Introduction

to
Business Analytics

Dr. Amitabh Mishra 1

• Analytics is a field which combines following into one -
1. Data,
2. Information technology,
3. Statistical analysis,
4. Quantitative methods and
5. Computer-based models

• This all are combined to provide decision makers all the

possible scenarios to make a well thought and
researched decision.

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 Meaning of Business Analytics
• Business analytics (BA) refers to
– “The skills, technologies, practices for continuous
developing new insights and understanding of business
performance based on data and statistical methods”.

– “the practice of exploration of an organization’s data with

emphasis on statistical analysis. Business analytics is used
by companies committed to data-driven decision making.

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– “The statistical analysis of the data a business has
acquired in order to make decisions that are based
on evidence rather than a guess”.

– “A combination of data analytics, business

intelligence and computer programming. It is the
science of analysing data to find out patterns that
will be helpful in developing strategies”

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 Evolution of Business Analytics
• Business analytics has been existence since very long time and has
evolved with availability of newer and better technologies.

• It has its roots in operations research, which was extensively used during
World War II. Operations research was an analytical way to look at data to
conduct military operations.

• Over a period of time, this technique started getting utilized for business.
Here operation’s research evolved into management science. Again, basis
for management science remained same as operation research in data,
decision making models, etc.

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• As the economies started developing and companies
became more and more competitive, management
science evolved into-
– Business intelligence,

– Decision support systems and into

– PC software.

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 SIGNIFICANCE AND USAGES
OF BUSINESS ANALYITCS
• To make data-driven decisions
• Converts available data into valuable information.
• Eliminate guesswork
• Get faster answer to questions
• Get insight into customer behavior
• Get key business metrics reports when and where
needed

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• It impacts functioning of the whole organization. And
hence, can-
– Improve profitability of the business
– Increase market share and revenue and
– Provide better return to a shareholder
– Reduce overall cost
– Sustain in competition
– Monitor KPIs (Key Performance Indicators) and
– React to changing trends in real time

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 CHALLANGES FOR BUSINESS ANALYITCS

• Business analytics depends on sufficient volumes of high

quality data.

• The difficulty in ensuring data quality.

• Data warehousing require a lot more storage space than

it did speed.

• Business analytics is becoming a tool that can influence

the outcome of customer interactions.

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• Technology infrastructure and tools must be able to
handle the data and Business Analytics processes.

• Organizations should be prepared for the changes

that Business Analytics bring to current business and
technology operations.

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 Scope of Business Analytics

• Business analytics has a wide range of

application and usages-
– Descriptive analysis

– Predictive analysis

– Prescriptive analysis

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 Descriptive Analysis

• This branch of Business Analytics analyses and finds

answer to the question-
“What has happened in the past?”.

• Descriptive analysis/ statistics performs the function

of “describing” or summarizing raw data to make it
easily understandable and interpretable by humans.

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 Predictive Analytics
• This branch of Business Analytics, uses forecasting
techniques and statistical models to find out-
What is going to happen in future?

• Predictive analysis helps us in predicting the future

course of events and taking necessary measures for the
same.

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• Predictive analysis employ-
– Predictive modelling and Machine learning techniques.

• Predictive modeling uses statistics to predict outcomes.

• Machine learning(ML) statistical is the scientific

study of algorithms and models that computer systems use to

perform a specific task without using explicit instructions, relying

on patterns and inference instead. Machine learning algorithms

build a mathematical model based on sample data, known in order

to make predictions or decisions without being explicitly

programmed to perform the task.

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 Prescriptive Analytics
• This branch of Analytics, makes use of optimization and simulation
algorithms to find answer to the question-
“What should we do?”.
• Prescriptive Analysis is used to give advices on possible outcomes.
• This is a relatively new field of analytics that allows users to
recommend several different possible solutions to the problem and
to guide them about the best possible course of action.

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 USERS OF BUSINESS ANALYITCS
1. Students

2. Business man

3. Accountants and Auditors

4. Organization/Companies/Group of industries/
Small firm

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 MAIN SOFTWARE USED FOR BUSINESS
ANALYITCS

1. MS-EXCEL

2. SPSS

3. R

4. SAS

5. E-views

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• SPSS-
– SPSS Statistics is a software package used for statistical
analysis. Long produced by SPSS Inc., it was acquired by
IBM in 2009. The current versions (2014) are officially
named IBM SPSS Statistics.

• MS-EXCEL-
– Microsoft Excel is a spreadsheet application developed by
Microsoft for Microsoft Windows. It features calculation,
graphing tools, pivot tables, and a macro programming
language called Visual Basic for Applications.

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MS-EXCEL in Business Analytics
– Microsoft Excel is a spreadsheet application
developed by Microsoft for Microsoft Windows.

– It features
• Calculation,

• Graphing tools,

• Pivot tables, and

• A macro programming language called Visual Basic

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The Business Analytic Process

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Components of Business Analytics
• There are 6 major components/categories in
any analytics solution:
Data Mining

Text Mining

Components of Forecasting
Business Analytics Predictive Analytics

Optimization

Visualization
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• Data Mining – Create models by uncovering previously
unknown trends and pattern in vast amounts of data e.g.
detect insurance claims frauds, Retail Market basket
analysis.
• There are various statistical techniques through which data
mining is achieved.
– Classification (when we know on which variables to classify the
data e.g. age, demographics)
– Regression
– Clustering (when we don’t know on which factors to classify
data)
– Associations & Sequencing Models
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• Text Mining – Discover and extract meaningful
patterns and relationships from text
collections. E.g.
– Understand sentiments of Customers on social
media sites like Twitter, Face book, Blogs, Call
centre scripts etc. which are used to improve the
Product or Customer service or understand how
competitors are doing.

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• Forecasting – Analyze & forecast processes that take place
over the period of time. E.g.
– Predict seasonal energy demand using historical trends,

– Predict how many ice creams cones are required considering

demand

• Predictive Analytics – Create, manage and deploy

predictive scoring models. E.g.
– Customer churn & retention,

– Credit Scoring,

– Predicting failure in shop floor machinery

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• Optimization– Use of simulations techniques to
identify scenarios which will produce best results.
E.g.
– Sale price optimization,
– Identifying optimal Inventory for maximum fulfilment
& avoid stock outs.

• Visualization– Enhanced exploratory data

analysis & output of modelling results with highly
interactive statistical graphics.

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