Strategic decision-making in today's complex business landscape requires leaders and professionals to rely heavily on data-driven insights. Executives and managers need to have access to raw data and actionable insights that allow them to leverage available data to achieve organizational goals.
Understanding business analytics and the role it plays in today's business environments will allow you to prepare effectively for a career in this field.
What Is Business Analytics?
So, what is business analytics, exactly? IBM defines business analytics as the statistical methods and processes used to extract data and visualize relationships that may exist between the data and overall organizational efficiency. The goal of business analytics is to produce actionable insights that allow industry professionals and leaders to make data-driven decisions that will have a positive impact on the organization. In recent years, business analytics has become more relevant than ever before, with organizations of all sizes and across all industries relying heavily on data analysis to streamline operations, improve customer satisfaction ratings, and drive revenue growth.
How Business Analytics Works
Business analytics relies on a strategic process that allows professionals to harvest the most relevant and accurate data, evaluate and analyze the results, and subsequently make recommendations for actions that can be taken based on the most recently available data.
The business analytics process involves the following key stages:
Data Collection
The first step of the business analytics process is to collect relevant and accurate data. However, before you can begin your data collection efforts, you must first identify a problem you must resolve. Identifying the issue allows you to focus on the right data sets, harvest the most accurate data, and develop the most effective solution to the problem.
You can begin the data collection process by:
- Identifying key metrics that you will use while harvesting data.
- Collecting a comprehensive sample of data, allowing you to develop a broad understanding of the current circumstances.
- Collecting as much data as possible so that you can best analyze it and develop actionable insights for the organization.
Data Processing and Preparation
Once you have harvested the best possible data for the issue that you are trying to solve, you must begin processing and preparing that data. Data processing consists of taking raw data and transforming it into actionable information that an organization can use. The reality of the matter is that the average business leader is not going to be able to decipher and analyze raw data, highlighting the pivotal role that business analysts play in organizational growth and development. The stages of data processing and preparation include filtering the data that was collected to uncover the most relevant information, sorting the data according to various metrics, and analyzing the data to create actionable insights for the organization.
Analysis and Modeling
After processing the data, you will begin to see patterns that occur, some of which may be unexpected. Once you have identified those patterns, you will need to begin modeling the data to show how variables can change the results of the solution. Modeling allows you to:
- Uncover hidden insights that you would not have otherwise been aware of.
- Develop innovative strategies for the organization.
- Understand what changes will occur if particular variables change, allowing the organization to make strategic decisions.
Generally speaking, you will need to rely on several types of modeling to ensure that the organization has access to the most relevant and accurate insights.
Visualization and Reporting
Once you have completed the process of analyzing and modeling the data, you will have to work on developing a visualization strategy. Data visualization is the process of creating a comprehensive, visually appealing report so that others will understand the actionable insights that you have uncovered. Visualization and reporting are central components in the business analytics process because it allows you to communicate your knowledge and expertise in an understandable way to those without advanced knowledge of analytics.
Types of Business Analytics
Business analytics professionals will rely on different types of analytics processes to identify the right type of data to collect and develop the actionable insights needed for that specific solution.
These are four of the most common types of business analytics used today:
Descriptive Analytics
Descriptive analytics is a type of analytics process that requires the collection of historical data to better understand the changes that have happened to an organization over the course of a specific period of time. Descriptive analytics is often used by business leaders to evaluate the performance of an organization during a specific time period and to make strategic decisions about future growth and development. Common descriptive analytics metrics used by business leaders include month-over-month sales growth, year-over-year revenue, and the amount of revenue earned per subscriber or customer.
Predictive Analytics
Rather than taking a retrospective look at organizational performance, prescriptive analytics processes allow business leaders to rely on data to make predictions about the future and decide accordingly. During the prescriptive analytics process, the business analyst will harvest existing data, analyze it to uncover patterns that may exist and visualize the data so that the organization can predict what may happen if certain variables change. Using predictive modeling, organizational leaders can anticipate what may come in the future and adjust accordingly before any unexpected issues arise. It is becoming a crucial tool in the strategic decision-making process.
Prescriptive Analytics
Building upon the foundation established by predictive analytics, prescriptive analytics allows business leaders to understand which path is the optimal solution to their problem. Similar to predictive analytics, the prescriptive analytics process requires business analysts to harvest existing data and analyze it to predict future outcomes. The analyst then evaluates the generated outcomes and determines which solution is the best option. Prescriptive analytics plays a particularly prominent role in the financial sector, where it is used to identify cases of potential fraud.
Benefits of Business Analytics
The fact of the matter is that business analytics is an interdisciplinary field that requires professionals to have a deep understanding of the current business landscape, the technical skills required to harvest accurate and relevant data, and the intuitive business acumen required to make effective organizational decisions. As a result, business analytics professionals add value to any organization because they can apply their advanced understanding of data analysis and machine learning to improve nearly any aspect of business operations.
These are some of the most significant benefits of business analytics in today's complex and dynamic business landscape:
Improved Decision-Making
Business leaders are required to make critical decisions each day to improve operations in the organization, attract more customers, and increase revenue. Through business analytics, industry professionals and business leaders can better identify solutions and understand possible outcomes, and then they can make more strategic decisions based on the best available data.
Business analytics helps to improve decision-making by:
- Allowing business leaders to understand the patterns that shaped past performance and develop strategic plans to improve overall performance in the future.
- Allowing business leaders to better forecast what may happen in the future and identify the variables that may impact future performance.
- Giving business leaders the opportunity to better measure and evaluate the strategies being used within the organization allows them to become more flexible and resilient.
- Providing business leaders with more insight into the thought processes and motivations of their customers.
Enhanced Operational Efficiency
Business analytics processes require professionals to harvest and evaluate vast amounts of internal and external data. Whether using descriptive or predictive analytics, business analysts can uncover patterns that exist within the data and provide leaders with actionable insight into the steps that can be taken to improve operational efficiency in the organization. Business leaders can leverage business analytics to:
- Identify areas where performance can be improved.
- Identify areas for cost-savings.
- Identify areas where there is potential for future growth, allowing the organization to better invest in future products and services.
When used to streamline operations in the organization, business analytics can help reduce operational costs and increase profits, which benefits professionals at all levels.
Competitive Advantage
Business leaders investing in business analytics and recognizing the power that comes from leveraging data will be able to poise their organizations for success, even as the market continues to become more complex and competitive. By using data analysis to uncover the most relevant and accurate data, as well as develop strategic, actionable insights, business leaders will be able to increase their market share and drive profits for their organizations.
The Future of Business Analytics
To stay competitive, businesses must embrace what is business analytics and integrate it with emerging technologies like AI and machine learning. These are the trends shaping the field of business analytics:
- Artificial intelligence (AI) has emerged as a key player in business analytics. Rather than replacing the role of business analysts, AI technology enhances data collection efforts and analysis processes. It helps automate data mining and preparation processes, improve predictive analytics results, and provide more personalized insights.
- In the field of business intelligence, data governance is becoming more common. Business analysts will have to be aware of the policies and procedures in place to remain in compliance with the latest laws and regulations for the industry.
- In addition to focusing on data collection and preparation efforts, business analysts prioritize database management. The best practices in data quality management include implementing automated cleansing processes, standardizing data formats to improve overall consistency, and relying on data lineage tracking to better understand the data journey.
Learn About the Role of Data Analytics and Machine Learning in the Modern Business Landscape at Champlain College Online
Businesses across all industries are becoming more heavily reliant upon data insights, often basing most organizational decisions on the most accurate and recently available data. As a result, demand for business analysts is on the rise and now is an excellent time to begin preparing for a career in this field.
At Champlain College Online, we offer an online Master of Science in Business Analytics degree program designed to equip students with an understanding of the fundamentals of database management and advanced data analytics skills. Request more information about our online graduate degree programs today.
