To understand, why is business analytics booming and why is it called the sexiest job of the 21st century? Let’s first split the word “business analytics”. Business is defined as an organisation engaged in commercial, industrial, or professional activities. Simply, in business, people work to make and sell products or services. On the other hand, analytics is the scientific process of deriving insights from data to make business decisions.
There we have got it! Business analytics (BA) refers to the skills, technologies, applications, and practices for exploration and investigation of past business performance to gain insight and drive business planning. Business analytics focuses on developing new insights and understanding of business performance based on data, statistical methods quantitative analysis, explanatory and predictive modeling, and fact-based management to drive decision making.
What is the current business landscape?
Users have a choice, multiple businesses are coming up and potentially serving the same products and services. Cost of switching for a customer is zero or negligible, customer retention is the main challenge these businesses possess. Services are going global. Everybody can get anything, anytime, anywhere and on any device. There is a need to have an Online and offline story.
How is analytics accelerating business decisions?
A lot of data is being generated by all these businesses. Data is now a key business asset. We need analytics to find what the data is trying to tell. In effect, every business, regardless of size, now needs to be a data business. A business will have a higher-end if they use this data potentially to beat their competitors. Analytics will help a company make informed business decisions
Hence, a business analyst describes, predicts, and inform business decisions in the specific areas of marketing, human resources, finance, and operations, and has basic data literacy and an analytic mind-set that will help make strategic decisions based on data.
Analysis vs analytics
Analytics is a sub component of analysis. The analysis is a detailed examination of what has previously occurred. The analysis looks backwards over time, providing marketers with a historical view of what has happened. On the other hand, Analytics defines the science behind the analysis. Analytics look forward, to model the future or predict a result. It helps in obtaining an optimal and realistic decision based on past data.
Types of business analytics
- Descriptive analytics- It answers the question,’ what has happened?’ depending upon the past data, it describes and summarizes the large volumes of data that make it something which is interpret-able by humans. Descriptive analytics is the first step toward business analytics. We learn what has occurred till now and what should be done to make better business decisions. It usually consists of visualizations, tables and vast use of basic statistics. Example of descriptive analytics are total stock in inventory, average dollars spent per customer and year-over-year change in sales. Revenue, cost, profit and growth of the business in the following year, etc.
- Predictive analytics- This answers the question ‘what is going to happen?’. It predicts the future outcome depending upon the historic data that a business has collected over the years. It uses statistical models and forecasting techniques to understand the future. Example of predictive analytics can be the sale of products next month depending upon the past data. Predictive analytics could also be used to analyze the statistics for two (or more) different target audiences and provide with possible revenue values for each demographic.
- Prescriptive analytics- this answers the question,’ what should we do’? As the names say it prescribes a different solution to optimize business to gain profits. It guides businesses towards a solution. Prescriptive analytics predicts outcomes before they have taken place in order to quantify the effect of the future decision that might be taken by the business. Example of prescriptive analytics is risk management in the financial sector and optimizing of products of goods and services. Prescriptive analytics can help by automatically adjusting ticket prices and availability based on numerous factors, including customer demand, weather, and gasoline prices.
What is the difference between business intelligence and business analytics?
Business intelligence focuses on descriptive analytics. BI prioritizes describe the data, provides a summary of historical and present data to show what has happened or what is currently happening. BI answers the questions “what” and “how” so you can replicate what works and change what does not.
Business analytics focuses on predictive analytics. Business analytics uses data mining, modelling and machine learning to determine the future outcomes. Business analytics answers the question “why” so analysts can make more educated predictions about what will happen. With Business Analytics, you can anticipate developments and make the changes necessary to succeed.
Business analytics in e-commerce
- The e-commerce business is to connect buyers with suppliers, business analytics helps the supplier to predict the price to have higher competence than their competitors looking at the historic data of the type of customers, location, products and more. This can be done using predictive analytics. E-commerce’s main objective to use business analytics is customer retention.
- Another problem e-commerce business deal with is supply chain management. A lot of data is generated right from the warehouse until it reaches the customer. E-Commerce industries use business analytics to manage Inventory into optimizing transportation and pricing of delivery.
- E-Commerce is adopting the analytics tool to detect fraud. Even though it is rare, customers also make false claims in fraud. Initially, all these frauds were handled manually, but with time E-Commerce is moving towards developing a predictive algorithm to detect frauds and avoid them if possible.
- E-commerce uses recommendations as a targeted marketing tool in both email campaigns and on most of the pages of its website. It will recommend many products from different categories based on what you are browsing and pull those products in front of you which you are likely to buy. Recommendation engines have been the greatest game-changer of Businesses.
Business analytics in finance and banking
- Portfolio Analytics- Portfolio Risk Analytics allows wealth managers, advisers, and retail product providers to create forward-looking risk analyses for investment portfolios. Portfolio analytics also deal with Building customized investment solutions reflecting savings scenarios and cash flows for retail investors, including wealth accumulation, retirement saving, and retirement income withdrawal.
- Marketing analytics ( credit cards/convenience checks / other promotional offers )-marketing analytics helps in segmentation methods and best practices for identifying potential customer segments and focused targeting. Computation of Customer Lifetime Value for analyzing customer, brand loyalty and forecasting revenue in the short and long run are some aspects of marketing analytics. Analytics helps in finding out Factors to consider while designing and introducing new products in the market. Analytics can lead in calculating Optimal Pricing for products and services to get the best ROI. Business analytics will assess Marketing ROI for making better and data-driven decisions. Marketing analytics help businesses drive marketing to maximize their effectiveness and optimize return on investment (ROI).
- Security analysis – security analytics is more quantitative oriented like pricing of stocks, bonds, etc and lets the business and an individual make an impact-ful decision over the data collected over a period of time.
Business analytics in telecom
- Understand network quality issues/call drops
- Analyze network traffic in real-time and optimize routing
- Customer usage insights to develop new pricing and packages
- Providing recommendations on plans based on usage
- Analyze media consumption patterns – procurement
Some more Example of business analytics
- Forecasting -Estimating Sales, Crowd, predicting server loads or server downtime
- Risk and probability-Choosing the best customers for targeting mailings and phone calls.
- probabilities to diagnoses or other outcomes
- Determining products likely to be sold together
- Finding Sequences- Analyzing customer selection in a shopping cart, predicting likely events
- separating customers or events into clusters of related items.
- analyzing and predicting affinities
Why a career in business analytics?
- Potential Earnings – Let’s be honest it’s the main reason we work in the first place. So, you’ll be happy to hear that a typical Business Analyst (BA) earns over $78,000 per year. And that is only the average. Work hard, continue to increase the value you provide, and just imagine how much you could end up making!
- Market Growth – The Business Analysis job market is expected to grow at a rate of 19% over the next 10 years, so get in now and take advantage of an industry that’s on the rise. In fact, per the US Bureau of Labour Statistics, American employers will need 876,000 business analysis related professionals in 2020. It is a great time to be versed in business analysis!
- Career Springboard – The skills you learn as a Business Analyst are crucial to a host of many other professions, everything from IT to Business. This career path isn’t just a job, it’s an investment in your future.
- Use Existing Industry Knowledge – Similarly, the skills you’ve learned outside of the business analysis world are highly valued in the industry – so rather than starting anew, you can be put your experience to good use.
- It’s Never Boring – With new projects always on the horizon, and different challenges to tackle each day, the role of a Business Analyst never grows stale.
Who can be a business analyst?
- A business analyst scrutinizes the financial aspects of the business and determines if there are any changes that could be made to make the business grow.
- A successful business analyst should have a quantitative and aware mind that is able to analyze data and come to conclusions based on this data and can make decisions that improve the business
- A business analyst requires gathering, analyze and interpret data in areas such as budgets, financial planning and forecasting, and cash flow projections. Secondly, the business analyst must be able to coordinate, organize and direct organizations of projects related to the financial sector of business.
- Business analyst must develop and implement goals and procedures based on the data that they analyze.
- A business analyst will often require a bachelor's degree in accounting, finance or information technologies. They may also have a technical background as a programmer or computer engineer.
- A successful business analyst must have this background as they draw upon this as the means to be able to interpret the data.
- A business analyst is a job that requires attention to detail and an innovative mind to fix problems. It is mentally stimulating and very fulfilling when they lead the business into the green!
Tools required for business analytics
R Programming- Open source tool, used widely by business analysts for statistics and data modelling. It has surpassed SAS in terms of data quantity, performance and output. It has 11,556 packages and allows you to browse the packages by categories. R also provides tools to automatically install all packages as per user requirement.
Tableau public- Business analytics makes use of tableau for visualizations, maps and dashboards. Business analytics requires real-time updates that can be done using tableau. Tableau’s Big Data capabilities makes them important and one can analyze and visualize data better than any other data visualization software in the market.
Python- A business analyst need to build models and predict the future. Python has very good machine learning libraries viz. Scikitlearn,Tensorflow and Keras. Another important feature of Python is that it can be assembled on any platform like SQL server, a MongoDB database or JSON.
Excel- Excel is a basic, popular and widely used analytical tool almost in all industries. Whether you are an expert in Sas, R or Tableau, you will still need to use Excel. Excel becomes important when there is a requirement of analytics on the client’s internal data. Excel has the advance business analytics option which helps in modelling capabilities.
What is a career in business analytics?
Business analyst gather, organize, analyze and visualize data. analysts use data for improved business decision-making. Business analysts present information in the form of metrics, KPIs, reports, and dashboards. They Perform quantitative and qualitative business analysis.
Does business analytics require coding?
To be a business analyst, one requires minimal coding proficiency, and some companies require SQL, R, data manipulation, and more. Business analysts are expected to have working knowledge about the tools you will be using or at the least know the basics of coding. They mostly require basic statistics, good communication skills and knowledge of the domain.
Is business analytics a good career choice?
It is a great time to be versed in business analysis. Every business wants to better than their competitors. Business analytics can assist business to grow and make decisions that are beneficial for the company.
How much does a business analyst earn?
Average salary of business analytics in India for the year 2017 is INR 12.7 Lakhs across all experience level and skill sets. Mumbai is the highest paying city at almost 13.3 Lakhs per annum, followed by Bengaluru at 12.5 Lakhs. 78% of business analytics professionals receive salary in 0-6 Lakhs salary bracket.