Companies and organisations are becoming very data rich as they collect data explicitly by ensuring that their systems are designed to extract maximum value from the interactions and transactions they have with their customers, suppliers, partners and employees. Others may not do this explicitly, but may be collecting considerable amounts of data implicitly just by using modern digital systems in their supply chains, customer and employee management systems, and stock and inventory systems, which collect data as a by-product of their design.
Those that harness that data to further fuel growth, competitive advantage and efficiencies will come out stronger than their competitors. This is why all companies should embrace business analytics. Business analytics is the process of collecting, storing, process, analysing, reporting and gaining insights from historical data into how their business is performing, identifying areas for improvement and making decisions on the direction of their business based on what they can understand from the data.
Business analytics differs from other analytical areas, such as customer analytics, data science, business intelligence or management information, in that it is solely focused on helping companies and organisations to understand how they are performing holistically and therefore be able to make decisions based on that information. Business analytics is typically a complimentary form of analysis to the decision makers, where the data does not provide clear direction, as in data science whereby recommender systems or predictive models suggest next best action. Business analytics is also much broader, allowing decision makers to have confidence in their decisions based on the best available information or evidence gleaned from the data the company holds.
Modern Business Analytics
Modern business analytics is typical grouped into 4 areas:
- Descriptive: Analysing data to understand historical trends and patterns so that you can better anticipate what may happen in the future
- Diagnostic: Analysing data in a targeted method to understand why something happened, this includes comparing trends and patterns before and after changes were made by the business.
- Predictive: Analysing data using statistical techniques to try and forecast future outcomes for the business
- Prescriptive: Analysing and modelling data to provide insights into what could happen if certain changes were made, this would include activities such as scenario planning
Depending on the maturity of the business, they will usually progress along this spectrum from Descriptive to Prescriptive. However, many companies will find themselves operating and dormant in the Descriptive and Diagnostic stages if they have decided not to take business analytics seriously. However, some will even struggle with the descriptive stage if they have not considered the basics of what they need to be able to do business analytics.
The fundamentals of business analytics
- Collecting good quality data
- Storing it in an organised format so that it is easily accessible
- Having the ability to analyse it in a timely manner
- Having the people who understand data to interpret what the data means
- Having the organisational culture of using data for decision making
Companies and organisations that do not understand the importance of business analytics will find that they will fall behind their competitors who will use the data they have to execute on strategies which are informed by data.
So to make the start, businesses should ensure that the data they collect has a purpose, they should ask themselves what they are collecting this data and how it can help them operate better. This will ensure that they provide a very well defined set of requirements to their IT vendors and suppliers in what they need from the system beyond just what it does operationally, i..e collect the right, good quality data that can help the business progress,
Next a business needs to think about how it stores and analyses this data. It is often sufficient to leave the data in the source systems and use siloed tools to analyse the data and bring it all together in Excel or even in a powerpoint. This suits companies that are unlikely to make changes frequently and have the luxury of time in bringing together data to make decisions. Others who need to make decisions very fast, such as commerce, publishing, logistics, etc., may want to automate the data aggregation to be able to analyse the data faster and more efficiently.
This could lead to the need to aggregate the data in a data warehouse or data lake, or in more recent developments such as data lakehouse. Whatever, the best solution for different companies may be, it does mean taking data from their source system, aggregating it and using analytical tools that sit across all the data in a standardised format so that business questions can be answered effectively, fast and routinely, so that the business can make decisions based on trusted sources of data.
Finally, it is important that an organisation has the right type of people to effectively make use of data for decision making. This does not just reside in hiring a data analyst, hoping that this role will magically make the rest of the business take into account the data when making decisions. It requires senior management and stakeholders to adopt a data culture, one where data is seen as an equal source of value for decision making.
Without this, data is just seen as a crutch for many and only used when it supports or reinforces an opinion or view points and rejected and criticised when it does not. This makes data a political tool in an organisation, being wielded to further individual ambitions and provide credence, by being manipulated, to support often poor decision making outcomes.
To avoid this, ensure that your senior management becomes data literate, and understand the value of data, especially where it can help them and where they can only use it as a guide to help them formulate their own ideas. Data can not drive your business, no matter how much you want to be data driven. The people drive the business and the data is there to provide a factual evidence base from which to substantiate ideas and move forward with those that seem most considered.
Business analytics is a powerful tool in the armoury of a business. All companies and organisations should adopt this as part of their business culture. Where they do not, they will find their competitors exceed them. At Be Data Solutions, we help organisations adopt business analytics by helping them identify what data to collect, how to store and process it and then provide the tools and expertise to analyse and adopt a healthy data culture