UNIT I

Concept, evolution of business analytics process,

overview of data analysis, data scientist vs data
engineer vs business data analyst, roles and
responsibilities, business analytics in practice, career
in business analytics Introduction to R
Introduction

■ The word analytics has come into the foreground in last decade or so. The increase
of the internet and information technology has made analytics very relevant in the
current age. Analytics is a field which combines data, information technology,
statistical analysis, quantitative methods, and computer-based models into one.
■ This all are combined to provide decision makers all the possible scenarios to
make a well thought and researched decision
Meaning
■ 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 methodical
exploration of an organization's data, with an emphasis on statistical analysis, to drive
decision-making.
■ At its core, business analytics involves a combination of the following:
∙ Identifying new patterns and relationships with data mining;
∙ Using quantitative and statistical analysis to design business models;
∙ Conducting A/B and multi-variable testing based on findings;
∙ Forecasting future business needs, performance, and industry trends with
predictive modelling; and
∙ Communicating your findings in easy-to-digest reports to colleagues,
management, and customers.
Definition

Business analytics (BA) refers to the skills, technologies, and practices for continuous
iterative exploration and investigation of past business performance to gain insight and
drive business planning. Business analytics focuses on developing new insights and
understanding of business performance based on data and statistical methods.

Business Analytics is the process of transforming data into insights to improve business
decisions. Data management, data visualization, predictive modelling, data mining,
forecasting simulation, and optimization are some of the tools used to create insights
from data.
Scope of Business Analytics
■ Business analytics has a wide range of application and usages.
∙ It can be used for descriptive analysis in which data is utilized to understand past and
present situation. This kind of descriptive analysis is used to asses’ current market
position of the company and effectiveness of previous business decision.

∙ It is used for predictive analysis, which is typical used to asses’ previous business
performance.

∙ Business analytics is also used for prescriptive analysis, which is utilized to formulate
optimization techniques for stronger business performance.

■ For example, business analytics is used to determine pricing of various products

in a departmental store based past and present set of information.
 Need/Importance of Business Analytics

▪ Business analytics is a methodology or tool to make a sound commercial

decision. Hence it impacts functioning of the whole organization. Therefore,
business analytics can help improve profitability of the business, increase market
share and revenue and provide better return to a shareholder.
▪ 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. It is how this information is
utilized makes the company competitive. Business analytics combines available
data with various well thought models to improve business decisions.
▪ Converts available data into valuable information. This information can be
presented in any required format, comfortable to the decision maker.
 Business Analysis vs. Business Analytics
■ Business Analysis
■ Business Analytics
∙ It mainly aims at the methods and
∙ It aims at data and reporting.
determining the business needs.
∙ It is widely practiced to
∙ It is employed to figure out
reckon further stats and
the organizational needs
make decisions to bring
and possible problems to
improvements in the
have productive outcomes.
business.
∙ Here, the tasks are carried
∙ Here, the tasks are carried out by
out by Functional Analysts, Data Scientists and Data Analysts.
Systems Analysts, and ∙ Mathematical, statistical,
Business Analysts. and programming skills are
∙ Business, functional, and domain needed for executing
skills are needed to perform business
analysis. business analytics.
4 Types of Business Analytics

1. Descriptive Analytics
2. Diagnostic Analytics
3. Predictive Analytics
4. Prescriptive Analytics
Descriptive Analytics

■ It summarizes an organization’s existing data to understand

what has happened in the past or is happening currently.
Descriptive Analytics is the simplest form of analytics as it
employs data aggregation and mining techniques. It makes data
more accessible to members of an organisation such as the
investors, shareholders, marketing executives, and sales
managers. It can help identify strengths and weaknesses and
provides an insight into customer behaviour too. This helps in
forming strategies that can be developed in the area of targeted
marketing.
Diagnostic Analytics

■ This type of Analytics helps shift focus from past performance

to the current events and determine which factors are
influencing trends. To uncover the root cause of events,
techniques such as data discovery, data mining and drill-down
are employed. Diagnostic analytics makes use of probabilities,
and likelihoods to understand why events may occur.
Techniques such as sensitivity analysis and training algorithms
are employed for classification and regression
Predictive Analytics

■ This type of Analytics is used to forecast the possibility of a future event

with the help of statistical models and ML techniques. It builds on the
result of descriptive analytics to devise models to extrapolate the
likelihood of items. To run predictive analysis, Machine Learning experts
are employed. They can achieve a higher level of accuracy than by
business intelligence alone. One of the most common applications is
sentiment analysis. Here, existing data collected from social media and is
used to provide a comprehensive picture of a user's opinion. This data is
analysed to predict their sentiment (positive, neutral or negative).
Prescriptive Analytics

■ Going a step beyond predictive analytics, it provides

recommendations for the next best action to be taken. It
suggests all favourable outcomes according to a specific course
of action and also recommends the specific actions needed to
deliver the most desired result. It mainly relies on two things, a
strong feedback system and a constant iterative analysis. It
learns the relation between actions and their outcomes. One
common use of this type of analytics is to create
recommendation systems
 Evolution of Business Analytics
■ During the early 1900s, Henry Ford, inspired by Frederick Taylor’s scientific management
system, hired him to measure the performance of the assembly line of his famous Ford
Model T. This led to a series of events that had transformed the manufacturing industry and
production lines across the world. This also helped Henry Ford make his assembly line as
efficient as possible.
■ In 1956, IBM introduced the first hard disk drive that allowed users to store data that can be
used for business or corporate purposes.
■ During the 1970s, Bill Inmon started discussing the concept of a data warehouse to solve the
problem of storing vast amounts of data for business intelligence.
■ During the 1980s, the first business data warehouse was developed by IBM researchers Barry
Devlin and Paul Murphy.
■ In this period between the 1990s and early 2000s, various solutions and software were
introduced, such as business intelligence tools by companies like SAP, Microsoft, SAS and
IBM alongside relational databases.
■ After the early 2000s, common people started using data more proactively for
personal purposes. This also led to more corporate use of data through employees
extensively using organisational data. More tools were also introduced during this
time with which individuals can use business intelligence tools without extensive
training. Eventually, Google Analytics was introduced that allowed website
owners to analyse statistics about their website, such as trends in website visits.
■ After 2010, business intelligence and analytics truly took off, being adopted
worldwide by companies and businesses around the world. This also pushed us to
an era of cloud computing and extensive use of Artificial Intelligence or
automation. In later years the business analytics have exploded with the
introduction of computers. This change has brought analytics to a whole new level
and has brought about endless possibilities. As far as analytics has come in history,
and what the current field of analytics is today, many people would never think
that analytics started in the early 1900s with Mr. Ford himself.
■ As the economies started developing and companies became more and more
competitive, management science evolved into business intelligence, decision
support systems and into PC software.
Business Analytics in Action: 7-steps Process:
 ■ Step 1: Address the Business Problems: Initially, business problems need to be
addressed, the purpose of applying analytics is sometimes designated categorically
or broken into parts. So, relevant data is selected to address these business problems
by business users or business analysts equipped with domain knowledge.
■ Some examples are: keeping modeling for a postpaid subscription, fraud detection for credit cards,
or customer analysis of a mortgage portfolio.
■ Step 2: Identify Potential Interest from Data: All sources of data having potential interest are
required to identify. The key asset in this step is the more the data, the better it is. All the data will
then be accumulated and consolidated in a data warehouse or data mart or at a spreadsheet file.
Some exploratory data analysis is executed to do the computation for missing data, removing
outliers, and transforming variables.
■ Step 3: Inspect the data
■ Once moving to the analytics step, an analytical model will be predicted on the prepared and
transformed data using statistical analysis techniques like correlation analysis and hypothesis
testing. The analyst figures out all parameters in connection with the target variable. The business
expert also performs regression analysis to make simple predictions depending upon the business
objective.
■ Step 4: Interpretation and Evaluation by Experts
■ Finally, after obtaining model results, business experts interpret and evaluate
them. Results may be clusters, rules, relations, or trends known as analytical
models derived from applying analytics. Experts use predictive techniques like
decision trees, neural networks, logistics regression to reveal the patterns and
insights that show the relationship and invisible indication of the most persuasive
variables.
■ Step 5: Optimization of Best Possible Solution
■ Once the analytical model has been validated and approved, the analyst will apply
predictive model coefficients and conclusions to drive “what-if” conditions, using
the defined to optimize the best solution within the given limitations and
constraints.
■ Step 6: Decision Making and Estimate conclusions
■ Analysts then would make decisions and endure action based on the conclusions
derived from the model in accordance with the predefined business problems.
Spam of period is accounted for the estimation of conclusion; all the favorable and
opponent consequences are measured in this duration to satisfy the business needs.
■ Step 7: Upgrade performance system
■ At last, the outcome of decision, action and the conclusion conducted from the
model are documented and updated into the database. This helps in changing and
upgrading the performance of the existing system.
What Do You Mean by Data Analysis?
■ “What do you mean by data analysis?” it essentially refers to the practice of
examining datasets to draw conclusions about the information they contain.
The process can be broken down into several steps, including:
∙ Data Collection: Gathering relevant data from various sources, which could be
databases, surveys, sensors, or web scraping.
∙ Data Cleaning: Identifying and correcting inaccuracies or inconsistencies in the
data to ensure its quality and reliability.
∙ Data Transformation: Modifying data into a suitable format for analysis, which
may involve normalization, aggregation, or creating new variables.
∙ Data Analysis: Applying statistical methods and algorithms to explore the data,
identify trends, and extract meaningful insights.
∙ Data Interpretation: Translating the findings into actionable recommendations or
conclusions that inform decision-making.
■ Data Analysis Definition
■ “The process of inspecting, cleaning, transforming, and modeling data to discover useful
information, draw conclusions, and support decision-making.” This definition emphasizes the
systematic approach taken in analyzing data, highlighting the importance of not only obtaining
insights but also ensuring the integrity and quality of the data used.
■ Data scientists employ various analytical techniques, such as:
Why Data Analysis is important?
∙ Informed Decision-Making: Analysis of data provides a basis for informed decision-making by
offering insights into past performance, current trends, and potential future outcomes.
∙ Business Intelligence: Analyzed data helps organizations gain a competitive edge by identifying
market trends, customer preferences, and areas for improvement.
∙ Problem Solving: It aids in identifying and solving problems within a system or process by
revealing patterns or anomalies that require attention.
∙ Performance Evaluation: Analysis of data enables the assessment of performance metrics,
allowing organizations to measure success, identify areas for improvement, and set realistic goals.
∙ Risk Management: Understanding patterns in data helps in predicting and managing risks,
allowing organizations to mitigate potential challenges.
∙ Optimizing Processes: Data analysis identifies inefficiencies in processes, allowing for
optimization and cost reduction.
ROLES OF A BUSINESS ANALYST

∙ Strategic management: This is the analysis level, where a business analyst evaluates
and calculates the strategic where about if a company. This is one of the most critical
levels because unless the evaluation is done on the point, none of the further steps can
work appropriately.
∙ Analysis of business model: This level has to do with evaluating policies that are
currently being employed by the company. This not only enables us to implement what’s
new but also helps in checking the previous ones.
∙ Designing the process: Like an artist creates his imagination, business analysts do that
with their skills. The step includes modelling the business processes, which comes out to
be designing and modelling.
∙ Analysis of technology: Technical systems need a thorough analysis too. This is
something that, if not taken care of, leads to severe consequences.
Difference between Data Scientist, Data Engineer, and Data Analyst
Career in Business Analyst: