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Module 1

Business Analytics

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34 views

Module 1

Business Analytics

Uploaded by

ambika venkatesh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Module-1

INTRODUCTION TO BUSINESS ANALYTICS


Topics

 Terminologies used in Analytics:


− Business Analytics
− Business Intelligence
− Meaning, Importance, Scope, Uses of Business Analytics
 Architecture of Business Analytics
 Types of Analytics: Descriptive, Diagnostics, Predictive, Prescriptive,
 Application of Business analytics
 Introduction to Data Science and Big Data
Architectural Framework

 Figure below provides the architectural framework of business analytics.


 It depicts the various components and how they interact to enable
analytics. The framework contains four key elements.

Figure : Business Analytics Architectural Framework


Data Sources
 Data can come from multiple, disparate systems (e.g., databases, CRM
systems, ERP, SCM systems, etc.) found in various locations within the
wider business ecosystem, and it may be either structured (quantitative)
or unstructured (text).
 All this data needs to be organized, structured, and otherwise
standardized in a way that readies it for analytics
Business Data Transformation
 For analytics purposes, data has to be pooled.
 The data is in a raw state and so requires processing or transformation.
For this, several options are available.
 A service‐ oriented architectural approach combined with web services is
one route.
 The data stays raw, and services that perform the routine and
standardized processes across the organization are used to call, retrieve,
and process the data.
 Another approach is data warehousing (middleware), whereby data from
various sources is aggregated and made ready for processing.
• Data from diverse sources are cleansed and made ready through the
steps of extract, transform, and load (ETL).
Platform and Tools
 After the data are readied for analytics, an array of tools can be
deployed to perform the four types of analytics.
 These may include statistical tools (e.g., SAS, R, SPSS etc.), advanced
business intelligence tools for visualization (Cognos, Business Objects,
Tableau, Hyperion, etc.), and programming languages such as Python
and packages for machine learning.
Business Analytics Applications
 By deploying various tools, analytics applications such as queries,
reports, online analytical processing, and data mining can be executed to
support managerial decision‐making.
 For example, consider the task “Identify customers who have incurred
high overhead costs (e.g., in returns, exchanges) during the sales year
and whose overall cost exceeds the average overhead cost by at least
40%”
Types of Analytics

1. Descriptive Analytics
2. Diagnostic Analytics
3. Predictive Analytics
4. Prescriptive Analytics
1. Descriptive Analytics

 Simplest form of analytics


 It is the most basic form of analytics performed by more than 90% of
businesses. The objective is to summarize the results and to understand
what is going on.
 Descriptive analytics helps a business learn from its past behavior and
how it will impact the future.
 The two main techniques involved are data aggregation and data mining
stating that this method is purely used for understanding the underlying
behavior and not to make any estimations.
 The tools used in this phase are MS Excel, MATLAB, SPSS, STATA, etc.

 A simple example of descriptive analytics is to assess credit risk: we


can predict a consumer’s likely financial riskiness by seeing their
balance amount against the credit limit
2. Diagnostic Analytics

 Diagnostic analytics is used to determine why something


happened in the past.
 It is characterized by techniques such as drill-down,
data discovery, data mining and correlations.
 Diagnostic analytics takes a deeper look at data to understand the root
causes of the events.
 It is helpful in determining what factors and events contributed to the
outcome. It mostly uses probabilities, likelihoods, and the distribution of
outcomes for the analysis.
 In a time series data of sales, diagnostic analytics would help you
understand why the sales have decrease or increase for a specific year or
so.
 Another use case of diagnostic analytics is in healthcare. One can
identify the impact of medicines on the patients and can be used to
study the effects of before and after treatment.
3. Predictive Analysis

 Predictive analytics uses the gathered data and descriptive and diagnostic
analytics results to tell what is likely to happen in the future on a granular
level
 Its use involves forecasting the future, predicting the market trends,
changing customer behaviors, and analyzing competitors to optimize and
build strategies to maximize the business results.
 The predictions are made by analyzing the past data, detecting patterns,
casual relationships in the data, and then extrapolating them in the
future.
 One of the common applications of predictive analytics is found in
sentiment analysis where all the opinions posted on social media are
collected and analyzed (existing text data) to predict the person’s
sentiment on a particular subject as being- positive, negative or neutral
(future prediction).
 Amazon’s recommendation engines are a classic example where on
making one purchase, the engine shows the list of other similar items
that the buyers have purchased.
 Techniques used decision trees, neural networks and regression
 The most popular tools for predictive analytics include Python, R,
RapidMiner, etc.
4. Prescriptive Analytics

 prescriptive analysis is the next step that helps in


exploiting the future. It essentially tells the business
what should be done.
 Using simulation and optimization, it advises on the possible outcomes and
suggests actions that can maximize the key business metrics.
 The focus here is on how to make it happen.
 Specific techniques used in prescriptive analytics include optimization,
simulation, game theory and decision-analysis methods. Data science and
machine learning tools form the foundation of a prescriptive analytics
practice.
 For example, while calling for a cab online, the application uses GPS to
connect you to the correct driver from among a number of drivers found
nearby. Hence, it optimizes the distance for faster arrival time
 Prescriptive analytics has its applications in marketing, financial markets,
and the transportation industry.
 Similarly, it can be applied in the transportation sector to save time and
resources by optimizing the best routes.
 In the financial markets, the researchers heavily rely on statistical
modeling to maximize the returns and manage risk and profitability.
Applications of Business Analytics
Introduction to Data Science and Big Data

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