Business analytics use statistical analysis, which includes predictive and explanatory modeling, along with fact-based management to drive business decision making. Analytics is related to management science. It can be used to inform human decisions or fully automated ones. While traditional business intelligence can show what happened and where the problem lies, business analytics can tell why it happened, what happens next, if the trend will continue, and how to optimize it. This is information that can really improve your business decisions and increase your bottom line.
There are 4 types of analytics that provide the numbers modern companies use to make business decisions. They decision analytics which employ visual analytics. Descriptive analytics which use historical data, reporting, scorecards, and clustering.
Predictive analytics which utilizes predictive modeling from machine learning techniques and statistics. Then there is prescriptive analytics which uses optimization, simulation, and other optics. These techniques have been refined over the last 50 years and employs computers as decision support systems. This has taken business analytic and the numbers they generate to an entirely new level.
This new level of business analytics uses software tools and processes, data warehouses, enterprise resource planning systems. With them the possibilities for generating useful number is endless. The key is gathering, integrating, and analyzing as much high quality data from as many different sources as possible. The data is divided into subsets and used to develop the numbers necessary to make the correct business decisions. These numbers are then used to predict and influence customer interaction outcomes. It can help create the right sales pitch and offer for each consumer.
Another important step for being able to get the most out of the numbers is based on the company’s decision maker’s ability to access the storage space that holds all the data as quickly as possible to make the necessary decisions in real-time. This enables businesses to use analytics to optimize distinct business capabilities and be better able to compete.
The companies that will be able to best compete using the numbers generated by business analytics are: Those organizations with senior executives that are in favor of fact-based decision making. Companies which have the widespread use of complex optimization techniques and predictive modeling. Businesses which use a substantial amount of analytics across numerous business processes and functions. Those companies that move towards managing via an enterprise level approach using data, analytical tools, and organizational capabilities and skills.