The What, How’s and Who’s of Business Analytics
Business Analytics as we know it today is an entirely novel proposition brought about due to rapid technological progress and growth in computational powers, yet, origins of Business Analytics thought can be traced back even to the most primitive Barter economies. The development of a tracking system in order to obtain and store data on who contained what and when can be observed even in the carvings on cave dwellings.
Since then our thoughts on Business Analytics have developed through the industrial era and the current information era to understand business analytics as a means of turning data using various resources into meaningful business insights.
This understanding of business analytics as a general means of turning data into business insights is broad and can be broken down into descriptive, predictive and prescriptive analytics. Each of these types tries to seek answers to a different type of question. Descriptive analytics for instance seeks to understand what happened. Predictive analytics tries to identify what might or what will happen and prescriptive analytics attempts to answer what should be done. As one can see, findings of descriptive analytics are used in predictive analytics which can then be used in prescriptive analytics. As analytics progresses from descriptive to prescriptive analytics it increases in difficulty and in value.
An example can be used to illustrate this better. For instance, when looking at a business problem such as how to optimise pricing in order to boost revenue or pinpointing bottlenecks and failures in supply chain, each type of analytics may be used. The data may then be gathered based on quality, availability, frequency, etc. Once data has been gathered, starting with descriptive analytics, past year sales may be compared to present year sales to figure out what the data indicates. If for instance it is found that price is directly related to the demand of the product, it can then be used in predictive analytics to forecast changes in demand with changes in price. Prescriptive analytics can then be used to identify the optimum price at which total revenue can be boosted or maximised.
Today almost every successful sustaining company uses Business Analytics. Data based decision making is no longer a luxury but a necessity and failure to capitalise on data available will easily lead to being left behind in any market in which a company or business is operating.
