Why Business Analytics is important for Today’s Organizations

Business analytics is a powerful tool in today’s marketplace. Across industries, organizations are generating vast amounts of data which, in turn, has heightened the need for professionals who know how to interpret and analyze that information.

Consider the following facts:

These and many other fascinating insights are from MicroStrategy’s latest research study, 2018 Global State of Enterprise Analytics Report. The study is based on surveys completed in April 2018 with 500 globally-based enterprise analytics and business intelligence professionals on the state of their organizations’ analytics initiatives across 20 industries. Participants represented organizations with 250 to 20,000 employees worldwide from five nations including Brazil, Germany, Japan, the United Kingdom and the United States.

Companies worldwide are using data to:

• Boost process and cost efficiency (60 percent)
• Drive strategy and change (57 percent)
• Monitor and improve financial performance (52 percent)

In light of this trend, gaining an in-depth understanding of business analytics can be a way to advance your career and make better decisions in the workplace. Before diving into the benefits of data analysis, it’s important to understand what the term “business analytics” means.

Business analytics is the process of using quantitative methods to derive meaning from data in order to make informed business decisions. Today, businesses, irrespective of their size, are using analytics tools to determine how data can be leveraged to solve problems and increase efficiency and revenue.

There are four primary methods of business analysis:

• Descriptive: The interpretation of historical data to identify trends and patterns. Many companies use descriptive analytics for a deeper look into the behavior of customers and how they can target marketing strategies to those customers.
• Predictive: The use of statistics to forecast future outcomes. This type is often used by sales and marketing teams to forecast opinions of specific customers based on social media data.
• Diagnostic: Focuses on past performance to determine which elements influence specific trends. This is done using drill-down, data discovering, data mining, and correlation to reveal the cause of specific events. Once an understanding is reached regarding the likelihood of the event, and why an event may occur, algorithms are used for classification and regression.
• Prescriptive: The application of testing and other techniques to determine which outcome will yield the best result in a given scenario. Not only does this type of business analytics determine outcomes, but it can also recommend the specific actions that need to occur to have the best possible result. This is often achieved using deep learning and complex neural networks. This type of business analytics is often used to match various options to real-time needs of a consumer.

To help you understand how business analytics works in real life, let’s look at an example:

We are all aware of Uber, the ride-hailing cab service. What is it primarily used for? To enter your pickup location and wait for the cab. While this seems pretty straightforward, there is a lot of data wrangling that goes behind it.

For starters, Uber uses its algorithms to find look-alike trips, i.e., a ride that starts near, ends near, and is happening around the same time as another ride. By using this data, Uber can cater to passengers willing to have a similar journey but by paying less. And, this is where Ubers Pool feature comes into play.

By analyzing data, Uber is not only able to serve more people but also ensure its drivers are occupied and make more money. This is just one simple example of how a simple ride-hailing app like Uber can transform its services by using data.

Analytics has become the buzzword of this decade. Almost every business type is focusing on using it to change the way it makes decisions. But why has it become so popular right now? Why does almost every company want to hire business analytics professionals?

The reasons behind this swift drive are need, availability and affordability. Starting with the first factor, businesses are in constant pressure to innovate due to the increasing competition. Plus, customers have become more demanding. So, to survive, managers must make the best decisions promptly to respond to market-driven forces. And, analytics is a promising method to gain insights required to make better and faster decisions.

When it comes to availability and affordability, organizations are collecting tremendous data. This is mainly due to the recent technological advances and the affordability of software and hardware. So basically, companies have all the raw data possible, but they are in dire need of experts who can make sense of all it and draw relevant outcomes.

So, to have a competitive edge while saving time and money, business analytics has gained a lot of hype amongst businesses lately.

To better understand how data insights can drive organizational performance, here’s a look at some of the ways firms have benefitted from using business analytics.

• Enhance Customer Experience

With the variety of options available, customers are spoiled for choice. To ensure businesses can retain their customer base, they turn to analytics.

For example, companies can analyse a customers’ interaction on their website and past purchasing habits. Based on this data, they can analyse patterns and make improvements to their website performance. This can be as simple as sending a push notification prompting products that customers have added to their shopping cart. This will result in overall better customer experience, and eventually, loyalty.

• Make Informed Decisions

Businesses often outsource a few of their processes to enhance their efficiency. When it comes to selecting vendors for such activities, they need to know which one will bring more profits. Analytics can help them evaluate supplier performance based on customer ratings, order fulfilment speed, quality, etc. This data will help them decide which one works best for their business.

• Reduce Employee Turnover

Every year, companies have to bear an extensive cost due to employee onboarding and attrition. To save time and costs, HR professionals can use analytics tools to examine the likelihood of an employee aligning with a company’s culture, tracking their performance and how satisfied they are with the new role, and similar factors.

Once you know such answers, it will be easier to recognize employees who will stick to your company for a long time.

• Improve Efficiency

Efficiency is not always limited to employees. Businesses can also analyse other resources to learn more about their performance.

For example, a grocery store chain was able to reduce refrigeration costs by merely analysing the temperatures of in-store coolers. It was found that the refrigerators were being kept several degrees lower than necessary, which increased power usage. So, by increasing the temperature, power costs went down without affecting safe food storage. Business owners can learn from such examples and use data to make their resources efficient.

• Identify Frauds

Finance companies have begun using analytics to reduce fraud. One way they do this is by using data to identify potentially fraudulent purchases, based on the analysis of customers previous transactions.

These companies also use predictive analytics to look at customer profiles and gauge the level of risk. This helps rate the risk that a particular customer presents and use this analysis to prevent losses, and builds stronger customer relationships.

• Cut Manufacturing Costs

One company that has outranked everyone when it comes to using analytics to reduce manufacturing costs is Intel. Initially, this tech giant would perform 19,000 tests on each chip being manufactured. With the advent of predictive analysis, Intel was able to determine which chips need, which tests before their launch. By using the data collected from all of that testing, it has been able to save almost $3 million.

• Make the Most of your Investment

Earlier, business people would rely on traditional marketing techniques to gain and retain customers. However, the internet has changed this completely.

Now search marketing has become the most efficient and inexpensive way for businesses to find leads. By using business intelligence, marketers can craft perfect campaigns and strategies, eventually increasing chances of higher ROI.

• Improved Advertising

Advertising is expensive; hence marketers must know how to get the best return on investment. This is why they use analytical methods such as A/B and C split-testing.

When it comes to advertising online, all landing pages, pop-ups, and even product descriptions are evaluated and tweaked to ensure maximum results. Even the way products are positioned on the website is assessed to identify the best location to drive more engagement and sales.

• Better Product Management

When it comes to retail companies, they have more than a thousand products to offer. So, how do they decide which ones to release at which time?

Yes, the answer is data analytics. Such businesses analyse which are the most popular products depending on the region and season. This data is then used to target the right product at the right time, which eventually has a positive impact on sales.

• Tackle Problems

Whenever a problem arises, a business often pauses the current operations, which leads to a huge loss. To prevent such situations, business analysts help the organization to make an informed decision by providing information that can help identify potential risks and avoid any occurrence of loss. These professionals can use the raw data to detect a malfunction in the existing system, and thus help business owners to fix it at the earliest.

• Accelerate Through Uncertainty

Look at the current business scenario. Owing to the lockdown across the globe, the business environment is as uncertain as it gets. Almost nobody has an idea when things will get back to normal, and the corporate world will be allowed to resume its operations. At such times, data analytics can be used to resolve supply chain issues, introduce crisis management solutions, optimize costs, and more.

• Conduct a Competitor Analysis

Today, almost every business has a clear idea of its competitors. An effective way to get ahead of them is by understanding what they are up to, their strategies, USPs, etc. By gathering this data by conducting a SWOT analysis, you can get a preview of how your business is performing as compared to your competitors.

When your organization chooses to use business analytics, you are bound to make better decisions regarding revenue, customer experience, and overall efficiency.

These methods are often considered a hidden gem as they can reveal ways to get an edge over your competitors. Set your goal, keep your eye on the prize, and you will be pleasantly surprised by what you find.

In case if you want to figure out the tools that would help you achieve better analytical results, please feel free to get in touch with our consultants.

Author