The benefits of business analyticsPosted on: September 20, 2021
Business analytics has been growing in popularity in recent years, as companies across a wide range of sectors are becoming more aware of the benefits of investing in this area of their operations.
When used effectively, business analytics can predict future events and trends both internally within an organisation and externally within their customer base. This can allow for more focused decision-making, create more efficient processes, and result in increased revenue.
What is business analytics?
Business analytics examines a company’s data and performance to gain insights and make data-driven business decisions. It uses a combination of skills and technologies for statistical analysis with the goal of improving revenue, productivity and efficiency.
There are four types of data analytics a business can harness. These include:
- Descriptive analytics: Uses historical data to identify trends and patterns, allowing insights into what has happened previously so this knowledge can be used to ensure further success in the future. This type of analytics uses data aggregation and data mining techniques, and many companies use this to gain a deeper look into customer behaviour.
- Diagnostic analytics: Uses drill-down, data discovering, data mining and correlation to reveal the cause of specific trends in past performance. Algorithms are then used for classification and regression.
- Predictive analytics: Uses statistics to forecast and predict the likelihood of future outcomes by using statistical models and machine learning techniques, often using the results of descriptive analytics to create models for specific outcomes.
- Prescriptive analytics: Uses data from past performances to recommend actions for similar situations in the future. This is often achieved using deep learning and complex neural networks, and can recommend specific actions for the best results.
Why is business analytics important?
The Covid-19 pandemic upended business as usual for many companies across the world, causing issues to the supply chain management, increasing online sales as consumers chose to shop from the safety of their homes, and forcing employees to work remotely. While 2020 may have caused unprecedented change to the way many businesses operate, it’s becoming clear that some new processes in customer behaviour and business operations may be altered long after the pandemic is over.
In light of this, the use of big data and data analysis is increasingly important for many businesses. How their products and services were sold and used prior to 2020 may not be the way going forward. Employing a team to read the business data as markets change could be the difference between success or failure.
By adopting business analytics, a company is able to make quicker and more accurate decisions on their internal and external operations by having a clear picture on what is and isn’t working. By solving business problems using data, risks are minimised as the data will give the correct steer on what needs to be amended. It can also give a company a competitive advantage when used effectively.
Companies worldwide are using data to boost process and cost efficiency, drive strategy and change, and monitor and improve financial performance. As technology and information technology evolves, using data analysts to help drive business performance will become an essential part of many companies in the future.
Business analytics case studies
Many businesses have already used business analytics to drive positive change within their organisations. Here are a few examples.
Microsoft believes collaboration amongst employees is key to a productive work environment. Their Workplace Analytics team suggested that moving the 1,200-group from five buildings to four could be beneficial for the business, which was based on an earlier study by Microsoft which found that people were more likely to collaborate when more closely located to each other.
By using analytical skills on employee calendars, they found that this move resulted in a 46 percent decrease in meeting travel time, saving 100 hours per week across all relocated staff, and an estimated saving of $520,000 per year in employee time.
Uber developed a tool which used data science techniques, machine learning and natural language processing, to help agents respond to support tickets in a quicker and more accurate way. The Customer Obsession Ticket Assistant (COTA) reduced ticket resolution time by 10 percent. Further testing also showed that COTA both improved customer service and saved the company millions of dollars.
PepsiCo created a cloud-based data and analytics platform to make more accurate decisions about product merchandising. From a dataset of 110 million US households, they identified that 24 million of those would be interested in one of their products. Using this information, they targeted their unique audience by identifying where these households might shop. 12 months after the launch of their platform, this audience drove 80% of the product’s sales growth.
The benefits of business analytics
As these case studies show, there are many benefits to utilising business analytics. It allows a company to make more informed decisions that are based on the facts data can prove, as opposed to guesswork, it can increase revenue and enable significant financial returns, and it can improve operational efficiency as data can also be analysed internally and applied to the way employees work for greater productivity.
While business analytics can predict and model trends in sales and profits, it can also help a company to plan for the unexpected, as data can provide answers on what to change quickly and effectively to get back on track.
Develop your knowledge of business analytics
As companies continue to invest in business analytics, those skilled in the area are becoming increasingly in demand.
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