What is Business Analytics?

Business analytics refers to the processes, tools, and techniques used to gain valuable insight
and improve business decisions using data analysis. It involves examining past and current data
to find trends, patterns, and opportunities that can influence strategic planning and performance
improvements across all levels of an organization.

Business analytics is about transforming numbers and facts into plans that create progress. It
enables turning raw data into actionable information so that organizations can take advantage.
Common areas in which it provides valuable perspective include operations, budgeting,
management, sales, logistics, and more.

Components of Business Analytics

Modern-world business strategies are centered around data. Business Analytics, Machine
Learning, Artificial Intelligence, Data Science, etc. are used to arrive at solutions for complex
and specific business problems. Even though all of these have various components, the core
components still remain similar. The following are the core components of Business Analytics:

• Data Storage– The data is stored by the computers in a way that it can be further used
in the future. The processing of this data using storage devices is known as data storage. Object
storage, Block Storage, etc. are some of the storage products and services.

• Data Visualization– It is the process of graphically representing the information or

• Insights– Insights are the outputs and inferences drawn from the analysis of data by
implementing business analytics techniques and tools.

• Data Security– One of the most important components of Business Analytics is Data
Security. It involves monitoring and identifying malicious activities in the security networks.
Real-time data and predictive modelling techniques are used to identify vulnerabilities in the
system

Types of Business Analytics

1. Descriptive Analytics

Whenever we are trying to answer questions such as “what were the sales figures last year” or:
what has occurred before”, we are basically doing descriptive analysis. In descriptive analysis,

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we describe or summarize the past data and transform it into easily comprehensible forms, such
as charts or graphs.

An example would be finding out the percentage of leads that we couldn’t convert and the
potential amount of business that we lost due to this.

2. Predictive Analytics

Predictive analytics is exactly what it sounds like. It is that side of business analytics where
predictions about a future event are made. An example of predictive analytics is calculating the
expected sales figures for the upcoming fiscal year. Predictive analytics is majorly used to set
up expectations and follow proper processes and measures to meet those expectations.

3. Prescriptive Analytics

In the case of prescriptive analytics, we make use of simulation, data modelling, and
optimization of algorithms to find answers to questions such as “what needs to be done”. This
is used to provide solutions and identify the potential results of those solutions. This field of
business analytics has recently surfaced and is on heavy rise since it gives multiple solutions,
with their possible effectiveness, to the problems faced by businesses. Let’s say Plan A fails or
there aren’t enough resources to execute it, then there is still Plan B, Plan C, etc., in hand.

4. Diagnostic Analytics

Diagnostic analytics involves analysing past business performance to identify the causes of
certain outcomes. It helps businesses understand what has happened in the organization and
why. Diagnostic analytics uses different techniques like data mining and statistical analysis to
dig deeper into historical data and gain useful insights. Some common applications of
diagnostic analytics include identifying factors that influence customer churn, determining
reasons for project delays or budget overruns, and finding causes that impact product quality
and customer satisfaction levels.

The insights from diagnostic analytics enable businesses to take corrective actions, make
process improvements, and prevent similar issues from occurring in the future. Overall, it helps
organizations learn from past mistakes and successes to enhance operational efficiency and
results.

Business Analytics Process

Just like any other thing in business, there is a process involved in business analytics as well.
Business analytics needs to be systematic, organized, and include step-by-step actions to have
the most optimized result at the end with the least amount of discrepancies.

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Now, let us dive into the steps involved in business analytics:

• Business Problem Framing: In this step, we basically find out what business problem
we are trying to solve, e.g., when we are looking to find out why the supply chain isn’t as
effective as it should be or why we are losing sales. This discussion generally happens with
stakeholders when they realize inefficiency in any part of the business.

• Analytics Problem Framing: Once we have the problem statement, what we need to
think of next is how analytics can be done for that business analytics problem. Here, we look
for metrics and specific points that we need to analyse.

• Data: The moment we identify the problem in terms of what needs to be analysed, the
next thing that we need is data, which needs to be analysed. In this step, not only do we obtain
data from various data sources but we also clean the data; if the raw data is corrupted or has
false values, we remove those problems and convert the data into usable form.

• Methodology selection and model building: Once the data gets ready, the tricky part
begins. At this stage, we need to determine what methods have to be used and what metrics are
the crucial ones. If required, the team has to build custom models to find out the specific
methods that are suited to respective operations. Many times, the kind of data we possess also
dictates the methodology that can be used to do business analytics. Most organizations make
multiple models and compare them based on the decided-upon crucial metrics.

• Deployment: Post the selection of the model and the statistical ways of analysing data
for the solution, the next thing we need to do is to test the solution in a real-time scenario. For
that, we deploy the models on the data and look for different kinds of insights. Based on the
metrics and data highlights, we need to decide the optimum strategy to solve our problem and
implement a solution effectively. Even in this phase of business analytics, we will compare the
expected output with the real-time output. Later, based on this, we will decide if there is a need
to reiterate and modify the solution or if we can go on with the implementation of the same.

Business Analytics Examples

Some of the examples of Business Analytics are:

• A simple would be working with data to find out what would be the optimal price point
for a product that a company is about to launch. While doing this research, there are a lot of
factors that it would have to take into consideration before arriving at a solution.

• Another example would be applying to identify and figure out how many and which
customers are likely to cancel the subscription

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• One of the highly appreciated examples of business analytics is working with available
data to figure out and assess how and why the tastes and preferences change of customers who
visit a particular restaurant regularly.

Challenges of Business Analytics

Business analytics can be tricky. Collecting reliable data and making sense of complex
information is hard. Still, solutions exist to conquer these common data hurdles.

• Data Complexity: With data from various systems and sources, understanding
connectivity and ensuring quality is significantly difficult. Much effort is needed to ensure
accuracy and context.

• Data Interpretation: Even with quality data, finding meaningful insights requires
considerable data science and analytical expertise to explore relationships and patterns
effectively.

• Tool Dysconnectivity: Many analytics tools and platforms generate output that is often
disconnected rather than integrated, hindering enterprise-wide awareness.

• Acceptance Hesitation: lack of skills and a data-driven culture can make organizational
alignment and implementation of analytics methodologies slow, despite extensive proof of
concept. Patience and persistence thus become mandatory.

The 4 Vs of Big Data

It can be said that the Big Data environment has to have these four basic characteristics:

Volume

You may have heard on more than one occasion that Big Data is nothing more than business
intelligence, but in a very large format. More data, however, is not a synonym of it.

Obviously, the Big Data, needs a certain amount of data, but having a huge amount of data,
does not necessarily mean that you are working on this field of data.

It would also be a mistake to think that all areas of Big Data are business intelligence since is
not limited or defined by the objectives sought with that initiative. But it will be by the
characteristics of the data itself.

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Variety

Today, we can base our decisions on the prescriptive data obtained through this method.
Thanks to this technology, every action of customers, competitors, suppliers, etc, will generate
prescriptive information that will range from structured and easily managed data to
unstructured information that is difficult to use for decision making.

Each piece of data, or core information, will require specific treatment. In addition, each type
of data will require specific storage needs (the storage of an e-mail will be much less than that
of a video).

Veracity

This V will refer to both data quality and availability. When it comes to traditional business
analytics, the source of the data is going to be much smaller in both quantity and variety.

However, the organization will have more control over them, and their veracity will be greater.

When we talk about the Big D, variety is going to mean greater uncertainty about the quality
of that data and its availability. It will also have implications in terms of the data sources we
may have.

Velocity

It is very possible that Variety and Veracity would not be so relevant and would not be under
so much pressure when facing a Big Data initiative if it were not for the high volume of
information that has to be handled and, above all, for the velocity at which the information has
to be generated and managed.

The data will be an input for the technology area (it will be essential to be able to store and
digest large amounts of information). And the output part will be the decisions and reactions
that will later involve the corresponding departments.

The important thing here is that they are able to react with the necessary speed to boost the
business area.

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Linear Regression

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Things to look out for in the above images:

• Method
• R2
• Adjusted R2
• Durbin Watson
• Significance of ANOVA
• Unstandardised Beta
• VIF
• Tolerance
• Normal PP plot for normality of residuals