Business analytics is one of the most growing fields in the modern era. Due to the deadly combination of statistics and computer science the scope of business analytics has been growing wider and wider. This evolution of business analytics has resulted in various kinds of career opportunities. That’s why it is very important to understand the meaning and the importance of business analytics.
In this blog, we will be covering the following topics:
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Business Analytics Definition
In this introduction to Business Analytics, we first have to understand the term ‘analytics.’ Now, analytics generally refers to the science of manipulating data by applying different models and statistical formulae on it to find insights. These insights are the key factors that help us solve various problems. These problems may be of many types, and when we work with data to find insights and solve business-related problems, we are actually doing Business Analytics. The tools used for analytics may range from spreadsheets to predictive analytics for complex business problems. The process includes using these tools to draw out patterns and identify relationships. Next, new questions are asked and the iterative process starts again and continues until the business goal is achieved.
One of the biggest essentials of business analytics is categorized as descriptive analytics, which analyzes historical data to determine particular reactions from a bunch of people. Business analytics refers to a subset of several methodologies, such as data mining, statistical analysis, and predictive analytics, to analyze and transform data into useful information. Business analytics is also used to identify and anticipate trends and outcomes. With the help of these results, it becomes easier to make data-driven business decisions.
The use of business analytics is very popular in some industries such as healthcare, hospitality, and any other business that has to track or closely monitor its customers. Many high-end business analytics software solutions and platforms have been developed to ingest and process large data sets.
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Business Analytics Examples
Some of the examples of Business Analytics are:
- A simple example of Business Analytics would be working with data to find out what would be the optimal price point for a product that a company is about to launch. While doing this research, there are a lot of factors that it would have to take into consideration before arriving at a solution.
- Another example would be applying Business Analytics techniques to identify and figure out how many and which customers are likely to cancel the subscription
- One of the highly appreciated examples of Business Analytics is working with available data to figure out and assess how and why the tastes and preferences change of customers who visit a particular restaurant regularly.
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Components of Business Analytics
Modern world business strategies are centered around data. Business Analytics, Machine Learning, Data Science, etc. are used to arrive at solutions for complex and specific business problems. Even though all of these have various components, the core components still remain similar. Following are the core components of Business Analytics:
- Data Storage– The data is stored by the computers in a way that it can be further used in the future. The processing of this data using storage devices is known as data storage. Object storage, Block Storage, etc. are some of the storage products and services.
- Data Visualization– It is the process of graphically representing the information or insights drawn through the analysis of data. Data visualization makes the communication of outputs to the management easier in simple terms.
- Insights– Insights are the outputs and inferences drawn from the analysis of data by implementing business analytics techniques and tools.
- Data Security– One of the most important components of Business Analytics is Data Security. It involves monitoring and identifying malicious activities in the security networks. Real-time data and predictive modeling techniques are used to identify vulnerabilities in the system
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Types of Business Analytics
There are various types of Business Analytics that are performed on a daily basis across many companies. Let’s understand each one of them in this section.
Descriptive Analytics
Whenever we are trying to answer questions such as “what were the sales figures last year” or :what has occurred before”, we are basically doing descriptive analysis. In descriptive analysis, we describe or summarize the past data and transform it into easily comprehensible forms, such as charts or graphs.
An example would be finding out the percentage of leads that we couldn’t convert and the potential amount of business that we lost due to this.
Read our blog on Descriptive Analytics.
Predictive Analytics
Predictive analytics is exactly what it sounds like. It is that side of business analytics where predictions about a future event are made. An example of predictive analytics is calculating the expected sales figures for the upcoming fiscal year. Predictive analytics is majorly used to set up expectations and follow proper processes and measures to meet those expectations.
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Prescriptive Analytics
In the case of prescriptive analytics, we make use of simulation, data modeling, and optimization of algorithms to find answers to questions such as “what needs to be done”. This is used to provide solutions and identify the potential results of those solutions. This field of business analytics has recently surfaced and is on heavy rise since it gives multiple solutions, with their possible effectiveness, to the problems faced by businesses. Let’s say Plan A fails or there aren’t enough resources to execute it, then there is still Plan B, Plan C, etc., in hand.
In short, business analytics is a combination of all of these types of analytics.
Key Steps in Business Analytics Process
Just like any other thing in business, there is a process involved in business analytics as well. Business analytics needs to be systematic, organized, and include step-by-step actions to have the most optimized result at the end with the least amount of discrepancies.
Now, let us dive into the steps involved in business analytics:
- Business Problem Framing: In this step, we basically find out what business problem we are trying to solve, e.g., when we are looking to find out why the supply chain isn’t as effective as it should be or why we are losing sales. This discussion generally happens with stakeholders when they realize inefficiency in any part of the business.
- Analytics Problem Framing: Once we have the problem statement, what we need to think of next is how analytics can be done for that business analytics problem. Here, we look for metrics and specific points that we need to analyze.
- Data: The moment we identify the problem in terms of what needs to be analyzed, the next thing that we need is data, which needs to be analyzed. In this step, not only do we obtain data from various data sources but we also clean the data; if the raw data is corrupted or has false values, we remove those problems and convert the data into usable form.
- Methodology selection and model building: Once the data gets ready, the tricky part begins. At this stage, we need to determine what methods have to be used and what metrics are the crucial ones. If required, the team has to build custom models to find out the specific methods that are suited to respective operations. Many times, the kind of data we possess also dictates the methodology that can be used to do business analytics. Most organizations make multiple models and compare them based on the decided-upon crucial metrics.
- Deployment: Post the selection of the model and the statistical ways of analyzing data for the solution, the next thing we need to do is to test the solution in a real-time scenario. For that, we deploy the models on the data and look for different kinds of insights. Based on the metrics and data highlights, we need to decide the optimum strategy to solve our problem and implement a solution effectively. Even in this phase of business analytics, we will compare the expected output with the real-time output. Later, based on this, we will decide if there is a need to reiterate and modify the solution or if we can go on with the implementation of the same.
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Applications of Business Analytics
Business analytics is a very useful process that is used in different sectors. Whether it be the IT sector, the healthcare domain, or any other type of business, business analytics can help improve them immensely. Hence, there are a vast number of applications for business analytics. Some of the notable examples of business analytics are:
- Optimization of supply chains
- Forecasting revenue
- Pinpointing reasons for employee attrition
- Fraud detection
- Recommendation systems
- Finding out the number of cabs required in a region
- Price point comparison
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Business Analytics vs. Data Analytics
Business Analytics means performing data analysis to draw business insights and offer solutions to complex business problems. It specifically involves dealing with business insights, unlike Data Analytics.
Data Analytics refers to the analysis of already existing data to draw conclusions about the information contained in the data. It is a broader concept and involves business analytics too.
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Business Analytics vs. Data Science
Data Science refers to the performance of data analysis using advanced statistical methods and arriving at insights to drive data-driven decision-making. It is the advanced stage of Business Analytics. However, both the roles differ based on the activities and functions involved in the business decision-making. Both play a very vital role to understand the fundamental difference that lies in Business Analytics and Data Science.
Data Science explores possible solutions and aims at generally long-term problems and business growth. On the contrary, Business analytics aims at short-term and specific business problems.
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Career Scope of Business Analytics
As we mentioned above, there are a lot of different sectors recruiting business analytics professionals. Hence, the career scope of business analytics is very wide. Business analytics professionals are hired for different kinds of job roles. Their responsibilities may differ a little based on their designation and the sector in which their organization operates, but the end goal is the same—solving business problems.
Some Important Roles in Business Analytics
| Designation |
Description |
| Business Analyst |
Developing visualizations, building APIs, and creating and working with dashboards |
| Data Analyst |
Analyzing data trends and finding valuable insights and metrics |
| Decision Analytics Professional |
Working with data and client requirements to find out the optimum path for a solution and its implementation |
| Business Consultant |
Working with partner clients from planning to implementation phases |
Learn more about careers in Business Analytics on our blog at Business Analytics Careers.
Skills Required to Enter the Field of Business Analytics
The skill set of a business analytics professional includes:
- SQL (mandatory)
- MS Excel
- Statistical expertise
- Strong analytical skills
- Business acumen
- Python coding (preferred by a lot of companies)
- Proficiency in R (preferred by a lot of companies)
- Data visualization skills (preferably in Tableau and Power BI)
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Business Analytics Salaries
- The average salary in the Business Analytics field is ₹7.8 LPA. However, it may vary based on the sector and the experience and skills of the candidates.
- As they go higher in their career, these professionals can easily touch a point of ₹20 LPA with 6–7 years of experience.
- Candidates with Python and R skills earn higher average salaries than those who do not have these skills.
- In the United States, the average salary of a Business Analytics professional is around US$80,000 per year.