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What Is Business Analytics? Definition, Importance & Examples

Category: B2B News
What is business analytics?
Business analytics is a process used by companies to measure their business performance. Insights provided by business analytics help solve present and future problems. It’s a significant tool that aids in driving the efficiency, productivity, and ROI of organizations.

Every day, most businesses create a massive array of chaotic figures that’s mostly sore to look at. It’s called data. By using the right methods and processes, however, businesses transform them into a wealth of insights. Those methods and processes are referred to as business analytics, which is the more focused version of big data analytics

This article discusses what business analytics is all about together with some terms it’s closely tied with. It also enumerates some of the benefits it brings including real-life examples to better illustrate how it’s helpful to businesses.

what is business analytics main web

The demand for good business analytics is the driving force behind the development of business analytics solutions. These tools are so designed to make sense of enormous, unstructured data. In comparison, it’s hard to believe that the field goes way back to when prehistoric humans dwell in caves. Looking at the history of business analytics however, it seems quite true.

Source: India Assignment Help

More organizations are taking interest in mining their data in order to use them as a basis for their decisions. They’re also looking to automate various processes through business analytics and pick out significant insights. They would then use the information obtained to give themselves an edge against the competition.

As expected in any field, there are some challenges in business analytics as well. This includes the lack of experts to handle data and the potentially big changes it could bring to the organization. Against all odds, however, companies are looking to utilize business analytics to help steer them in a more successful direction.

What is business analytics and its types?

Business analytics refers to the techniques and methods that companies use in order to measure their business performance. It’s comprised of quantitative methods that are applicable to particular products, processes, or projects. It’s useful in evaluating both the specific aspects of the business and the entire company itself.

You can use business analytics to highlight significant data that has a plethora of use cases. For instance, it’s helpful in determining the weakness that your current processes possess. It also provides information that organizations can use to deal with present issues and future similar problems.

However, business analytics’ most common use is to generate insights that help in making a smarter business decision. This makes it popular among companies that are dedicated to making strongly data-driven choices. They consider data as part of their asset which they actively mine for ways to turn into a tangible edge.

Business analytics can be classified into four types:

  • Descriptive Analytics – monitors KPIs in order to comprehend the current state of the business. Typically answers the question “What happened?”
  • Diagnostic Analytics – scrutinizes past performance to find out the reason for the present events. Answers “Why did it happen?”
  • Predictive Analytics – combines the study of both the past and the present data to make a forecast of the future. The most commonplace of all types and answers the question “What will happen and why?”
  • Prescriptive Analytics – gives answers, solutions, or suggestions to questions, issues, or similar situations that might happen in the future. Answers “How to make it happen?”

Many experts aren’t clear on where to draw the line that separates business analytics and business intelligence. In fact, business intelligence solutions are usually the systems used for both BI and business analytics needs. However, all experts agree that the two are highly connected and their process for providing businesses with insights is entwined. Together, they provide organizations with a holistic view of all data in order to make the best business decisions.

What is the difference between data analytics and business analytics?

Business analytics and data analytics overlap in a lot of ways making them closely related, but not the same. Both fields apply data and technology in order to improve business efficiency. They also aim to solve a wide range of business-related problems. Moreover, most data analytics software is also business intelligence software. However,

  • Business analytics is more process-oriented while data analytics is more technical-centered.
  • Business analytics focuses more on communicating the results and implementing changes. On the other hand, data analytics is more concerned with the aspect of processing data and drawing conclusions from them.
  • Business analytics requires understanding in statistical analysis software while data analytics requires comprehension in statistical methods.
  • Business analytics presents the data as the one and only version of the truth. In contrast, data analytics shows theoretical probabilities.
  • Business analytics is the phase for decision making while data analytics is the procedure for asking questions.
  • Business analytics covers the production of reports, data trends, and the Key Performance Indicator (KPI) matrix. Data analytics, however, directs more effort in fiddling with data to find correlations and patterns.
  • Business analytics is a subclass of computer science while data analytics is a superset of data science.

As shown above, business analytics and data analytics have key differences. While experts refer to them interchangeably in some occasions, they are still a field of their own. Each has its own objective, process, skill requirement, and function. They, however, work side by side most of the time. Therefore, business analytics vs. data analytics doesn’t refer to which is better but rather, which is used for what.

Importance and examples of business analytics application

The primary function of business analytics is to obtain relevant insights in a timely and organized manner. The things that can be done with the information at hand branches in many ways. You could use it for automating reports, making smarter business decisions, improving your service, etc. Here are some of the benefits that business analytics brings together with sample real-life scenarios.

Performance Enhancement

Business analytics provides insights into what’s working for your business and what isn’t so you can do something about it. You can cut the things that are proving to be ineffective and don’t seem to have a potential for change. Subsequently, you can find out what drives your business forward and invest more in maintaining or improving it.

Example: The HR department noticed that overtime hours decreased and sick leaves spiked in their company. Needless to say, this resulted in reduced overall productivity. The management decided to use an HR analytics solution to monitor the performance and behavior of their employees. The analytics pointed to one clear conclusion: they’re severely understaffed. Their next step became clear as well which is to hire additional employees.

Top 3 Data Sources that Drives Business Performance

56%

Sales and Financial Transactions

51%

Leads and Sales Contacts

39%

Email and Productivity Apps

Source: rapidminer.com 2017

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Increased Operational Efficiency

Improving the level of service while at the same time lowering its cost is the aim of every company. Business analytics makes it possible by providing the necessary metrics in order to measure productivity and compare it against finances. It’s many times more effective than a manual approach because a BI system pulls data from various sources in real-time. Therefore, you’re able to monitor all relevant indicators to know which units must undergo improvement, must be cut loose, etc.

Example: A large bottling company spends a lot of time generating reports about its sales and delivery operations each day. When they employed a BI platform, the once manual reporting process became automated. The company was then able to lower its operation cost by rate worth 260 hours each year.

Risk Mitigation

It allows you to analyze and understand everything related to consumer behavior, trends, and performance. This helps in making the right and safe choices that would steer your business away from the red. Aside from that, business analytics also helps automate various data-related processes. This allows your employees to focus on their jobs of catching anomalies in your business.

Example: An insurance policy provider is experiencing big insurance frauds that are causing them 6–10% loss of revenue per annum. The management went for a BI solution to automate the processes related to scrutinizing claims without hurting customer service. This also opened up more time for their auditors to check more closely each transaction for signs of fraud. The company soon found out that there’s a systematic fraud at work which they were able to deal with.

Better Relationship with Customers

For any business to succeed, it must first understand its customers. Business analytics provides a deeper understanding of the behavior and preferences of their customers. Consequently, you can optimize your service to cater to what they truly want, improving your market’s effectiveness.

Example: A telecom provider is experiencing an increase number of customer churns. The management deployed a business analytics system to gain more data from their customers. It turns out that most of their clients don’t like talking to their outsourced call center when asking for support. Cutting the external call center service and replacing them with in-house support increased the renewal rates of their customers.

Leads Management

Business analytics enables you to grade your leads so you can focus on the good ones. With the information derived from raw data, visibility into customer patterns emerge. Thus, you are able to better determine which leads have great potential and should invest more time in.

Example: The department in a university that’s in charge of taking donations from alumni is facing a problem. There’s an increasing number of alumni and they’re having a hard time determining whom to focus their efforts on. The staff employed the service of BI software to create an analytical model. It uses over 150 variables to compute the affinity score of potential donors. This made their work a lot easier and more efficient.

More Personalized Service

Having clear and defined information regarding the things that satisfy your customers is a big plus. One of the best ways to provide great online customer service is putting a personal touch to your business. This is true for on-site service providers as well. Customers like it when you know what they want and you deliver it to them.

Example: A clothing retailer, while experiencing continuous growth, also sees a rise in the churn rate of its customers. Its management decided to go for sales analytics software with retail KPI that focuses on customer value and acquisition. As a result, the business was able to segment its customers accurately which makes personalized deals easier to offer.

Top Benefits of Business Analytics

Improved Quality of Decisions

%

Enhanced Planning and Forecasting

%

Consistent Data Across the Enterprise

%

Increased Speed, Simplicity, and Ease of Use

%

Increased Operational Efficiency

%

Source: Harvard Business Review 2017

Designed by

Business Intelligence Applications

One of the major trends in business analytics tools is being self-service. Ease of use without the need for specialists has become a major demand. Thanks to this, most business intelligence tools are deployable across the entire organization through server environments or small apps. Both business analysts and less knowledgeable personnel can use these tools to track data sets, generate reports, etc. Examples of good BI solutions are as follow:

1. Sisense

sisense dashboard example

Sisense is an agile business intelligence solution that can cater to the BI needs of small and large businesses alike. It allows users to put together decentralized data from different sources and analyze them. Sisense then visualizes the resulting information and turns them into actionable insights.

The software uses an award-winning In-Chip engine which is a combination of simplicity and power. It allows users to operate the system through a drag-and-drop interface and other user-friendly features which cuts down IT dependency. It also takes advantage of the full power of its host computer by effectively and efficiently using its resources. You can try all its premium features at no cost when you sign up for Sisense free trial here.

2. Looker

looker dashboard example

Looker is a data-discovery application which gives innovative data exploration features that’s beneficial for business of any scale. The system provides real-time insights into your operation which you could access through a web-based interface. Users can also generate reports on the fly and share them to all stakeholders so everyone’s always up to date.

Looker is ideal even for those without prior knowledge in SQL since it features a rich database full of learning materials. This includes screencast lectures, video tutorials, and more. There are interactive puzzles as well which transforms learning into enjoyable activity for the team.

The vendor has an appealing free trial where you can tinker with the features at no cost. You can sign up for Looker free trial here.

3. Qualtrics Research Core

qualtrics dashboard example

Qualtrics Research Core is useful for all types of qualitative research including R&D, brand study, customer insight, and product research. There are hundreds of templates and question types available that are prepared by Ph.D. survey scientists. Furthermore, there are many advanced tools at your disposal for quickly creating, testing, and modifying surveys.

The platform also features an IQ directory which gives you a real-time and organized record of relevant audience data. This includes preferences, beliefs, sentiments, and emotions to name a few. You can utilize this repository of data for academic research, customer management, business planning, and other purposes. Should you want to investigate the platform firsthand, you can easily do so when you can sign up for Qualtrics Research Core free trial here.

4. Zoho Analytics

zoho analytics dasbhboard example

Zoho Analytics is a data analytics solution that transforms data into actionable insights presented through intuitive visualizations. Previously referred to as Zoho Reports, it’s a powerful BI, online reporting, and data visualization platform. It makes it easy for organizations to obtain robust reports even without the need for a specialist’s help.

Another strong point of this software is its collaboration aspect. It’s secure and the generated reports can be easily shared with clients, members, vendors, and others. You can communicate with others through in-context comments and messages and each member receives an alert when problems occur. You can check the solution closely when you sign up for Zoho Analytics free trial here.

5. Yellowfin

yellowfin dashboard example

Yellowfin is a BI platform that seeks to accelerate the process of obtaining data-driven predictions and actionable insights. Using your company’s performance, it thoroughly identifies the result of your organization’s operational activities. Not only that, but it also provides a blow-by-blow explanation regarding the reasons why you obtained such results. This gives added depth to the insights gained for better business decisions.

The platform isn’t exclusive to knowledgeable users only as even laypeople can also effectively utilize the system. Moreover, it’s more than just a data analytics platform. It’s also capable of collaborative BI, data discovery, mapping, and many more. The software also features dashboards, storyboards, and mobile BI that you can use to analyze, monitor, and comprehend your data. If you want to know more about the features you can easily sign up for Yellowfin free trial here.

Business Analytics Plays an Important Role

There are various ways in which business analytics can be beneficial to organizations. For instance, it can be used to create a competitive edge. Also, business owners can use it as a pillar of decisions and strategies that’ll drive the company forward. It’s also useful in determining and solving a wide variety of problems.

There’s a lot more advantage to gain when deploying business analytics. Proof of that can be seen in this set of BI statistics. It shows the increasing adoption rate of business intelligence by companies as part of their system. And the more people discover ways to leverage data, the more this trend will grow.

If you are ready to invest in a new analytics software, why not subject Sisense to a test drive? Again, all its premium features at no cost when you sign up for Sisense free trial here.

By Nestor Gilbert

Senior writer for FinancesOnline. If he is not writing about the booming SaaS and B2B industry, with special focus on developments in CRM and business intelligence software spaces, he is editing manuscripts for aspiring and veteran authors. He has compiled years of experience editing book titles and writing for popular marketing and technical publications.

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