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Volume

BAFBANA
Fundamentals of Business Analytics

Fundamentalsof
BusinessAnalytics
FUNDAMENTALS OF BUSINESS ANALYTICS

BAFBANA

Prepared by

ARRUEJO, ARPEE C.
QUILON, EILEEN ROSE
Table of Contents
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Module 1 Analytics in Practice ................... Error! Bookmark not defined.

What Do We Mean by Analytics? .....Error! Bookmark not defined.
Why It's Time to Put Analytics to Work?Error! Bookmark not defined.
Three Types of Analytics ................Error! Bookmark not defined.
Power of Information ........................Error! Bookmark not defined.
Metrics and Measurements ..............Error! Bookmark not defined.
Module 2 Introduction to Data and Information Error! Bookmark not
defined.
Evolution of Information System ......Error! Bookmark not defined.
Managing Data and Information AssetsError! Bookmark not defined.
Introduction to Business Intelligence Error! Bookmark not defined.
Types of Business Intelligence .........Error! Bookmark not defined.
Module 3 Big Data ................... Error! Bookmark not defined.
What is Big Data? ............................Error! Bookmark not defined.
Characteristics of Big Data...............Error! Bookmark not defined.
How to Create a Document ..............Error! Bookmark not defined.
Module 4 Introduction to Statistics Error! Bookmark not defined.
What is Statistics? ...........................Error! Bookmark not defined.
What is Descriptive Statistics? .........Error! Bookmark not defined.
Statistics and Visualization...............Error! Bookmark not defined.
Visualizing Operational Intelligence .Error! Bookmark not defined.
Module 5 Descriptive Analytics Error! Bookmark not defined.
What is Descriptive Analytics? .........Error! Bookmark not defined.
Data Processing ..............................Error! Bookmark not defined.
Data Cleaning ..................................Error! Bookmark not defined.
Data Cleaning ..................................Error! Bookmark not defined.
Data Integration and TransformationsError! Bookmark not defined.
Pivot Tables .....................................Error! Bookmark not defined.
Module 6 Introduction to Visualization of Data Error! Bookmark not
defined.
Data Visualization ............................Error! Bookmark not defined.
Data Life Cycle ................................Error! Bookmark not defined.
Statistics and Visualization...............Error! Bookmark not defined.
Visualizing Operational Intelligence .Error! Bookmark not defined.
Tools to Visualize and Performance Using Data VisualizationError! Bookmark not
defined.
Choosing Tools to Visualize Data ....Error! Bookmark not defined.
Analyze Data Using Statistical ReportsError! Bookmark not defined.
Module 7 Guide to Dashboard Design Error! Bookmark not defined.

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What is Daschboard?.......................Error! Bookmark not defined.

Foundation and Designing DashboardError! Bookmark not defined.
Audience Analysis ...........................Error! Bookmark not defined.
Information Discrimination ...............Error! Bookmark not defined.
Building Blocks of Dashboard ..........Error! Bookmark not defined.

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Analytics in Practice
This part introduces analytics and its application in institutions
specifically in business organizations.

A
nalytics provides opportunities to organizations for real time updates and
forecasting possible outcomes. This course will help students to foresee
possible applications of analytics for strategic management.

Learning Outcomes
K E Y

 Objectives At the end of the lectures, you should be able to:

 Assessment 1. Define what is analytics;
2. Enumerate the three types of analytics;
 Exercise
3. Compare the different types of analytics.

What Do We Mean By Analytics?

Analytics is a scientific process of discovering and communicating meaningful patterns
from data. IBM Global Center for Smarter Analytics (2013) stated that Analytics is
defined as the extensive use of data, statistical and quantitative analyses, explanatory and
predictive modeling, and fact-based management to drive decision making.

 Analytics is all about providing business users with better insights,

particularly from operational data stored in transactional systems.

 Fortunately, data mining, analytic applications, and business intelligence

systems are now being better integrated with transactional systems.


Important Note
“The key consumer of these analytics is the business user, a person
whose job is not directly related to analytics per se, but who typically
must use analytical tools to improve the results of a business process
along one or more dimensions.”

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Why It’s Time to Put Analytics to Work [1

FIGURE 1. Why Analytics Matter?

Massive amounts of data from companies are continuously growing. Processing of

these data are necessary in order for the companies to utilize into a more meaningful
way. “The data may come from transaction-oriented applications such as ERP
(enterprise resource planning) systems, scanner data in retail environments, customer
loyalty programs, financial transactions, or clickstream data from customer Web
activity.”
These are just an overview of the three types of analytics primarily used in business.

Descriptive Analytics

Descriptive analytics answers the questions what happened and why it happen.
This type of analytics provides information from past and historical data. An
example of descriptive analytics output are stochastic reports such as daily, monthly
and quarterly reports. It describes information from data in the past.

It was supported by IBM Global for Smarter Analytics (2013) that Descriptive
analytics answers the questions what happened and why it happen. Looks at
the past data or historical data, understand and find reasons what really happened
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and why it happened. Almost all management reporting such as sales, marketing,
operations and finance, uses this type analytics model. Below is the process involved
in descriptive analytics.

FIGURE 1. Process Involved in Descriptive Analytics

Data: We need data to be collected, data repository is needed to access for essential data.
Analyze: We need to analyze the data we collected, Analyze Data Model to assess and query
the data collected in the process.
Generate Reports: Business Users can choose the required reports. (Sales, Financial,
Distributions, Inventory, etc.).
Smart Decisions: We need to decide the ways on how we analyzed the data. Analytics can
allow Managers to create a better and smarter decisions.

Example of Descriptive Analytics

Here are some common applications of Descriptive Analytics:

 Summarizing past events such as regional sales, customer attrition, or success of

marketing campaigns.
 Tabulation of social metrics such as Facebook likes, Tweets, or followers.
 Reporting of general trends like hot travel destinations or news trends.

Predictive Analytics

Predictive analytics answers the question what will happen. This type of analytics
predicts and forecast possible events in the future.

A sample picture shows predictive analytics workbench. A predictive analytics

workbench allows a user to create, validate, manage, and deploy predictive analytic
models. A predictive analytics workbench consists of these components [4].

Davenport (2012) proposed a model for the Predictive Model. This model is
combined with historical data with rules, algorithms and other external data to
predict the outcome or a situation.

Model repository: A place where models and the specification of the tasks required
to produce them can be stored, revised, and managed. Not all predictive analytic
workbenches have such a repository, and some still store models as script files.

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Data management tools: Building predictive analytic models requires access to

multiple data sources of various formats; a predictive analytics workbench must be
able to connect to and use this data.

Design tools for a modeler: Modelers need to be able to define how data will be
integrated, cleaned, and enhanced, as well as the way in which it will be fed through
modeling algorithms and the results analyzed and used.

Modeling algorithms: Predictive analytic workbenches have a wide array of

modeling algorithms that can be applied to data to produce models.

Data visualization and analysis tools: Modelers must be able to understand the
data available, analyzing distribution and other characteristics. They must also be able
to analyze the results of a set of models in terms of their predictive power and
validity.

Deployment tools: Models are not valuable unless they can be deployed in some
way, and predictive analytic workbenches need to be able to deploy models as code,
as SQL, as business rules, or to a database using an in-database analytics”

FIGURE 2. Process Involved in Predictive Analytics

Data: We need data to be collected, data repository is needed to access for essential data.
Analyze: We need to analyzed the data we collected, Analyze Data Model to assess and
query the data collected in the process.
Provides Prediction using Algorithms: In this step prediction are now provided so that
Business Users can actually define and track the next steps on their business analytics before
it will happen with the use of mathematical algorithms and equation process.
Smart Decisions: We need to decide the ways on how we analyzed the data. Analytics can
allow Managers to create a better and smarter decisions.

“The difference between Predictive and Prescriptive is that Predictive didn’t generate
reports, they only provide prediction to business users indicating what will happen, on the
other hand Prescriptive has the prediction and the generated reports indicating why it
happened. Many business users actually tends to use this approach for more in depth analysis
of the business. The only downfall for this is, it is very tedious work and needed more time
to implement and build/create this model.” ---Davenport, T., Harris, J. and Morison, R (qtd
in the book from Analytics at Work: Smarter Decisions, Better results. 2012).

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Examples of Predictive Analytics

For many companies, predictive analytics is nothing new. But it is increasingly used by
various industries to improve everyday business operations and achieve a competitive
differentiation.

In practice, predictive analytics can take a number of different forms. Take these scenarios
for example.

Identify customers that are likely to abandon a service or product. Consider a yoga
studio that has implemented a predictive analytics model. The system may identify that ‘Jane’
will most likely not renew her membership and suggest an incentive that is likely to get her
to renew based on historical data. The next time Jane comes into the studio, the system will
prompt an alert to the membership relations staff to offer her an incentive or talk with her
about continuing her membership. In this example, predictive analytics can be used in real
time to remedy customer churn before it takes place.

Send marketing campaigns to customers who are most likely to buy. If your business
only has a $5,000 budget for an upsell marketing campaign and you have three million
customers, you obviously can’t extend a 10 percent discount to each customer. Predictive
analytics and business intelligence can help forecast the customers who have the highest
probability of buying your product, then send the coupon to only those people to optimize
revenue.

Improve customer service by planning appropriately. Businesses can better predict

demand using advanced analytics and business intelligence. For example, consider a hotel
chain that wants to predict how many customers will stay in a certain location this weekend
so they can ensure they have enough staff and resources to handle demand.

Prescriptive Analytics

Prescriptive analytics anticipates what will happen, when it happened, and also why
it happened.

Prescriptive analytics not only anticipates what will happen and when it will
happen but also why it will happen. Prescriptive analytics software has the potential
to help during each phase of the oil and gas business through its ability to take in
seismic data, well log data, and their related data sets to prescribe where to drill, how
to drill there and how to minimize the environmental impact.

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FIGURE 3. Process Involved in Prescriptive Analytics

Data: We need data to be collected, data repository is needed to access for essential data.
Analyze: We need to analyzed the data we collected, Analyze Data Model to assess and
query the data collected in the process.
Provides Prediction using Algorithms: In this step prediction are now provided so that
Business Users can actually define and track the next steps on their business analytics before
it will happen with the use of mathematical algorithms and equation process.
Smart Decisions: We need to decide the ways on how we analyzed the data. Analytics can
allow Managers to create a better and smarter decisions.

Examples of Prescriptive Analytics

Recommender Agents- YouTube’s algorithm factors in billions of data points in order to

create a customized viewing experience unique to you every time you visit the site’s home
page. The more data you give the algorithm (by selecting videos, liking and disliking,
subscribing, leaving comments, and watch time), the better it gets at surfacing videos that are
likely to be of interest to you.

Synthesis
Write your own understanding of the topics on Analytics and the 3 types of analytics in
an essay form.

Analytics Dictionary
Write down your own understanding on the different context given below.

1. Descriptive Model

2. Analytics

3. Insights

4. Predictive Model

5. Prescriptive Analytics

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6. Algorithm

7. Prediction

8. Forecasting

9. Reports

10. Recommender