IT0069

FUNDAMENTALS OF BUSINESS ANALYTICS

 Lesson #1:

ANALYTICS IN
PRACTICE

Introduction to Business Analytics

• To define what is analytics
• To understand the evolution of business analytics
• To understand the data analytics methodology
• To discuss the different roles of analytics in various
industries
• To identify the challenges and opportunities of
analytics in different sectors

Introduction to Business Analytics

 When did Analytics Started?

Introduction to Business Analytics

 HBR calls Data
Science as the
Sexiest Job of the
21st Century
Neural
Gauss
Statistics Networks Map
Reduce
Bernoulli Turing Machine Deep Learning
Bayes Machine Learning Internet and AI

1700 1900 2000

Introduction to Business Analytics

 Harvard Business Review

Introduction to Business Analytics

 Statistics

Computer
Science

Data

Harvard Business Review

Introduction to Business Analytics

 What is Analytics?

Introduction to Business Analytics

Analytics is an encompassing
and multidimensional field that
uses mathematics, statistics,
predictive modeling and
machine learning techniques to
find meaningful patterns and
knowledge in recorded data.

Introduction to Business Analytics

You draw conclusions What are the types of
from the data customers who buy a Forecast Sales
certain product?

Business Analyst What is the most bought Inventory Report

product?

Introduction to Business Analytics

 Forecasting Test Data Mining
Analytics

Statistics Optimization Visualization

Introduction to Business Analytics

Introduction to Business Analytics
 From Numbers to Big Data

Introduction to Business Analytics

By 2020, there will be
around 40 trillion
gigabytes of data (40
zettabytes).

In 2012, only 0.5 of all

data was analyzed.

Source: EMC

Introduction to Business Analytics

2.5 quintillion bytes data
are generated each day by
internet users.

In 2019, there are 2.3

billion active Facebook
users, and they generate a
lot of data.

Introduction to Business Analytics

But what is Big Data and why does it
matter?
Big data is a term applied to a
dataset that exceeds the
processing capacity of
conventional database systems,
or it doesn’t fit the structural
requirements of traditional
database architecture.

Introduction to Business Analytics

Normal data comes from your
traditional relational database system
Big data comes from different data sources. Data
are usually in petabytes, or terabytes

Introduction to Business Analytics

1 Volume big data starts as low as 1 terabyte and
it has no upper limit

2 Velocity big data enters an average system at velocity ranging

between 30 Kilobytes (KB) p/sec to as much as 30
gigabytes (GB) per sec
3 Variety big data is composed of unstructured, semistructured,
structured dataset

Introduction to Business Analytics

Approximately 97.2% of
organizations are investing in
big data and AI.

By utilizing big data, Netflix

managed to save $1 billion
per year on customer
retention.

Source: Inside Big Data

Introduction to Business Analytics

Facebook Face Recognition Uber’s data-driven
rating system
Introduction to Business Analytics
 Data Analytics Methodology

Introduction to Business Analytics

 Data
Collection
Put into Data
use Preparation

Data
Results Analysis
Model
Building

Data Analytics Methodology

Introduction to Business Analytics
The first step in the process is
data collection. Data relevant to
the applicant is collected. The
quality, quantity, validity, and
nature of data directly impact the
analytical outcome. A thorough
understanding of the data on
hand is extremely critical. Venn diagram of data sources

Introduction to Business Analytics

The next step is data preparation. Usually raw data is not in a
format that can be directly used to perform data analysis. In
very simple terms, most platforms require data to be in a
matrix form with the variables being in different columns and
rows representing various observations.

Data may be available in structured, semi-structured, and

unstructured form.

Introduction to Business Analytics

Once data is converted into a structured format, the next
stage is to perform data analysis. At this stage underlying
trends in the data are identified. This step can include fitting a
linear or nonlinear regression model, performing principal
component analysis or cluster analysis, identifying if data is
normally distributed or not.

The goal is to identify what kind of information can be

extracted from the data and if there are underlying trends that
can be useful for a given application.
Introduction to Business Analytics
Once the trends in data are identified, the next step is to put
the data to work and build a model that will help with the
given application or help solve a business problem. A vast
number of statistical models are available that can be used,
and new models are being developed every day.

Quality of a model is not governed by complexity but rather

by its ability to account for real trends and variations in data
and sift information from noise.

Introduction to Business Analytics

Results obtained from the models are validated to ensure
accuracy and model robustness. This can be done two ways;
the first is by splitting the original data set into training and
validation data sets. In this approach, part of the data is used
for model building and the remaining part is used for
validation. The other approach is to validate data against
real-time data once the model is deployed.

Introduction to Business Analytics

Once the model is developed it is deployed in a real-time
setting for a given application.

Many times, the models have to be corrected and new

variables added or some variables removed to enhance
model performance. Additionally, models need to be
constantly recalibrated with fresh data to keep them current
and functional.

Introduction to Business Analytics

 =

Data Analyze Generate reports Smarter

Decisions

Introduction to Business 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.

Introduction to Business Analytics

 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.

Introduction to Business Analytics

 Current Trends in Analytics

Introduction to Business Analytics

DQM consists of acquiring the
data, implementing advanced data
processes, distributing the data
effectively and managing oversight
data. We detailed the benefits and
costs of good or bad quality data in
our previous article on data quality,
where you can read the five
important pillars to follow.

Introduction to Business Analytics

An essential element to consider is
that data discovery tools depend upon a
process, and then, the generated
findings will bring business value. It
requires understanding the relationship
between data in the form of data
preparation, visual analysis and guided
advanced analytics. “Interactive and new
visualization types enable decision-
makers to see, within an instant, major
trends, as well as spot outliers,” the
Research Center emphasizes.

Introduction to Business Analytics

Artificial intelligence (AI) is the
science aiming to make
machines execute what is
usually done by complex human
intelligence.

Introduction to Business Analytics

Artificial intelligence (AI) is the
science aiming to make
machines execute what is
usually done by complex human
intelligence.

Introduction to Business Analytics

Business will need to assess
their needs and capacities of
implementation, to evaluate
whether it would be beneficial
and profitable to go for a multi-
cloud strategy.

Introduction to Business Analytics

It is the control over any data
entry that has to be made
accordingly to particular
standards.

Introduction to Business Analytics

A usually hot debate is the
decision between on-premises
or cloud BI Tools: whether the
software is installed locally in the
company’s own servers, or if the
solution is hosted in the cloud.

Introduction to Business Analytics

The role of a CDO is essential
for the good management of the
information assets a company
has, as well as to improve
efficiency in the data analyses to
get a competitive advantage in
their BI strategy.

Introduction to Business Analytics

Collaborative information,
information enhancement, and
collaborative decision-making are
the key focus of new BI tools.
But collaborative BI does not only
remain around some documents’
exchanges or updates. It has to
track the various progress of
meetings, calls, e-mails exchanges,
and ideas collection

Introduction to Business Analytics

“By 2021, 15% of all customer
service interactions will be
completely handled by AI, an
increase of 400% from 2017.” –
Gartner

Introduction to Business Analytics

 When is Analytics not practical?

Introduction to Business Analytics

When There’s No Data.
Some decisions must be made before data can be gathered
systematically. When a firefighter is in a burning building, trying to
decide whether the floor is about to collapse, he has to “gather
data” rapidly by observing his surroundings. He’s unlikely to
perform a logistic regression analysis.

When There’s No Precedent.

If something has never been done before, it’s hard to get data
about it. The obvious analytical response in such a situation is to
perform a small-scale randomized test on the idea and see if it
works.

Introduction to Business Analytics

When the Decision Maker Has
Considerable Experience.
Sometimes a decision maker has made a particular
decision often enough to have internalized the process of
gathering and analyzing data.

When the Variables Can’t Be Measured.

Some decisions are difficult to make analytically because
the key variables in the analysis are hard to measure with
rigor.

Introduction to Business Analytics

Overview of some industries benefiting
from analytics

Introduction to Business Analytics

The insurance industry has
always relied on statistic to
determine the insurance rates.

Risk-based models form the

basis for calculators that are
used to calculate insurance
premiums.

Introduction to Business Analytics

The travel & tourism industry is also
using big data analytics for
enhancing customer experiences
and offer customized
recommendations. These firms use
demographic statistics, average time
spent by users on certain travel-
related web pages, personal historic
travel preferences, etc.

Introduction to Business Analytics

Success in the finance industry is
all about having the right
information at the right time. By
using big data and predictive
analytics, algorithms help the
industry in collecting the data from
a variety of data sources and
support from trading decisions to
predicting default rates and risk
management.

Introduction to Business Analytics

Data analytics in health care can
be used for all kinds of
applications; these can include
prognosis and diagnosis of an
ailment, identifying the risk of
propagation of a pandemic,
identifying the effectiveness of a
new therapy, systemic health
trends in a given population, and
many more.
Introduction to Business Analytics
 By applying data analytics, it has
become easier for telecom
companies to understand their
customer needs and behaviors in
better ways and to customize the
offers and services accordingly. By
proving customized or
personalized offers, there is a
higher probability of the
conversion.
Introduction to Business Analytics
Predictive analytics is widely used
by both conventional retail stores
as well as e-commerce firms for
analyzing their historical data and
building models for customer
engagement, supply chain
optimization, price optimization,
and space optimization and
assortment planning.

Introduction to Business Analytics

It helps the agriculture industry
from predicting pesticides
quantities to predicting crop
prices, weather conditions, soil, air
quality, crop yield, and reducing
waste; and the livestock health
can improve the profitability for the
farmers.

Introduction to Business Analytics

 Challenges of Business Analytics

Introduction to Business Analytics

Environment
We all know that the economic environment has been more intense and
challenging than ever before.

Competition
Part of addressing competitive threats is to monitor and stay one step ahead
of your competition—tracking, analyzing, and integrating everything you
know about your competitors into the analytics of your own company.

Customers
Another business challenge that's leading to an increase in companies
relying on business analytics to drive their strategy is that customers are
becoming more fickle, and loyalty to products and services is rarer than ever
before

Introduction to Business Analytics

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