SOAR: Specify the Question:
Sample Business Questions
(Potentially Answerable With
Data):
 How is the customer demographic profile (age, gender,
disposable income, etc.) changing for typical customer
shopping at McDonald’s?
 If we purchase a new, more efficient copier, will the realized
savings be sufficient to justify the more expensive price tag?
 How much will the lead ordering deadline for Christmas
products change if we source the products from Mexico
versus Indonesia?
 How will Chinese tariffs affect the sourcing of Walmart
products to the US?
 How will our increasing employee health insurance rates
affect our level of sales needed to break even?

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 SOAR: Specify the Question
 Different Questions Lead to Different Analytics Types
 Five General Types of Business Questions and their
Respective Analytics Type:

 Descriptive Analytics: What Happened?

 Diagnostic Analytics: Why did it Happen?
 Predictive Analytics: What is Likely to Happen in the
Future?
 Prescriptive Analytics: What Action(s) should we Take,
based on What we Expect Will Happen?
 Adaptive Analytics: How does the System Adapt to
Changes?

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 SOAR: Obtain the Data

 Which data is available?

 Which data needs to be collected?
 Will the data actually adequately address the
question?
 Is the data relevant to the question being asked
and/or reliable enough to address the question?
 Is it clean of errors or inconsistencies?
 Does it have lots of missing data?
 Is the data biased in some way?

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 SOAR: Analyze the Data

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 SOAR: Report the Results

 What is the best way to communicate what we’ve

found in our data analysis?
 Static Visualizations
 Reports
 Graphs
 Tables

 Dynamic Visualizations
 Dashboards

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 The SOAR Analytics Model

1. Specify the Question

2. Obtain the Data
3. Analyze the Data
4. Report the Results

EXHIBIT 1.4 The Recursive SOAR Analytics Model

32
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 Progress Check 1.5

Q. If a company was trying to

track its actual daily sales as
compared to its sales targets,
would you use a dynamic or static
report?

33
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instructor useLLC.
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 Data
Visualizations in
Business Analytics
LO 1.6

34
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 Data Visualizations
 Defined as graphic representation of data, usually in the
form of a graph, chart or other image.
Two types of data visualizations:
 Exploratory Data Visualizations - useful for uncovering
patterns and useful insights in the data, generally as part
of descriptive or diagnostic analytics.
 Part of the “Analyze the Data” step of the SOAR analytics
model.
 Explanatory Data Visualizations – important means of
reporting the findings of the business analytics to
stakeholders.
 Part of the “Report the Results” step of the SOAR analytics
model.

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 Exploratory Data
Visualizations

 The visualization displays the expected bell-shaped distribution of earnings for

publicly traded companies from 1976-1994.
 However, the visualization shows an anomaly—in this case, a discontinuity, right
around zero. Just below zero, there seem to be missing observations or a lower-
than-expected frequency, suggesting some type of an anomaly. And just above
zero, there seem to be higher-than-expected frequency, again suggesting an
anomaly.
 Does this finding warrant additional investigation?

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 Explanatory Data
Visualizations
 Different Purposes Warrant Different Visualizations to
Report the Results to the Decision Maker
 What are We Trying to Communicate?
 Chapter 6 will discuss further.

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 Progress Check 1.6

Q. If people retain 95 percent of visual

messages compared to 10 percent of
text messages, how does that speak to
the value of explanatory data
visualizations to “Report the Results”?

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