Starbucks, Accenture, Amazon, Splunk, Google, Uber, IBM, and many popular companies use business analytics to personalize product recommendations, land logistical business decisions and better understand markets, customers, and business processes. Not just big brands, nearly 70% of small businesses spend more than $10,000 annually on various business analytics.
What is Business Analytics?
Business Analytics is the process of using statistical methods, skills, technologies, and practices to analyze historical data and gain new insight to improve strategic decision-making. This subset of data management solutions employs business intelligence and several methodologies such as data mining, statistical analysis, and predictive analytics.
Various business analytics types help analyze and transform data into useful information, identifying and anticipating the current trends and outcomes for smarter, data-driven business decisions.
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Types of Business Analytics
The four most popular types of business analytics are descriptive, diagnostic, predictive, and prescriptive. The fifth– cognitive analytics is a new type that employs AI, ML, and deep learning. Whilst each of these business analytics types is effective when used individually, they become extremely powerful when employed together.
1. Descriptive Analytics
Descriptive Analytics is used to analyse historical data to determine the response of a unit over a set of given variables. It tracks key performance indicators (KPIs) for a better understanding of the present state of a business.
It involves the following five steps:
- Deciding which business metrics will effectively evaluate performance against objectives
- Identifying required data as per the current business state
- Collecting and preparing data using various processes like depublication, transformation, and cleansing.
- Analyzing data for patterns to measure performance
- Presenting data in charts and graphs to make it understandable for non-analytics experts
Examples of Descriptive Analytics
- Summarizing past events, exchange of data, and social media usage
- Reporting general trends
2. Diagnostic Analytics
Diagnostic Analytics is one of those business analytics types that help understand why things happened in the past. Using drill-downs, data mining, data discovery, and correlations, you can comprehend the driving factors.
This advanced analytics method is usually employed as a preceding step of Descriptive Analytics to find the reasoning behind certain results in finance, marketing, cybersecurity, and more.
Examples of Diagnostic Analytics
- Examining market demand
- Identifying technical issues
- Explaining customer behavior
- Improving organization culture
3. Predictive Analytics
Predictive Analytics considers historical data trends for determining the probability of particular future outcomes. It uses several techniques like data mining, machine learning algorithms, and statistical modeling to forecast the likelihood of events.
Predictive analytics helps improve business areas, including customer service, efficiency, fraud detection and prevention, and risk management. It allows you to grow the most profitable customers, improve the operations of businesses, and determine customer responses and cross-sell opportunities.
Examples of Predictive Analytics
- Predicting customer preferences
- Detection of employee intentions
- Recommending products
- Predicting staff and resources
4. Prescriptive Analytics
Prescriptive analytics generates recommendations to handle similar future situations relying on past performances. It employs several tools, statistics, and ML algorithms for the available internal data and external data.
It gives you insights into what may happen, when, and why.
Examples of Prescriptive Analytics
- Tracking fluctuating manufacturing prices
- Improving equipment management
- Suggest the best course of action
- Price modeling
- Evaluating rates of readmission
- Identifying testing
5. Cognitive Analytics
Combining Artificial Intelligence and Data Analytics, Cognitive Analytics is one of the newest types of business analytics. It looks at the available data in the knowledge base and discovers the best solutions for the questions posed.
Cognitive analytics covers multiple analytical techniques to analyze large data sets and monitor customer behavior patterns and emerging trends.
Examples of Cognitive Analytics
- Tapping unstructured data sources such as images, text documents, emails, and social posts.
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What Business Analytics Types Do Different Companies Prefer?
Top companies choose different types of business analytics. Often they employ several types of business analytics in a step-like process, starting from Descriptive Analytics and concluding with Prescriptive Analytics.
- Amazon uses descriptive and predictive analytics of customers' historical shopping data for the prediction of the probability of a customer buying a product. It also uses these methods to personalize product recommendations.
- Microsoft uses prescriptive and predictive analytics to improve productivity and collaboration.
- Uber uses predictive modeling to estimate demand in real-time and has enhanced its customer support.
- Starbucks also benefits from predictive analytics to predict purchases and propose interesting offers.
- Apple's Siri, Microsoft's Cortana, and IBM's Watson use cognitive analysis.
What Types of Business Analytics are Right for You?
Every business analytics type plays a significant role depending on the requirements. However, prescriptive analytics is one of the most important types and is thus opted for by most companies.
Descriptive analysis is the most suitable if you are aiming at analyzing the everyday reporting for your businesses.
When making assessments for future situations using ML and deep learning, use predictive analytics as it is a more advanced method.
To estimate the best possible options, opt for prescriptive analytics to get actionable insights instead of data monitoring. It best suits healthcare decision-makers needs in optimizing and reducing production costs.
When it comes to social media campaign analytics and other digital marketing analytics, diagnostic analytics helps view what works and what doesn't for your campaigns.
You can use these four techniques sequentially, or you can jump directly to prescriptive analytics if you have identified the key area that requires optimization to reach the desired outcome.
Looking into the business strategies of top companies reveals that prescriptive and cognitive analytics are the front-runners in this spectrum.
Business Analytics Tools
From a simple spreadsheet with statistical functions to complex predictive modeling applications and data mining, business analytics tools enable users to gain deeper insights with much-needed accuracy.
Business analytics tools help analyze various business reports and data, generating the best possible outcome for users. For instance, OmniSci is a business analytics tool. It enables users to interactively query, visualize, and power Data Science workflows across massive data.
Some other tools used by Business Analysts are as follows:
- Jira
- Confluence
- Trello
- Balsamiq
- Microsoft Visio
- Google Docs and Spreadsheets
- Rational Requisite Pro
Business Analytics Jobs
According to Glassdoor, a business analyst earns an average of $68,346 annually. With thorough knowledge of business analytics, you can compete for the following job positions:
- Business Analyst
- Business Analyst Manager
- Data Analysis Scientist
- Data Business Analyst
- Information Security Analyst
- Quantitative Analyst
- IT Business Analyst
Conclusion
Despite the growing demand for business analytics, fewer candidates choose this career path. To thrive in today's business world, you must both understand and speak data. Enroll in our Professional Certificate Program in Business Analysis to acquire the in-demand skills and accelerate your journey to success.
FAQs
1. What are the different types of analytics?
The different types of business analytics are mentioned below:
- Descriptive Analytics: Summarizing and describing past events
- Diagnostic Analytics: Examining past performance to find causes
- Predictive Analytics: Forecasting future events using historical data and models/ML
- Prescriptive Analytics: Recommending specific actions based on data analysis
2. What type of analytics is considered most crucial for businesses in general?
Prescriptive analytics is one of the key types of business analytics. It predicts future events in a business and outlines the steps to be taken to achieve the desired outcome. It produces guidelines and recommends actions to be taken, making it highly sought after in the industry.
3. What job positions are available for individuals with knowledge of Business Analytics?
If you have a comprehensive understanding and knowledge of Business Analytics, you can seek the following job positions:
- Business Analyst
- Information Security Analyst
- Data Analysis Scientist
- Quantitative Analyst
- Data Business Analyst
- Business Analyst Manager
- IT Business Analyst
