Different Types of Business Analytics To Follow
The term Business Analytics (BA) dates back to the 1800s when Fredrick W. Taylor prescribed it in the US. The requirements of the industrial revolution to boost trade brought forward an upgraded version of BA. Today, BA has shaped the marketing structure of every business. Starbucks, Nestle, Unilever, Amazon, Apple, and most of the brands today rely on different types of business analytics to derive data-driven decision-making and predictive modeling to enforce significant stratagems and streamline customer satisfaction and business growth. According to a report, the market size of business analytics in 2021 accounts for USD 31.74 Billion.
What is Business Analytics (BA)?
A member of the family of data management solutions, BA is a process of collecting, formatting, analyzing, and processing data, skills, and practices of past business performance to derive business planning and strategies for a progressive future based on statistical methods by using various types of business analytics.
Different types of Business Analytics aid in collating data and converting it into significant information, which helps to predict business decisions to endorse foolproof amplification of any business.
The following steps are involved in executing the concept of BA to help a business prosper in terms of profits, smarter and efficient business moves, customer satisfaction, and new opportunities:
- Discover a business need
- Collect relative data
- Analyze the data
- Predict outcomes
- Find the best solution
- Make decisions
Why Do Businesses Rely on Business Analytics?
Today, globally every business and company rely on to business analytics assure sustainable growth alongside maximum customer satisfaction. Thanks to BA, this has been made possible. Businesses rely on BA owing to the following reasons:
- To achieve increased efficacy and output (64%)
- To reach potential and useful decisions (56%)
- To reinforce financial growth (51%)
What Are the Types of Business Analytics?
Descriptive, diagnostic, predictive, and prescriptive analysis are the four distinct types of business analytics.
- Descriptive: Involves identification of an issue as to what has happened
- Diagnostic: Identification of the causes as to why it has happened
- Predictive: Prediction of the future based on the collected data as to what may happen
- Prescriptive: to derive a solution based on the above three. Helps to answer “What should be done?” to make something happen.
Besides these types of business analytics, there are further a few more types of Business Analytics:
- Cognitive analytics
- Spatial analytics
- Text analytics
- Behavioral analytics
1. Descriptive Analytics (DA)
This one of the types of business analytics is the simplest form of BA, most communal and essential. It functions by evaluating the movements in business and also keeps a track of the active performance of the company by identifying trends and relationships associated with the sales, marketing, and growth of the business.
It helps to answer the question,” WHAT HAPPENED?” It answers questions like:
- How much did we sell?
- What was the overall production?
- How many customers did we make/lose in the year?
The advantages of DA are as follows:
- Helps to understand overall data at a cumulative level.
- This category of BA does not need any special skills or expertise. It is easy and doable.
- It helps the company to understand the simplest yet most important questions of problem identification and performance status.
- A variety of tools are available to ease out the process of DA and so is a fleeting task. Also, it uses data that is readily available to any company as a part of its data collation.
Let us understand DA with an example. Do you know Netflix? Of course, you would. So, Netflix is a company that relies on data-driven decision-making. It collects data on customers’ likes and then converts this into information. This information is used to list out the most desired shows and movies on the home screen of the application on your screen.
This doesn’t only ease the choice of highlighted shows and movies but also helps the company to understand customer behavior in terms of choices and likings in relation to actors, shows, and themes. This, in turn, aids in deciding the future course of action by the company as to which production houses, actors, and themes should top their priorities.
2. Diagnostic Analytics (DiA)
This category of BA diagnoses and explains the root cause of a problem/boost, that has been identified. It helps a company to answer the question, “WHY DID IT HAPPEN?”. Relevant terms in regard to Diagnostic Analytics are as follows:
Knowledge discovery in data: It is the process to dig into a large amount of data to discover patterns and behavior of customers as well as business growth. For example, Analysts will dive deep into the data to find out what has helped Netflix with an increased subscription.
Data drilling: A deeper investigation will help the analysts to identify the facets of the data that are resulting in the observed trends and forms. For example, Analysts will dig into data to find out what exactly, which zone, what timings, and which shows and movies helped Netflix with an increased TRP.
Correlation analysis: Helps to draw an analysis of how different variables are correlated. For example: During covid, the subscription of Netflix experienced a huge surge.
DiA is advantageous in the following ways:
- Aids in understanding customer behavior and the cause. This helps the master plan of growth of the company.
- Helps companies to amplify their growth by coming to a prognosis by giving a clear picture of what can be reiterated or what needs to be changed/omitted to increase the success rate.
Example of DiA: During Covid, Netflix experiences a sudden, unexpected surge in its subscriptions. It was observed that around 26 million people around the globe created accounts on Netflix in the first 6 months of 2020. It was identified that during the pandemic, Netflix continuously telecasted new and fresh content, which enabled Netflix to stay at its peak in relation to viewers’ choices.
Thanx to DiA, this information was of profound importance in regard to growth and stability in the performance of the company. Also, social media is a great platform for DiA to derive significant data in terms of customer behavior, promotions, and deals. Analysts can rely on this data to determine the proficiency of specific strategies and thus, help a business boom and stabilize.
3. Predictive Analytics (PA)
This is one of the most useful types of business analytics. PA is a branch of analytics that relies on historical data and predicts scenarios and future events, which helps in decision-making to avoid risks and discover opportunities. These predictions can be expeditious or can be for that specific day. PA answers the question, ‘What may happen?’
PA can be conducted in two different ways:
- Machine-generated data in the form of algorithms
It is noteworthy that PA uses reverse psychology to determine the prognosis. Various parameters are analyzed to identify the relationship between them. These parameters are written in form of a mathematical statement.
The benefits of PA can be seen as follows:
- It helps a company to retrieve their most potential customers
- Helps to reduce risk by helping foresee possible events.
- Helps to augment sales and operations
For example, Netflix relies on machine-generated algorithms to determine the plan of action, based on a choice of customers, browsing history, and the anthropology of the most popular shows and movies. This analysis helps Netflix to take decisions on which shows and movies should be aired.
4. Prescriptive Analytics (PrA)
Though the credit for inventing the term Prescriptive analytics goes to IBM, it should be remembered that the concept has existed for years. It is better known as the Final Frontier. PrA helps organizations to answer the “What should be done to achieve a desired result?”
PrA benefits businesses in the following ways:
- Provides permutations and combinations of different scenarios and helps in simplifying decisions.
- Focuses on execution and so, the result is quicker since less time is spent on the plan of action
To better understand PrA, let us look at an example. Netflix follows PrA to understand the present customer behavior and uses this information to foresee what in the future will affect customer decisions in terms of subscriptions. This analysis helps the company to make appropriate acclamations.
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5. Cognitive Analytics (CA)
CA is a branch of business analytics that uses human-like intelligence to come up with smart technologies, learning systems, and processes. CA unwraps the layers of amorphous data sources like pictures, texts as well as data emerging from social platforms.
CA has adopted Artificial intelligence (AI) to make use of human-like inputs. Data mining, as explained earlier, is also an essential element of CA. It can also be said that CA is a broad term that is inclusive of a lot of other substantial elements like machine learning, artificial intelligence, and language processing.
The benefits of CA can be seen as follows:
- It helps to correlate different kinds of data and also amplifies and recognizes veiled designs in the growth graph of any business.
- It brings the entire data to one common platform, in a scenario where some information may have been missed otherwise. So, CA also helps to collect a-z information, without creating any gaps in between.
- CA is applicable to a variety of systems. For example, videos, pictures, languages, etc.
For example, CA helps to collect and store pictures on Google photos. It takes the help of google cloud computing and reforms the data. In addition, the users give their contributions by labeling and segregating their folders.
6. Spatial Analytics (SA)
SA helps an organization with location-specific information. The information is derived by conjoining different layers of business and terrestrial data. This analysis helps in developing a clear picture of the data to solve complicated problems of an absolute location. The three core elements of SA are lines, points, and polygons alongside the readily used GIS system of navigation.
SA lends a hand to businesses in the following ways:
- It becomes easy to track the source of the problem and companies are able to avert any potential danger in the future, by following the “nip it in the bud” theory.
- Helps to resolve zone-specific issues and get a clear picture in regard to the geographical location.
- Helps to understand human behavior and derive patterns to analyze a future possibility.
7. Text Analytics (TA)
TA is that branch of BA that brings together large volumes of amorphous text and combines it with analytical tools of machine learning and processes to derive trends and visions. It is also known as text data mining. The computer system analyses a bulk of written information and draws results by mining into various written sources including feedback shared by customers, which are usually in various languages also.
It is helpful in the following ways:
- Time-saving since the entire data is brought onto one platform
- Increased productivity through mechanization
- Mechanized translation in case of various languages
The industries which benefit majorly from Text analytics are as follows:
- Hospitality: The hotel industry prospers or dies out based on the reviews. These reviews help to create data-driven decisions by collecting and analyzing these texts in the form of reviews.
- Advertising: Helps to track the sentiments of customers and generates data based on TA
- Pharma: Uses TA in regard to drug compendia ad well as the alterations needed based on the findings.
- Retail: In E-commerce, customers’ feedback is crucial and this is analyzed and converted into significant information to derive solutions.
- Financial services: Customer interaction and other kinds of documentation are used by TA.
8. Behavioural Analytics (BeA)
This concept of BA is a recent invention that analyses how’s and what’s of the customer consumer behavior and provides findings based on the analysis done on different digital platforms. For example E-commerce, mobile apps, emails, etc.
There are three behavioral analytical tools:
- Segmentation tools: Helps to derive custom calculations, and patterns and amplify marketing.
- Funnel tools: Helps to visualize complex journeys performed by customers and identify trends
The benefits of BeA can be summed up as follows:
- Amplifies the company’s conversion
- The data is accessible to all the members of the team and so all can share their insights.
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Software Associated With Business Analytics
There is a list of software that make the life of Business analysts easier. They are enlisted as follows:
- Microsoft Power BI: It is the best software for data visualization. It helps to create data sheets with ease and also allows us to share them steadily. It is good for small organizations which want to create urbane data visualizations.
- Tableau: This is software that helps with business intelligence. It is empowered with the Einstein AI tool, which makes it more resourceful for business analysts. It has a large community, which will come to your rescue, should you need any help and support at any point in time.
- Qlik Sense: Qlik sense is excellent for machine learning (ML) and uses ML to derive simpler analysis of the data which is user-friendly. It offers unparalleled efficiency in terms of analytics.
- Looker: This is the best software for data exploration. Its integration with google cloud makes it easier and more user-friendly. It also has a vigorous Application programming interface (API) which comes in handy to prepare customized applications.
- Klipfolio: If you need instant metrics, then Klipfolio is for you. It is time-saving as well eases the process easier by collating the entire data in one place as well as saving the history for frequent use.
- Zoho Analytics: If you are aiming at robust insights, then Zoho is your best partner. This software helps users by integrating data from various sources like custom applications, business feedback, cloud computing, etc.
- Domo: For streamlining workflow, you will not find anything better than Domo. It allows you to choose packages based on the requirement of data storage as well as query volume. It uses drag-and-drop features through pre-built applications for apple, android, and other such user-friendly interfaces.
Frequently Asked Questions About Types of Business Analytics?
Is Data Analytics and Business Analytics the same?
Although both – data and business analytics, work with data, the difference comes in with the usage of the same. Data analysts would utilize the data to derive insights and trends, whereas business analysts use it to make strategic decisions.
What are the most important types of Business Analytics?
Though all the types of business analytics are substantial in their own way, yet, the two most widely used types of business analytics are prescriptive and descriptive BA.
Which one of the types of business analytics is most complex?
Prescriptive BA is the most complex BA.
Can I get a Job after my post-graduation in Business Analytics?
Yes, with the high demand in the market for Business Analysts, one can be assured of a job after post-graduation with BA. The highest demand for Business Analysts comes from these industries: hospitality, finance, healthcare, and business consultancies.
How much on average a Business Analyst can earn?
Business Analysts with an experience of 1-2 years can make up to an average of $76,191 per year.
How can one develop a career in Business Analytics?
One can follow the following path to make a career in BA:
- Get a relevant undergraduate degree: It is highly recommended to pursue an undergraduate degree in business or computer applications.
- Pursue a post-graduate degree in business analytics: With the increasing cloud computing and the increasing competition in the field, it will be a smart move to achieve a master’s degree in business analytics, to help you advance in computing, and business development.
- Additional learning and certifications: Supplementing your credentials with certifications from global associations like the International Institute of Business Analysis (IIBA) will not only add up to your profile, but it will also help you to strengthen your position in the industry as a potential candidate for employers.
- Gain hands-on experience with professional training: Internships in relative firms will help one to get the real feel of working for different domains of the industry. It will also help you to decide whether you would want to work in the core field or in a specific domain.
- Place your hands on the latest software and machine learning: A practical experience with relevant tools and software will help you gain confidence to work on the required platform at ease and will also help you to understand the correlation between business and IT.
- Expand your circle and networking through conferences and events: Conferences, workshops, seminars, etc. will not only help you increase your acquaintance with experts in the industry but, it will also help you with opportunities.
What are the Career Options For Business Analysts?
A business analyst can dive deep into the industry and scoop out various positions in different domains. There are some rewarding career options available for post-graduates in Business Analytics. These can be listed as follows:
- Business Analyst
- Data Analyst
- HR Analyst
- Financial Analyst
- Supply Chain Analyst
- Marketing Analyst
- Data Scientist
Which are the top 5 big BA companies?
- ProCogia, Canada
- Data Root Labs, Ukraine
- QBurst, India
- Indicium, Brazil
- Atlantbh, Bosnia
Business Analytics is a great career option for business and computer graduates as well as people with a master’s in business administration. With the increasing rise in business around the globe, BA is certainly a wise choice for one’s career. With the increasing inventions in cost-efficient cloud computing systems, elaborate data analysis as well as analytic software, the future demands efficient business analysts to make business growth sustainable globally.
And so, whether you are a business graduate or a computer expert, BA stands as a great choice for you for a prosperous career. Further, gaining expertise in one or more types of business analytics will polish your skills and amplify the chances of a steep hike in professional innovation. Go for it and make a niche for yourself in your dream job right away!