BUSINESS

ANALYTICS
BASICS
UNIT - 1
 DEFINATION

 Business analytics (BA) is a set of disciplines and

technologies for solving business problems using data
analysis, statistical models and other quantitative
methods

 Success with business analytics depends on data quality,

skilled analysts who understand the technologies and the
business, and a commitment to using data to gain
insights that inform business decisions.
BUSINESS ANALYTICS

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 BUSINESS ANALYTICS
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Business Business
Analytics Intelligence
Business analytics vs.
business intelligence
The terms business intelligence (BI) and business analytics are often used
interchangeably. However, there are key differences.
 BI analyzes business operations to determine what practices have worked
and where opportunities for improvement lie.
 business analytics focuses on predictive analytics, generating actionable
insights for decision-makers. Instead of summarizing past data points,
business analytics aims to predict trends.
Business Data
Analytics Analytics
Business analytics vs. data
analytics
 Data analytics is the analysis of data sets to draw conclusions
about the information they contain. Data analytics doesn't have
to be used in pursuit of business goals or insights. It's a broader
practice that includes business analytics.
 Business analytics involves using data analytics tools in pursuit of
fundamental business insights. However, because it's a general
term, data analytics is sometimes used interchangeably with
business analytics.
Business Data
Analytics Science
Business analytics vs. data
science
 Data science uses analytics to inform decision-making. Data
scientists explore data using advanced statistical methods. They
allow the features in the data to guide their analysis. The more
advanced areas of business analytics resemble data science, but
there's a distinction between
what data scientists and business analysts do
Benefits of business analytics
 BENEFITS
Improved
decision
making

Business
optimization
 Improved decision-making. Business analytics provides actionable insights
that spur organizations to make more informed, data-driven decisions.

 Business optimization. Business analytics can identify and help mitigate

recurring issues that keep processes from operating smoothly, such as steps
in a workflow that take longer than they should. Also, resource allocation and
use can be monitored to identify ways to cut costs.

 Competitive advantage. Data on market trends can be analyzed to identify

patterns and trends that lead to better strategies for reaching customers and
responding quickly to demand trends.

 Personalized customer service and marketing. Business analytics

provides metrics on different types of customers and their buying preferences
that can be used to create more personalized service and marketing
strategies that improve customer engagement and provide a better customer
experience.
CHALLENGES OF BUSINESS
ANALYTICS

Too many data sources

Lack of skills

Data storage limitations

Common challenges of
business analytics
 Too many data sources. There is an increasingly large spectrum of
internet-connected devices generating business data. In many cases,
they're generating different types of data that must be integrated
into an analytics strategy. However, the more complex a data set
becomes, the harder it is to use it as part of an analytics framework.
 Lack of skills. The demand for employees
with the data analytics skills necessary to process BA data has grown.
Some businesses, particularly small and medium-sized businesses,
might have difficulty hiring people with the expertise and skills they
need.
 Data storage limitations. Before a business can begin to decide
how it will process data, it must decide where to store it. For instance,
a data lake can be used to capture large volumes of unstructured
data.
 Business analysts must have a mixture of hard skills and
soft skills. A business analyst doesn't need a deep
understanding of IT but does need to understand how systems
work together. Some business analysts start their career in an
IT-centric role and then move into a business analytics role.

 When recruiting for these jobs, employers typically look for

detail-oriented people with good communications skills. They
need to have capabilities in some or all of these areas: cost-
benefit analysis; process modeling; stakeholder analysis;
analytical problem-solving; and IT systems, particularly
databases, data visualization, data management, business
analytics and business intelligence.
EVOLUTION AND HISTORY OF
BUSINESS ANALYTICS
• It is limited to few corporate

INTRODUCE
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Four Types of Analytics
 Descriptive Analytics
 What is Descriptive Analytics?
 Descriptive analytics answer the question, “What happened?”. This type of
analytics is by far the most commonly used by customers, providing
reporting and analysis centered on past events. It helps companies
understand things such as:
 How much did we sell as a company?
 What was our overall productivity?
 How many customers churned in the last quarter?
Descriptive analytics is used to understand the overall performance at an
aggregate level and is by far the easiest place for a company to start as data
tends to be readily available to build reports and applications.

It’s extremely important to build core competencies first in descriptive analytics

before attempting to advance upward in the data analytics maturity model. Core
competencies include things such as:

 Data modeling fundamentals and the adoption of basic star schema best
practices,

 Communicating data with the right visualizations, and

 Basic dashboard design skills.

 Diagnostic Analytics
Diagnostic analytics, just like descriptive analytics, uses historical data to
answer a question. But instead of focusing on “the what”, diagnostic analytics
addresses the critical question of why an occurrence or anomaly occurred within
your data. Diagnostic analytics also happen to be the most overlooked and
skipped step within the analytics maturity model. Anecdotally, I see most
customers attempting to go from “what happened” to “what will happen” without
ever taking the time to address the “why did it happen” step. This type of
analytics helps companies answer questions such as:
 Why did our company sales decrease in the previous quarter?
 Why are we seeing an increase in customer churn?
 Why are a specific basket of products vastly outperforming their prior year
sales figures?
 Diagnostic analytics tends to be more accessible and fit a wider range of
use cases than machine learning/predictive analytics. You might even
find that it solves some business problems you earmarked for predictive
analytics use cases.
 Predictive Analytics
Predictive analytics is a form of advanced analytics that determines what is
likely to happen based on historical data using machine learning. Historical data
that comprises the bulk of descriptive and diagnostic analytics is used as the
basis of building predictive analytics models. Predictive analytics helps
companies address use cases such as:

 Predicting maintenance issues and part breakdown in machines.

 Determining credit risk and identifying potential fraud.

 Predict and avoid customer churn by identifying signs of customer

dissatisfaction.
 Prescriptive Analytics
Prescriptive analytics is the fourth, and final pillar of modern analytics. Prescriptive analytics
pertains to true guided analytics where your analytics is prescribing or guiding you toward a
specific action to take. It is effectively the merging of descriptive, diagnostic, and predictive
analytics to drive decision making. Existing scenarios or conditions (think your current fleet
of freight trains) and the ramifications of a decision or occurrence (parts breakdown on the
freight trains) are applied to create a guided decision or action for the user to take
(proactively buy more parts for preventative maintenance).
Prescriptive analytics requires strong competencies in descriptive, diagnostic, and predictive
analytics which is why it tends to be found in highly specialized industries (oil and gas,
clinical healthcare, finance, and insurance to name a few) where use cases are well defined.
Prescriptive analytics help to address use cases such as:
 Automatic adjustment of product pricing based on anticipated customer demand and
external factors.
 Flagging select employees for additional training based on incident reports in the field.
Prescriptive analytics primary aim is to take the educated guess or assessment out of data
analytics and streamline the decision-making process.
 What Is Business Analytics? | Business: Explained (youtube.co
m)
DATA, INFORMATION AND
KNOWLEDGE
Data

 Data are the raw alphanumeric values obtained through different

acquisition methods. Data in their simplest form consist of raw
alphanumeric values.
Information

 Information is created when data are processed, organized, or

structured to provide context and meaning. Information is
essentially processed data.
Knowledge

 Knowledge is what we know. Knowledge is unique to each

individual and is the accumulation of past experience and insight
that shapes the lens by which we interpret, and assign meaning
to, information. For knowledge to result in action, an individual
must have the authority and capacity to make and implement a
decision. Knowledge (and authority) are needed to produce
actionable information that can lead to impact.
 Successful companies owe much of their survival to big data—those
trillions of data points collected across their organizations that can be
mined for useful insights. Big data helps their leaders improve their
services or products. But, “big data,” said Pearl Zhu, author of the Digital
Master book series, “is the starting point, not the end.”

 To maximize its value, decision makers need to be aware of its

challenges, also known as its five V’s. These are its sheer amount of
volume, its exponential velocity, its variety, the need to verify it, and the
issue on how to extract value from its content.
5 V’s of Big Data
Volume
Volume
 Volume refers to the colossal amount of data that inundates organizations.
We’re well past the days when companies resourced their data internally
and stored it in local servers. Companies of 15 years ago handled
terabytes of data.
 Today, data has grown to petabytes if not exabytes of bytes (that’s 1,000–
1 million TB) that come from sources such as transaction processing
systems, emails, social networks, customer databases, website lead
captures, monitoring devices and mobile apps.
 To handle all of this data, managers use data lakes and warehouses or data
management systems. They store it on clouds or use service providers
such as Google Cloud. And as global data grows from two zettabytes at the
beginning of the decade to 181 zettabytes a day by 2025, even these may
be insufficient
An example of data volume

 Walmart operates approximately 10,500 stores in 24 countries,

handling more than 1 million customer transactions every hour.
The result? Walmart imports more than 2.5 petabytes of data per
hour, storing it internally on what happens to be the world’s
biggest private cloud.
Velocity
Velocity
 Big data grows fast. Consider that, according to Zettaspere, there are around
3,400,000 emails, 4,595 SMS, 740,741 WhatsApp messages, almost 69,000
Google searches, 55,000 Facebook posts, and 5,700 tweets made per minute.
 Around five years ago, data scientists measured incoming data with
computerized batch processing that read large files and generated reports.
Today, batch processes are unable to handle the continuous rush of real-time
data from a growing number of sources.
 More critical still, data ages fast. As Walmart’s former senior statistical
analyst Naveen Peddamail said, “If you can’t get insights until you’ve
analyzed your sales for a week or a month, then you’ve lost sales within that
time.”
 Competitive companies need some capable business intelligence (BI) tools to
make timely decisions.
An example of data velocity

 Using real-time alerting, Walmart sales analysts noted that a

particular, rather popular, Halloween novelty cookie was not
selling in two stores. A quick investigation showed that, due to a
stocking oversight, those cookies hadn’t been put on the shelves.
By receiving automated alerts, Walmart was quickly able to
rectify the situation and save its sales.
Variety
Variety

 Variety refers to the different types of digitized data that

inundate organizations and how to process and mine these
various types of data for insights. At one time, organizations
mostly gained their information from structured data that fit into
internal databases like Excel.
 Today, you also have unstructured information that evades
management and comes in diverse forms such as emails,
customer comments, SMS, social media posts, sensor data,
audio, images, and video. Companies struggle with digesting,
processing, and analyzing this type of data and doing so in real
time.
An example of data variety

 Walmart tracks each one of its 145 million American consumers

individually, resulting in accrued data per hour that’s equivalent
to 167 times the books in America’s Library of Congress. Most of
that is unstructured data that comes from its videos, tweets,
Facebook posts, call-center conversations, closed-circuit TV
footage, mobile phone calls and texts, and website clicks.
Veracity
Veracity

 Veracity is arguably the most important factor of all the five Vs because it
serves as the premise for business success. You can only generate business
profit and impact change with thorough and correct information.
 Data can only help organizations if it’s clean. That’s if it’s accurate, error-free,
reliable, consistent, bias-free, and complete. Contaminating factors include:
 Statistical data that misrepresents the information of a particular market
 Meaningless information that creeps into and distorts the data
 Outliers in the dataset that make it deviate from the normal behavior
 Bugs in software that produce distorted information
 Software vulnerabilities that could cause bad actors to hack into and hijack
data
 Human agents that make mistakes in reading, processing, or analyzing data,
resulting in incorrect information
Example of data veracity

 According to Jaya Kolhatkar, vice president of global data for

Walmart labs, Walmart’s priority is making sure its data is correct
and of high quality. Clean data helps with privacy issues,
ensuring sensitive details are encrypted while customer contact
information is segregated.
Value
Value

Big data is the new competitive advantage. But, that’s only if you
convert your information into useful insight.
Users can capture value from that data through:
 Making their enterprise information transparent for trust
 Making better management decisions by collecting more
accurate and detailed performance information across their
business
 Fine-tuning their products or services to narrowly segmented
customers
 Minimizing risks and unearthing hidden insights
 Developing the next generation of products and services
Example of data value

 Walmart uses its big data to make its pharmacies more efficient,
help it improve store checkout, personalize its shopping
experience, manage its supply chain, and optimize product
assortment among other ends.
 https://www.youtube.com/watch?v=jl0UnQS_qbc