Business analytics (BA) refers to the skills, technologies, and practices for iterative exploration and investigation of past

business Business is the practice of making one's living or making money by producing or Trade, buying and selling Product (business), products (such as goods and Service (economics), services). It is also "any activity or enterprise entered into for ...

performance to gain insight and drive business planning. Business analytics focuses on developing new insights and understanding of business performance based on

data Data ( , ) are a collection of discrete or continuous values that convey information, describing the quantity, quality, fact, statistics, other basic units of meaning, or simply sequences of symbols that may be further interpreted for ...

and statistical methods. In contrast,

business intelligence Business intelligence (BI) consists of strategies, methodologies, and technologies used by enterprises for data analysis and management of business information. Common functions of BI technologies include Financial reporting, reporting, online an ...

traditionally focuses on using a consistent set metrics to both measure past performance and guide business planning. In other words,

focuses on description, while business analytics focusses on prediction and prescription. Business

analytics Analytics is the systematic computational analysis of data or statistics. It is used for the discovery, interpretation, and communication of meaningful patterns in data, which also falls under and directly relates to the umbrella term, data sc ...

makes extensive use of analytical modeling and numerical analysis, including explanatory and predictive modeling, and fact-based management to drive

decision making In psychology, decision-making (also spelled decision making and decisionmaking) is regarded as the cognitive process resulting in the selection of a belief or a course of action among several possible alternative options. It could be either ra ...

. It is therefore closely related to

management science Management science (or managerial science) is a wide and interdisciplinary study of solving complex problems and making strategic decisions as it pertains to institutions, corporations, governments and other types of organizational entities. It is ...

. Analytics may be used as input for human decisions or may drive fully automated decisions. Business intelligence is querying,

report A report is a document or a statement that presents information in an organized format for a specific audience and purpose. Although summaries of reports may be delivered orally, complete reports are usually given in the form of written documen ...

ing,

online analytical processing In computing, online analytical processing (OLAP) (), is an approach to quickly answer multi-dimensional analytical (MDA) queries. The term ''OLAP'' was created as a slight modification of the traditional database term online transaction proces ...

(OLAP), and "alerts". In other words, querying, reporting, and OLAP are alert tools that can answer questions such as what happened, how many, how often, where the problem is, and what actions are needed. Business analytics can answer questions like why is this happening, what if these trends continue, what will happen next (predict), and what is the best outcome that can happen (optimize).

Examples of application

In healthcare, business analysis can be used to operate and manage clinical information systems. It can transform medical data from a bewildering array of analytical methods into useful information. Data analysis can also be used to generate contemporary reporting systems which include the patient's latest key indicators, historical trends and reference values. * Decision analytics: supports human decisions with visual analytics that the user models to reflect reasoning. * Descriptive analytics: gains insight from historical data with reporting, scorecards, clustering etc. * Predictive analytics: employs

predictive modelling Predictive modelling uses statistics to Prediction, predict outcomes. Most often the event one wants to predict is in the future, but predictive modelling can be applied to any type of unknown event, regardless of when it occurred. For example, pre ...

using statistical and

machine learning Machine learning (ML) is a field of study in artificial intelligence concerned with the development and study of Computational statistics, statistical algorithms that can learn from data and generalise to unseen data, and thus perform Task ( ...

techniques * Prescriptive analytics: recommends decisions using optimization, simulation, etc.

Basic domains within business analytics

* Behavioral analytics * Cohort analysis * Competitor analysis * Customer journey analytics * Cyber analytics * Enterprise optimization * Financial statements analysis *

Fraud In law, fraud is intent (law), intentional deception to deprive a victim of a legal right or to gain from a victim unlawfully or unfairly. Fraud can violate Civil law (common law), civil law (e.g., a fraud victim may sue the fraud perpetrato ...

analytics * Health care analytics * Key performance indicators (KPI's) * Market Basket Analysis *

Marketing Marketing is the act of acquiring, satisfying and retaining customers. It is one of the primary components of Business administration, business management and commerce. Marketing is usually conducted by the seller, typically a retailer or ma ...

analytics * Pricing analytics * Retail sales analytics * Risk and credit analytics *

Supply chain A supply chain is a complex logistics system that consists of facilities that convert raw materials into finished products and distribute them to end consumers or end customers, while supply chain management deals with the flow of goods in distri ...

analytics, an area noted for its "growing importance". DeAngelis refers to multiples interpretations of the term "supply chain analytics". Westerveld notes that the significance of supply chain analytics lies in the importance of aligning corporate strategy and supply chain execution. * Talent analytics *

Telecommunications Telecommunication, often used in its plural form or abbreviated as telecom, is the transmission of information over a distance using electronic means, typically through cables, radio waves, or other communication technologies. These means of ...

Transportation Transport (in British English) or transportation (in American English) is the intentional Motion, movement of humans, animals, and cargo, goods from one location to another. Mode of transport, Modes of transport include aviation, air, land tr ...

analytics

History

Analytics have been used in business since the management exercises were put into place by Frederick Winslow Taylor in the late 19th century. Henry Ford measured the time of each component in his newly established assembly line. But analytics began to command more attention in the late 1960s when computers were used in decision support systems. Since then, analytics have changed and formed with the development of enterprise resource planning (ERP) systems, data warehouses, and a large number of other software tools and processes. In later years the business analytics have exploded with the introduction of computers. This change has brought analytics to a whole new level and has brought about endless possibilities. As far as analytics has come in history, and what the current field of analytics is today, many people would never think that analytics started in the early 1900s with Mr. Ford himself.

Challenges

Business analytics depends on sufficient volumes of high-quality data. The difficulty in ensuring data quality is integrating and reconciling data across different systems, and then deciding what subsets of data to make available. Previously, analytics was considered a type of after-the-fact method of

forecasting Forecasting is the process of making predictions based on past and present data. Later these can be compared with what actually happens. For example, a company might Estimation, estimate their revenue in the next year, then compare it against the ...

consumer behavior by examining the number of units sold in the last quarter or the last year. This type of data warehousing required a lot more storage space than it did speed. Now business analytics is becoming a tool that can influence the outcome of customer interactions. When a specific customer type is considering a purchase, an analytics-enabled enterprise can modify the sales pitch to appeal to that consumer. This means the storage space for all that data must react extremely fast to provide the necessary data in real-time.

Competing on analytics

Thomas Davenport, professor of information technology and management at Babson College argues that businesses can optimize a distinct business capability via analytics and thus better compete. He identifies these characteristics of an organization that are apt to compete on analytics: * One or more senior executives who strongly advocate fact-based decision making and, specifically, analytics * Widespread use of not only descriptive statistics, but also predictive modeling and complex

optimization Mathematical optimization (alternatively spelled ''optimisation'') or mathematical programming is the selection of a best element, with regard to some criteria, from some set of available alternatives. It is generally divided into two subfiel ...

techniques * Substantial use of analytics across multiple business functions or processes * Movement toward an enterprise-level approach to managing analytical tools, data, and organizational skills and capabilities

Examples of application

Basic domains within business analytics

History

Challenges

Competing on analytics

See also

References

Further reading