Business Analytics with Excel

Introduction to Business Analytics

 Learning Objectives

By the end of this lesson, you will be able to:

Explain the concept of analytics

List and describe the types of analytics

List the areas of analytics with relevant examples

 A Day in the Life of a Business Analyst

As a business analyst of an organization:

You are required to improve productivity and collaboration and enhance customer support
while keeping the historical data as the base.

You are also required to do a performance analysis and risk analysis.

To achieve these tasks, you will be learning a few concepts, such as types of analytics, and
areas of analytics, that will help find a solution for the given scenario.
Introduction
 What Is Analytics?

In today's data-driven world, analytics play a critical role in business as well as a variety of
other industries like:

Sports Finance

Business Government
 What Is Analytics?

Analytics is a scientific process used to examine the raw data to draw meaningful and
logical conclusions.
 Study of Analytics

The study of analytics often involves historical data to look for the potential trends of
the past to:

Understand the effects of certain decisions

Evaluate the performance of the business

 Study of Analytics

The goal of doing a proper analysis is to improve the business by gaining

comprehensive knowledge of past trends and decisions.
Business Analytics: Example

• The Operations Head of a multinational tire

company wants to do a detailed analysis of
defects during the tire production at its various
manufacturing plants across the globe.

• Every time there is a defect during the

manufacturing process, the defect is stored
with a predefined defect code.
 Business Analytics: Example

Implementing proper Optimize the

Obtain results
analytics performance

Perform analysis for every Do a predictive analysis

How many defects are there in
product, on every machine, keeping the historical data as
each plant?
and for every operator. the base.
Types of Analytics
 Types of Analytics

There are four distinct types of analytics:

Descriptive Predictive
Explains what has happened Depicts what could happen

Diagnostic Prescriptive
Determines why it happened Talks about what should happen
Descriptive Analytics

Descriptive analytics is known as the

simplest class of analytics.

It allows breaking a big chunk of data

into smaller pieces, extracting relevant
information from the data.

It provides a brief synopsis of what

happened.
 Descriptive Analytics: Example

Descriptive analytics for customer data includes finding answers to the

following questions:

How many different segments of buyers are we dealing with?

Where are these buyers located?

How do high-value customers differ?

What are they interested in?

What is the regional breakdown of these buyers?

 Diagnostic Analytics

Diagnostic analytics is the best option to go for if one wants to dig deeper into the data
collected and have a better understanding of why things happened.
Predictive Analytics

Predictive analytics help condenses data.

It uses different statistical, data modeling,

and data mining techniques to study the
latest and past trends.

It allows business analysts or data

scientists to make predictions.
 Predictive Analytics: Example

Predictive analytics for the marketing campaign will look for answers to the
following questions:

Who will respond to this campaign, for what product, and

through which channel?

What are the potential values for each customer and prospect?

Who will stop the subscription to the service and when?

 Prescriptive Analytics

Prescriptive analytics improves decision-making by identifying the optimal

option among a variety of options.
 Prescriptive Analytics

Prescriptive analytics is the last phase of business analytics and is related to

both descriptive and predictive analytics.

Prescriptive analytics
Descriptive analytics optimizes decision-making Predictive analytics helps
provides information about by determining the best forecast what might
what has happened. solution available among happen; it is probabilistic.
various choices.
Areas of Analytics
 Areas of Analytics

Here are some examples of areas of analytics:

Industry-focused analytics Financial analytics Performance analytics

Customer analytics Risk analytics

 Customer Analytics

Customer analytics is a process that helps organizations make critical decisions and
deliver offers that are anticipated.
Customer Analytics

It allows organizations to take

necessary decisions based on
customer insights.

It uses techniques such as market

segmentation, predictive analytics,
data modeling, and visualization.

It plays a pivotal role in the

prediction of customer behavior.
 Customer Analytics: Example

All telecom companies use different marketing methods for customer acquisition
and retention.

Platform as a
Service
 Financial Analytics

Financial analytics is a new way to drive competitive advantage.

Explore and Forecast

It helps financial executives explore different ways to answer specific finance-related

questions and forecast future financial situations.

Greater Value

It helps the finance department to bring greater value to the organizations.

Multiple Views

It helps the companies take multiple views of their data and derive insights that will
help them take necessary action.
 Financial Analytics: Example

Consolidated financial statements showcase the company’s financial position.

These statements provide a detailed overview of the company’s financial position

to investors and creditors.
 Performance Analytics

Performance analytics uses data and technology to analyze business performance for improvement.

Plan strategies

Meet service level Pinpoint areas of

agreements Performance improvement
Analytics

Create budgets for

Manage daily operations
business
 Performance Analytics: Example

In human resource management, the performance of the employees is monitored regularly.

Performance analytics allows companies to take corrective actions to improve the

performance of employees in time.
Risk Analytics

It foresees future uncertainties to evaluate

a project’s success or failure.

It helps organizations manage and

mitigate risks.

It allows decision-makers to make wise

decisions and take corrective actions.
Types of Risk Analytics

Quantitative

Quantitative risk analysis

quantifies possible results
specific to a project.

It evaluates the possibilities of

various adverse events
numerically.

It predicts the losses a company

would go through if any of these
possibilities come true.
Types of Risk Analytics

Qualitative

Qualitative risk analysis is

performed on almost all risks
and is not numerically defined.

It defines various project-related

threats and risks.

It determines the extent of these

risks and proposes corrective
actions.
 Risk Analytics: Example

In the banking industry, credit scores are built to predict an individual’s delinquent behavior.
It is also used to represent the creditworthiness of an individual.
Corruption

Corruption is unethical conduct by

a person or a group of people to
generate illegal profit.

It drastically affects the confidence

and trust of the parties involved.
 Key Takeaways

Analytics is a scientific process that examines raw data to draw

meaningful and logical conclusions from them. It is used across
industries to derive crucial business decisions.

Analytics has been divided into four different types, namely:

• Descriptive, which explains what has happened
• Diagnostic, which identifies why it did happen
• Predictive, which determines what could happen
• Prescriptive, which talks about what should happen

Business analytics can be divided into several types such as

customer analytics, financial analytics, performance analytics,
and risk analytics.
Knowledge Check
Knowledge
Check
Which one of the following is NOT a type of business analytics?
1

a. Descriptive analytics

b. Diagnostic analytics

c. Predictive analytics

d. Performance analytics
 Knowledge
Check
Which one of the following is NOT a type of business analytics?
1

a. Descriptive analytics

b. Diagnostic analytics

c. Predictive analytics

d. Performance analytics

The correct answer is d

Performance analytics is not a type of business analytics. The four distinct types of business analytics are:

descriptive, diagnostic, predictive, and prescriptive.

Knowledge
Check
Which one of the following is true about descriptive analytics?
2

a. It provides a brief synopsis of what happened.

b. It gives a better understanding of why things happened.

c. It uses various data modeling and data mining techniques to study trends.

d. It optimizes decision-making by determining the best solution.

 Knowledge
Check
Which one of the following is true about descriptive analytics?
2

a. It provides a brief synopsis of what happened.

b. It gives a better understanding of why things happened.

c. It uses various data modeling and data mining techniques to study trends.

d. It optimizes decision-making by determining the best solution.

The correct answer is a

Descriptive analytics allows you to break data into smaller pieces, extracting relevant information to get a brief
synopsis of what happened.
Knowledge
Check
Predictive analytics helps forecast what might happen; it is probabilistic.
3

a. True

b. False
 Knowledge
Check
Predictive analytics helps forecast what might happen; it is probabilistic.
3

a. True

b. False

The correct answer is a

Predictive analytics helps to forecast what might happen; it is probabilistic.

Knowledge
Check is the practice of using data and technology to study how your business
4 is performing to continuously make it better.

a. Performance analytics

b. Financial analytics

c. Risk analytics

d. Customer analytics
 Knowledge
Check is the practice of using data and technology to study how your business
4 is performing to continuously make it better.

a. Performance analytics

b. Financial analytics

c. Risk analytics

d. Customer analytics

The correct answer is a

Performance analytics is the practice of using data and technology to study how your business is performing to
continuously make it better.
Knowledge
Check
Which of the following is an example of customer analytics?
5

a. Consolidation of financial statements

b. Corruption

c. Customer acquisition and customer retention

d. Human resource management

 Knowledge
Check
Which of the following is an example of customer analytics?
5

a. Consolidation of financial statements

b. Corruption

c. Customer acquisition and customer retention

d. Human resource management

The correct answer is c

Customer acquisition and customer retention is an example of customer analytics.