What is Business Analytics?

Business analytics is the study of data through statistical and operational analysis, the shaping of predictive models, the application of optimisation techniques and the communication of these results to customers and business partners. Business analytics requires quantitative methods and evidence-based data for business modelling and decision-making. As such, business analytics requires the use of big data. That is, large amounts of structured as well as unstructured data that flows through the organisation on a daily basis.

What are the benefits of using business analytics?

Organisations use business analytics to make data-driven decisions. The insights gained through business analytics enable them to automate and optimise their business processes. Data-driven companies that use business analytics actually gain a competitive advantage because they are able to use the insights to:

• practice data mining (the exploration of data to find new patterns and relationships)
• use statistical analysis and quantitative analysis to explain why certain results occur
• test past decisions through A/B testing and multivariate testing
• use predictive modelling and predictive analytics to predict future outcomes

Business analytics also provides support for companies that make proactive tactical decisions, and business analytics enables these companies to automate the decision-making process so that they can make the right decisions moment by moment.

What challenges does business analytics present?

There are not only benefits, but also some challenges that business analytics presents. Firstly, there is greater potential for invasion of privacy. On the business side, companies face greater vulnerability in fast-moving markets, as there is a greater risk of confusing pure nothingness with true insight. This can lead to spending large amounts of money on vaguely defined problems or opportunities.

What best practices exist regarding business analytics?

Implementing business analytics is not something that a company can do overnight. However, if companies follow a number of best practices, they can achieve the level of insight they seek and become more competitive and successful.

• Know the goal for your use of business analytics. Define what your organisation will use it for and with what goal.
• Define your success and failure criteria.
• Choose your methodology and make sure you know the data and relevant internal and external factors.
• Validate models using your success and failure criteria.

This way, you will be able to get started with your use of business analytics.