Benefits of Data-Driven Decision Making with Business Analytics
Companies use Business Analytics (BA) to make data-driven decisions. The insight gained by BA enables these companies to automate and optimize their business processes. In fact, data-driven companies that utilize Business Analytics achieve a competitive advantage because they are able to use the insights to:
- Conduct data mining (explore data to find new patterns and relationships)
- Complete statistical analysis and quantitative analysis to explain why certain results occur
- Test previous decisions using A/B testing and multivariate testing
- Make use of predictive modeling and predictive analytics to forecast future results
Business Analytics also provides support for companies in the process of making proactive tactical decisions, and BA makes it possible for those companies to automate decision making in order to support real-time responses.
Business analytics techniques break down into two main areas. The first is basic business intelligence. This involves examining historical data to get a sense of how a business department, team or staff member performed at a particular time. This is a mature practice that most enterprises are fairly accomplished at using.
The second area of business analytics involves deeper statistical analysis. This may mean doing predictive analytics by applying statistical algorithms to historical data to make a prediction about the future performance of a product, service or website design change. Or, it could mean using other advanced analytics techniques, like cluster analysis, to group customers based on similarities across several data points. This can be helpful in targeted marketing campaigns.
Business Analytics Best Practices
Adopting and implementing Business Analytics is not something a company can do overnight. But, if a company follows some best practices for Business Analytics, they will get the levels of insight they seek and become more competitive and successful. We list some of the most important best practices for Business Analytics here, though your organization will need to determine which best practices are most fitting for your needs.
- Know the objective of using Business Analytics. Define your business use case and the goal ahead of time.
- Define your criteria for success and failure.
- Select your methodology and be sure you know the data and relevant internal and external factors
- Validate models using your predefined success and failure criteria
Business Analytics is critical for remaining competitive and achieving success. When you get BA best practices in place and get buy-in from all stakeholders, your organization will benefit from data-driven decision making.
Once the business goal of the analysis is determined, an analysis methodology is selected and data is acquired to support the analysis. Data acquisition often involves extraction from one or more business systems, data cleansing, and integration into a single repository, such as a data warehouse or data mart. The analysis is typically performed against a smaller sample set of data.
Analytics tools range from spreadsheets with statistical functions to complex data mining and predictive modeling applications. As patterns and relationships in the data are uncovered, new questions are asked, and the analytical process iterates until the business goal is met.
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