Business Analytics Demystified.
Most of us don’t really understand that there is a thin line between Business Analytics and Data Analytics and that Business Analytics is in fact a part of the latter. We have a presumed notion that Business Analytics is more or less Data Analytics done in a business setting. While this is vaguely correct, it still does not give you insight into things that make up the Business Analysis process.
One of the most important roles in any company, a Business Analyst is in most scenarios a data scientist with extensive knowledge about the domain of a company and helps it achieve better results. Majority of the jobs Data Scientists are offered relate to this position. It is also supposedly a role that’s going to grow exponentially in the years to come. But why is it so important to analyze a business? In this article, we’ll demystify the Business Analytics process which is then self-explanatory to the importance of this role.
What is Business Analytics?
Who are Business Analysts?
Why should someone hire a Business Analyst?
Which companies need a Business Analyst?
What is the Business Analytics process?
These are a set of questions that I will try to put to you in non-technical and simple terms so that we understand the intuition behind the entire Business Analysis process.
What is Business Analytics?
Business Analytics in simple terms is the process of analyzing historical data of a firm/company in order to find solutions to any problems the company is facing or to improve the efficiency of the internal processing of the company and provide with reports that lead to better decision making and improved efficiency in the company. Business Analytics can get rid of a problem in a company from it’s root and can also enable the company to grow at its full potential.
It is a subset of Business Intelligence and has 3 segments namely;
Descriptive Analytics: What is the Problem/Situation?
Predictive Analytics: What happens next? (or) What does this situation lead to?
Prescriptive Analytics: How to make things right?
Who are Business Analysts?
Business Analysts are experts who understand a particular business domain exceptionally well and are well versed with the business analytics process in order to identify and rectify any prevailing problems in a business. They are who people get when a problem does not have an evident root cause.
They are individuals highly trained with the Data Science skill set and unparalleled domain knowledge gathered with experience that makes them like ‘auditors’ to a business problem. They also provide the business with the requisite solutions for the problem.
Why should someone hire a Business Analyst?
You definitely hire an analyst when you have a problem that doesn’t subside over time to help you with the problem, but that’s not the only case. When you have a business that’s going well and does not exhibit any problems but still lacks growth, you may need an analyst to identify the reasons for the stagnation. If you feel that your employees are not working to their full potential, you’ll need to find the reasons for that too.
All business problems can be given prescriptions as needed by a Business Analyst.
Which companies need a Business Analyst?
Any company that has problems bigger than what can be identified by the employees or the board of the company, can hire a Business Analyst for their issues. Now as we know for a fact that business analysts not only help in solving problems, it is possible that a company can hire an analyst to have routine checks of the business performance and scrutinize it in order to ensure that the company never falls out against its competition and that performance stays up to the mark.
All things considered, every company needs a Business Analyst to tell them about their market position and how they can get better. (Well, there’s no company that wouldn’t want otherwise, right?)
What is the Business Analytics process?
Coming down to ‘the question’. How do they do it? What do they do? What is the process that they follow that leads them to somehow identify these business problems and give required solutions for them.
Note: The following procedure can change with the size of the company and it’s domain. However, this process encompasses all companies in general and can be worked upon to analyze business prospects effectively.
Following is the main Business Analytics process generally (Descriptive Analytics) followed:
Understand Problem
Formulate Hypothesis
Collect Data
Analyze Data
Present Findings
Let’s go over this entire process and understand how it works with possible steps and frameworks that you can follow for the same.
Understanding Business Problem:
It is a preconceived fact that we think that we’ll be presented with Data to analyze and present the findings at the beginning of the cycle. But that’s not the case, Understanding the Business Problem makes up the first stage of the Business Analytics process.
This happens generally over surveying and interviewing multiple individuals involved in the company’s affairs and are directly connected to it from all the affected departments in the company. This can include employees from any level of the company, the top to the bottom.
Interviews happen over time and the analyst can follow particular frameworks in case he has no information about the problem. The frameworks can be:
5 Why’s
So What?
What Next?
SPIN (Situation, Problem, Implication and Need)
5Ws (Who, What, When, Where, Why)
to reach the root of the problem and fix it there.
Formulating Hypothesis:
A Hypothesis is in simple terms a Possibility. When you think of it, a business can have more than one problem and this in turn can be prioritized based off the impact/need to solve them in the priority order. These identified problem or problems from the first stage then follow up to be given a cause under the Formulating Hypothesis step. They are hypotheses that can be solved to ensure the elimination of a business problem.
All these steps are interconnected and the analysts precision in each step can define the entire outlook of the analysis. Following are certain procedures that can be followed to formulate hypothesis in the process:
4Ps : Product, Price, Place, Promotion
STP Analysis : Segmentation, Targeting, Positioning
Porter’s 5 Forces
Issue Tree Framework
5Cs : Customer, Company, Collaboration, Competition, Context
where the problems are placed in these frameworks and then prioritized to get to the next step.
Collecting Data:
Data is collected from internal and external sources to analyze in the further steps. Data if relating to external conditions that a company is being troubled with can be sourced from secondary data sources and government data etc. than working with insufficient data available at first-hand.
It is important that only true and actual data is obtained which becomes factual to the problems experienced by the data. Secondary data sources are not preferred in the process but can be used if it is valid. The data is can also vary from Historical data to current data in order to help the Business Analyst as per his/her requirements. Data is exclusively collected separately for each hypotheses posed by the analyst.
Analyze Data:
Datasets received as a part of the previous step are then cleaned and analyzed using multiple Data analyzing tools as preferred by the Analyst. Datasets are scrutinized and put through a process of Exploratory Data Analytics (EDA) which includes Preprocessing, Univariate Analytics, Bivariate Analytics, Metadata Analytics and Data Visualization to understand underlying meaning in the data and identify outliers and anomalies that will help the Analyst verify the credibility of the Hypothesis formulated as a part of the second step.
EDA is by far the most important step as it is the ‘actual’ phase when the analysis occurs but it is interdependent with the other steps too and any drawbacks with the other stages (previous/after) can lead to an inefficient analysis that sometimes will lead to a problem not being solved altogether and resulting only in wastage of time, expenditure and effort.
Presenting Findings:
A good analyst, according to me, is not someone who knows the data best but someone who can communicate the findings out of the data the best. Let’s take an example, if you have a Business client with a turnover of over 1 crore and has hired you. You as a Business analyst completed the analysis and could only partly explain the findings to the concerned authorities. Since you’re not involved in the direct decision making for the company, a half-done presentation of the outcome of the analysis will not count as a half-done job by the company but an incomplete and inefficient analysis on your part.
The reports can be presented in a textual presentation or a vocal presentation, a key part of the report is Visualizations as they’re the best way for someone to retain key information and to understand things in a easier manner. There are multiple Data Visualization tools out there and methods that will help you take your reports to the next level. For further details on the same, check out my other articles:
101 Reasons to Visualize Data:
10 New Ways for you to Visualize Data:
Disclaimer: Business Analytics is a very vast dimension that involves a lot of work and is beyond the scope of this article. However, I hope this article gave you a general understanding on the Business Analytics process. Stay tuned with me as I elaborate the steps involved in the entire process in articles to come.
For more such articles, stay tuned, as I chart out the path on understanding data and coding and demystify other concepts related to Data Science and Coding. Please leave a review down in the comments. It was a long article, thank you very much for reading it all the way here! Great going!
