Lesson 1: Overview of Big Data and Business Analytics

Introduction
Everyone who runs a business would tell you that making decisions is the most important
task in the role. Business managers are always faced with questions on what to sell, how
much to sell, to whom, and through what mode. A manager or entrepreneur must know
how much it would need to make his or her product, how to cut down on expenses, how
to market the product to customers, and when the business can be expanded. Decisions
do not just come about on their own. They are a product of analysis based on the
information available to the decision-maker.
Business managers have always gathered information to base their decisions on. But
with the development of computers which can store and process large amounts of data,
business analytics began to offer more possibilities for decision-makers. In this lesson,
we will learn more about the role of business analytics, big data, and business
intelligence.

Learning Objectives
After completing this course, you should be able to:
1. Discuss the basic concepts of business intelligence, big data, and business
analytics;
2. Trace the evolution of business analytics; and
3. Give examples of big data service providers.
1.1. Business Analytics and Business Intelligence
In the era of the knowledge economy, getting the right information to decision-makers at
the right time is critical to their business success, and one such attempt includes the
growing use of business analytics (Min, 2017). Business analytics is one of the most
talked-about topics in the field of business and information technology. And as expected,
business analytics is becoming one of the most sought-after courses in the academe.
Business Analytics (BA)
What goes through your mind when you hear the word Business Analytics? Below are
some of the definitions of business analytics.
1. Business Analytics is the art of assembling the data gathered through Business
Intelligence in such a way that it can be analyzed by people. It is comprised of the
tools with which people can disseminate the data that’s been collected, to produce
meaningful conclusions (Fulton, 2013).
 2. Business Analytics is the use of data, information technology, statistical analysis,
quantitative methods, and mathematical or computer-based models to help
managers gain improved insight about business operations and make better, fact-
based decisions (Evans, 2012).

3. Business analytics is comprised of solutions used to build analysis models and

simulations to create scenarios, understand realities and predict future states
including data mining, predictive analytics, applied analytics and statistics (
https://www.gartner.com/it-glossary/business-analytics).

4. Business Analytics is 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 (Galleto, 2018).

5. Business analytics refers to a broad use of various quantitative techniques such

as statistics, data mining, optimization tools, and simulation supported by the query
and reporting mechanism to assist decision-makers in making more informed
decisions within a closed-loop framework seeking continuous process
improvement through monitoring and learning (Min, 2017).

Business Intelligence (BI)

Now, let's look at what Business Intelligence (BI) is.
1. Business Intelligence as the process of collecting information from all sources to
make data-driven decisions in an organization (Fulton, 2013, Galleto, 2018).
2. Business Intelligence as the process of combining aspects of reporting, monitoring
and alerting, dashboards, scorecards, and ad hoc query data exploration
(Capistrano, 2018, Galleto, 2018).

1.2. Origin of Business Analytics

From ancient times, people have had this need to predict the future. They used crude
methods like stones and sticks to project how many crops they were going to harvest or
how much they were going to yield. In this section, we shall trace the development of
business analytics from ancient times to modern times.
Prehistoric Era
In this age, it has been presumed by history that one of the first forms of business
analytics was the numerical markings on the cave walls using wood and stones traced
back from ancient Egypt, Rome, and Babylon, which help in predicting sales trends of
new discoveries and also contributed to the policymakers to build a better decision.

Industrial Era (1800s)

During this era, Frederick Taylor presented scientific management, which was known as
the first-ever system of business analytics in the USA. Its purpose was to survey the
employees' body movements and production process to identify significant efficiency.

Information Age Era (mid-20th century)

In the mid-20th century, the first hard drive disk was invented by the tech giant, IBM, which
allowed users to save a huge amount of data and information with greater flexibility.

Internet Age Era (21st century)

Lastly, in this era, Google came up with a free, accessible, and convenient way for users
to analyze their data, Google Analytics.

In other words, whatever the form of business analytics may be, it would help us answer
the following fundamental questions critical for decision-making:
1. What happened?
a. What did the data tell us?
 2. Why did a certain event take place?
b. Why did it happen?
c. What are the sources of problems?
3. Will the same event take place?
d. Will the problem recur?
e. Are there any noticeable patterns of the problem?
4. What will happen if we change what we used to do?
f. How can we deal with the recurring problem?
g. What is the value the change will bring?
5. How can we ensure that our changed practices actually work?
h. Is there scientific evidence indicating the validity and usefulness of our
changed practices?
By answering the preceding questions, business analytics aims to accomplish these
various goals:
• Gaining insights into business practices and customer behaviors: Business
analytics is designed to transform unstructured, nonstandardized big data
originating from multiple sources into meaningful information helpful for a better
business decision.

• Improving predictability: By deriving insights into customer behavioral patterns

and market trends, business analytics can improve the organization’s ability to
make demand forecasts more accurately.

• Identifying risk: With growing complexity and uncertainty resulting from the
globalization of business activities, many organizations encounter the daunting
tasks of managing risk. Risk cannot be managed without identifying it and then
preparing for it. Business analytics can function as an early warning system for
detecting the signs or symptoms of potential troubles by dissecting the business
patterns (e.g., shrinking market share, a higher rate of customer defection,
declining stock price).
• Improving the effectiveness of communication: With the query and reporting
mechanism of business analytics, it can not only speed up the reporting
procedures but also provide user-friendly reports including “what-if” scenarios.
Such reports can be a valuable communication tool among the decision-makers
and thus would help the management team make more timely and accurate
business decisions.

• Enhancing operating efficiency: By aiding the decision maker in

understanding the way business works and where the greatest business
opportunities are, business analytics can decrease the chances of making poor
investment decisions and misallocating the company’s resources and thus help
improve the company’s operating efficiency.
1.3. Big Data and Business Analytics
SAS defines big data as a term that describes the large volume of structured and
unstructured data that can be analyzed for insights needed for better decisions and
strategic business moves. IBM, on the other hand, refers to it as data sets whose size or
type is beyond the ability of traditional relational databases to capture, manage, and
process the data with low latency.
What is the difference?
Business Analytics is said to focus on financial and operational analytics of the business
while big data involves machine automation to analyze data. The importance of big data
is not on how much data you have, but what you do with that data.
There are four aspects that define big data which are volume, variety, velocity, and
veracity.
1. Volume is about how huge the data sets are.
2. Variety includes how many pieces of data we gather from social media data,
government data, financial data, banking data, and all sorts of transactions all
combined together to make one or more profiles for your customers.
3. Velocity is the speed of data.
4. Veracity means that there is a lot of uncertainty, meaning, there is all these different
data coming together, but the problem is we don’t know what to do with them.
1.4 Big Data Analytics Providers
Big Data companies are essential in today's digital world, which heavily relies on massive
data for their processes and services. These firms collect, process, and analyze large
amounts of information for businesses to create informed decisions to drive growth. They
also provide integrations and solutions that can improve your overall data management.
A long list of big data service providers that are now available in the market can be found
in the Internet.