Business Analytics: 5 Reasons You Should Go For It!

According to market research firm IDC, the business analytics market is set to grow to $50.7 billion by 2016. But what is Business Analytics? It is the process of exploring an organization's data to derive patterns and relationships that can be utilized to make critical business decisions that will change the direction of an organization. It is a tool that is increasingly being used to gain a competitive advantage, by acquiring insights that cannot be gained through plain surveys or observation. According to IBM's smarter analytics forum, “7 out of every 10 CEOs are making significant investments in their organizations' ability to draw meaningful customer insights from available data”.

So, how does analytics work? Initially, a business goal is decided upon, and the data needed to achieve the goal is gathered, usually filtered and stored in a data warehouse. This data is then put through analytics tools, ranging anywhere from a simple spreadsheet to complex predictive models. These analytics models produce patterns and trends using past data, which can then be used to predict future trends in a certain aspect of the business. For example, big retail chains like Wal-Mart would store customer data in a warehouse, and use analytics to derive specific patterns, such as “At what timings is this item selling fast?” or “What layout of the store results in the highest turnover?”. While there is much debate on whether business intelligence and analytics mean the same thing, there is a subtle difference between them. Business analytics is focused on analyzing what happened, to figure out something that happened in the past. However, analytics is focused more on the questions of “Why it happened?” and “What will happen in the future?”, as it's aim is to support real-time decision making and projecting future trends based on historical data.

Analytics has also evolved with times to cater to the changing needs of businesses. Initially, tools such as OLAP and reports were used to provide “descriptive” information to solve business problems. This was followed by analytics tools such as predictive models, forecasting, and simulations which provided “predictive” information on trends. This information proved to be critical for businesses, who needed to predict future trends such as consumer behavior to stay competitive in the market. Even this form of business analytics is now evolving to accommodate prescriptive information, which answers the question “How can we achieve the best outcome?” from a situation, including variables such as economic climate. (Source:“IBM Smarter Analytics Media Symposium”). As a business moves towards the adoption of prescriptive analytics, their competitive advantage increases.

According to IDC, organizations embracing analytics are 2.2 times more likely to outperform their industry peers. In what ways does an organization's performance get enhanced by the usage of analytics? We interacted with various industry experts to bring you 5 ways that prove adopting business analytics is the way to go!

1) Predict Trends Easily from Volumes of Business Data

With the use of predictive models and forecasting, even small businesses with big amounts of data can leverage on the information and derive trends for the future. In the current economic climate, being able to predict customer behavior and tailor strategies accordingly could be crucial to perform well. According to Pankaj Rai (Director,Dell Global Analytics), if you can predict for a business “who their next set of customers would be, what they would like to buy in the next quarter”, that will be of great benefit for the business. He also added that “once you know where your sale will happen, you can plan your supply chain accordingly” and “when you reduce unpredictability, it builds in more robust processes to deal with unpredictability”.

2) Understand your Customers Better

As a business, you want to understand the mind of the customer. With today's level of analytics, you can do exactly that. Learning customer behavior from data analytics can lead to focused and efficient service. For example, Anand S (Chief Data Scientist, Gramener) says they worked with “a telecom company to find out what kind of customers leave the network. We boiled it down to a single metric, “when was the last call?”, to accurately target such customers and roll out offers to them”. He added that “what we can do today with machine learning, is to observe and learn from data rather than ask and learn from customers”. He explained that when you conduct surveys, you often find correlations between inputs and data is contradictory. However, when you analyze data directly, you can achieve a much more accurate picture of how a customer's mind works.

3) Get Insights You Never Thought Of

Anand also shared an interesting anecdote when Gramener dealt with a low-end restaurant. “There was one product on their menu which was bringing down the rest of their sales. It was actually mineral water bottles! Since they were selling 1L bottles, customers ended up filling their stomachs, and did not purchase other items”. He added, “This is something that had come from the data, which neither us or them could have conceived in the first place”.

This example clearly shows how analytics can open our minds to new possibilities and correlations which could not be made with regular observation or intuition.

4) Manage Your Finances Better

According to Prashant Tewari (Country manager, Business Analytics, IBM India), financial analytics can do something simple like “present a dashboard to clients to keep track of working capital and collections”. He added that analytics can be used “to bring together all departments and come up with an annual operating plan, including building a budget for the next cycle”. With analytics, businesses can use past financial data to develop projections for the next financial cycle, and steps they can take to mitigate possible problems. Tiwari added that small businesses can definitely perform such analytics, given they “have a basic ledger system in place”.

5) Enhance Knowledge Sharing

According to Vikash Mehrotra (Divisional Lead, BI, Oracle India), “Earlier business intelligence tools catered to only top management, but now information dissemination is useful to the last mile of an organization”.He added, “A sales guy can now go to an outlet, and using the analytics tool on his smartphone, immediately assess the inventory and sales of the outlet, which would not have been possible without analytics”. Given that most business analytics solutions include mobile apps as well, every employee can be empowered to gain insights anywhere in the world. It's clear that when every department of an organization has access to analytics, better decisions can be made at every level of the hierarchy.

Are there any other ways business analytics helps enhance your business? Please let us know by mailing at pcquest@cybermedia.co.in!