Basic Business

Analytics using
Excel, Chapter 01
Intro to Business Analytics

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Topics
• Raw Data Into Useful Information
• Business Analytics
• Descriptive Analytics
• Predictive Analytics
• Prescriptive Statistics
• Big Data
• Steps In Making A Decision
• Types Of Decisions
• Approaches To Decision Making

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Raw Data Into Useful
Information
• Data Analysis :
• Converting raw data into useful information for decision makers
• Statistical Analysis :
• Statistics is the art and science of collecting, analyzing, presenting and
interpreting data to help make informed decisions.
• Analysis (Merriam-Webster dictionary):
• A careful study of something to learn about its parts, what they do and
how they relate to each other
• An explanation of the nature and meaning of something
• Analytics (Merriam -Webster dictionary):
• Information resulting from systematic analysis of data or statistics

• Business Analytics :
• Scientific process of transforming data into 3
insight for better decisions
Business Analytics :
• Scientific process of transforming data into insight for
better decisions
• Data driven decision making
• Fact-based decision making
• Scientific process such as: Queries, Linear Regression, and
Optimization
• Business Analytics has three parts:
• Descriptive Analytics
• Describing the past
• Predictive Analytics
• Build models that help predict the unknown future
• Prescriptive Analytics
• Build models to help predict the best course of action 4
Descriptive Analytics
• Set of techniques that describe what has happened in the past.
• Examples:
• Data Queries
• Like a Filter in Excel or an Access Query
• Reports
• Like an Income Statement, a Regional Report or a PivotTable with multiple
Criteria
• Descriptive Statistics
• Examples: Mean, Median Mode, Standard Deviation, Correlation
• Data Visualization
• Examples; Charts, Tables, Conditional Formatting
• What if Excel models
• Like Income Statement Budget with Assumption Table or a Fixed Variable Cost
Analysis
• Data Dashboards
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• Collection of items such as tables, charts and descriptive statistics that will update
as new data arrives
Predictive Analytics
• Set of techniques that use models constructed from past
data to:
• Predict the future
or
Ascertain impact of one variable on another
• Examples:
• Linear Regression
• Models to help predict one variable based on a one or more other
variables)
• Time Series Analysis & Forecasting
• Using data to make forecasts of unknown future
• Data Mining
• Methods to reveal patterns and relationships in data 6
Prescriptive Analytics
• Set of techniques to indicate the best course of action; what
decision to make to optimize outcome.
• Examples:
• Optimization models
• A mathematical model that gives the best decision, subject to the
situations constraints
• We’ll use the Excel feature called “Solver” which can tell us things
like what number of units to produce to maximize profit.
• Simulation
• Use Native Excel Functions to create a simulation
• Decision Analysis
• Advanced Analytics
• Predictive Analytics and Prescriptive Analytics 7
Big Data
• A set of data that cannot be managed, processed or analyzed with
commonly available software in a reasonable amount of time.
• Why do we have so much data now:
• Every time you buy something, the scanner beep at the register records a lot of
data such as price, product name, time, date, location, sales person and more.
• All our personal devices collect vast amounts of data everyday
• Social media
• E-commerce data
• Almost every click on the internet…
• According to Google: Amount of data generated every 48 hours is equal to
all data created from the beginning of civilization to 2003.
• Business Analytical methods are used more often now because of:
• Vast amount of data
• Improved computational approaches and algorithms to handle the vast
amounts of data 8
• Faster computers and more ability to store vast amounts of data
 BIG DATA

Big Data may well be the Next Big

Thing in the
IT world.

Big data burst upon the scene in the first decade of the
21st century.
Big Data

○Big data is being generated by everything around us at all

times.
○Every digital process and social media exchange produces it.
○Systems, sensors and mobile devices transmit it.
○Big data is arriving from multiple sources at an alarming
velocity, volume and variety.
○To extract meaningful value from big data, you need optimal
processing power, analytics capabilities and skills.
 BIG DATA

○ ‘Big Data’ is similar to ‘Small Data’, but bigger in size but

having data bigger it requires different approaches:
○ An aim to solve new problems or old problems in a better
way.
○ Big Data generates value from the storage and processing of
very large quantities of digital information that cannot be
analyzed with traditional computing techniques.
ORGANIZATIONS EMBRACING BIG DATA
CHARACTERISTICS OF BIG DATA

VOLUM Velocity Variety

E
Big Data Technologies

OPERATIONAL ANALYTICAL
WHY BIG DATA?
WHY BIG DATA?

Growth of Big Data is needed

○ Increase of storage capacities

○ Increase of processing power

○ Availability of data(different data types)

○ Every day we create 2.5 quintillion bytes of data.

○ 90% of the data in the world today has been created in the
last two years alone
BIG DATA SOURCES

Users Application Systems Sensors

Data Generation Points

○ Mobile Devices
○ Microphones
○ Readers / Scanners
○ Science Facilities
○ Programs / Softwares
○ Social Media
○ Cameras
Steps In Making A Decision:
• Identify and define the problem
• Determine criteria that will be used to evaluate alternative
solutions
• Determine the set of alternative solutions
• Evaluate the alternatives with the criteria
• Choose the alternative

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Types Of Decisions:
• Strategic Decisions
• High-level manager decisions concerning the overall direction, goals
and objectives of the organization (3 - 5 year time span)
• Examples:
• Does a local company try and sell out of the state or internationally?
• Does an online only company try to open brick and mortar stores?
• Tactical Decisions
• Mid-level manager decisions about how organization can achieve
the goals and objectives of the organization (1 year or 6 month time
span)
• Examples:
• What states or cities or locations to sell in?
• Operational
• Decisions concerning day to day operations such as number of 20
products to make or order, or how to schedule events.
Approaches To Decision
Making:
• Tradition
• (Probably based on someone’s past experience from way back)
• Intuition
• (Probably based on persons unconscious past experiences)
• Rule of Thumb
• (Probably based on past experiences)
• Data Based Decisions
• (Based on past experiences, but in a more objective way)

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