Embracing business analytics plays an important role in today’s business world as it helps in streamlining operations and improving processes. It helps us make sense of data and make informed business decisions. Sorting through the enormous amounts of data generated on a daily basis can help us figure out what is useful to the business and how it can be used to increase profits and reduce costs. But before we learn more about why business analytics is essential for your business, let’s understand what business analytics means.
What is Business Analytics?
The mix of skills, technologies, and procedures used to study an organisation’s data and performance in order to obtain insights and make data-driven decisions in the future using statistical analysis is known as business analytics (BA). BA’s purpose is to determine which datasets are useful and which can boost revenue, productivity, and efficiency.
When applied appropriately, BA can be used to accurately forecast future events involving consumer behavior, market trends, and the creation of more efficient procedures that could result in increased income.
Types of Business Analytics
To better understand and grow their business, companies can implement four types of business analytics:
- Descriptive analytics: As the name suggests, descriptive analytics provides insights into what is currently happening or has already happened. Two examples of descriptive analytics are social media engagement and sales reports.
- Prescriptive analytics: In prescriptive analytics, various data points such as past performance and available resources are used to suggest a course of action or strategy to achieve results.
- Diagnostic analytics: As the name suggests, diagnostic analytics examines the data to derive insights and explain why a particular action took place.
- Predictive analytics: In this type of business analytics, various AI or machine learning algorithms are used to predict or project what may occur in the future. This can be used to predict how many people will buy a particular product or service.
Depending on the goals, a company may choose which type of analytics they require. Now that we have a basic understanding of what business analytics means and the different types, we can learn more about why it is essential for our business.
Why business analytics is essential for your business
There are a multitude of reasons why business analytics can help you scale up your business. Some of the reasons are as follows:
1. Analysing data to identify business opportunities
There is an immense amount of data being generated on a daily basis. Analysing this data not only helps us increase efficiency but also in identifying new opportunities. The data may provide insights that may otherwise be overlooked, such as untapped customer segments. With this, there is an increase in business growth. Inflation can affect business growth. Check what is the best hedge against inflation.
Algorithms and various computer models can help in seeing the shift in customer purchasing patterns and thus deciding which products should be updated or discontinued. Data provides insights on product concerns, deficiency among employees, customer service issues, and much more. Thus, business analytics can be helpful in finding new opportunities.
2. Human Resources Tool
Human resources can also benefit from data analytics. Many firms are revolutionising their hiring processes using AI and machine learning, while data analytics in people management is informing promotions, performance reviews, employee engagement, and professional development decisions.
3. Enhancing logistic processes
Let’s take the example of shipping companies. They work on the logistical challenge of shipping thousands of packages each and every day. To be able to maximise their performance, they can look at data that will help them understand why there might be shipping delays or breakdowns taking place.
Companies can guarantee their cars stay on the road and don’t disrupt the flow of business by addressing problem areas before they become major concerns, thus decreasing driver downtime, overall maintenance costs, and customer unhappiness. The shipping industry has become more efficient by adding analytics into its approach to mechanical repair.
4. Improves customer targeting
With the help of business analytics, it is possible to make better business and marketing decisions and increase productivity. There is a lot of data regarding a customer’s purchasing patterns, their interests, and their likes and dislikes. Companies can use this data to showcase targeted ads, recommend movies or music, products or services that customers can benefit from, etc. Predictive analytics can be helpful in streamlining customer experiences and providing them with exactly what they are looking for.
5. Optimise internal processes
To gain a clear understanding of how internal processes in an organisation are, we can make use of business analytics. The following questions can be answered through analytics.
- What is the case of the problem at hand? (Reports)
- Why did the problem occur? (Diagnosis)
- What will take place in the future? (Predictions)
- What is the best path to ensure this problem is solved? (Recommendations)
Business analysis is the best way forward. With the help of data, we can improve our process and streamline communication, improve supply chain, improve quality and services, and much more.
As we have seen above, business analytics is essential to our business and can help optimise processes in a multitude of ways. Upskilling in the field of business analytics can prove to be extremely beneficial as the demand for business analytics professionals is on the rise.