Business Analytics also known as BA is mainly “the study of data through statistical and operations analysis, the formation of predictive models, application of optimization techniques, and the communication of these results to customers, business partners, and college executives.” The data used for Business Analytics needs to be quantitative and evidence-based in order to be able to create a business model and make big decisions. Through Business Analytics people can gain insights which help them automate and optimize business processes. That’s why business owners need Big Data.
“a greater potential for privacy invasion, greater financial exposure in fast-moving markets, greater potential for mistaking noise for true insight, and a greater risk of spending lots of money and time chasing poorly defined problems or opportunities.” Penn State University’s John Jordan described the challenges with Business Analytics.
What is Big Data?
According to SAS “Big Data is a term that describes the large volume of data – both structured and unstructured – that inundates a business on a day-to-day basis.”
Types of Business Analytics
There are 3 main types of business analytics which companies use to perform analysis of big data. These are as follows.
- Descriptive Analytics: Companies use descriptive analytics to summarize the results. The tools which are used for this type are data aggregation and data mining. In the first step, you are actually summarizing the data so that you can analyze them later. This is actually a history and includes an explanation of whatever has happened in the past. The techniques that business people use for this type are reports, data mining, Descriptive statistics etc.
- Predictive Analytics: This one helps with strong and educated guesses at likely results. The tools for Predictive Analytics are statistical models and simulation. You can use the data gained in the previous stage in Predictive Analytics. A company can create a mathematical model for predicting the future sales by using past data on product sales.
- Prescriptive Analytics: The devices that help with Prescriptive Analytics are optimization models and Heuristics which lead to making important decisions. In this type, a business person should describe the best process for a business activity.
The difference between Business Intelligence and Business Analytics
Although these two terms are similar, they are not exactly the same. Business Intelligence mainly refers to the process of collecting the data needed for Business Analytics. Therefore, we can think of the former as the first step and the latter as the second step of the whole process. Business Analytics refers to the process of analyzing the results gathered from the first step.