Everyday businesses all around the world generate tons of data.
This data include their their transactional data, employee’s data and organizational data.
The data needs to be gathered, analyzed, and interpreted to help the organization make the right strategic decisions.
What is Business Analytics?
Business analytics is the use of software applications to analyze data and present it in visually pleasing ways the would help the business leaders make informed strategic decisions.
Some of the strategic decisions that a business leader might have to make include reviewing historical business performance, understanding the current business situation, and predicting future business scenarios.
Business analytics analyses patterns, trends and historical data to understand why things happen in a certain way. It can then use that data to predict how things might happen in the future.
The predictive capabilities of business analytics is especially important because it can be used to help the business plan for the future.
How is Business Analytics used in organizations ?
Business Analytics has numerous real world applications which include the following :
- Descriptive Analytics: Descriptive analytics is the analysis of data to explain what has happened or is happening. It uses statistical methods such as data aggregation and data mining to spot data trends and use those trends to identify the root causes of various situations.
- Diagnostic Analytics: Diagnostic analytics is the analysis of data to identify the root cause of various issues. It uses mathematical functions such as probabilities, likelihoods, and the distribution of outcomes to produce dashboards which can be further analyzed by the end users to identify the cause of the problem.
- Predictive analytics: Predictive analytics analyzes data with a combination of statistical models and machine learning algorithms to predict the probability of sales and marketing outcomes, such as if customers would like a new product or if a new marketing campaign would increase sales.
- Prescriptive analytics: Prescriptive analytics uses iterative analysis, ongoing testing, and machine learning to decide on a course of action. It works with predictive analytics to make these decisions.