Business Analytics

Megharaja B
Assistant Professor of Commerce
VSK University, Ballari
Introduction to Business Analytics
 Meaning
 Definition
 Characteristics
 Applications
 Classification or types
 Importance
 Tools and techniques
 Functions
 Reports
 Data scientist roles and Responsibility
 Overview of Machine learning, Business Intelligence & Data visualisation
What is Business Analytics?

 Business Analytics is the discovery and communication of

meaningful patterns of data and that to business‐related
problems
 It is the scientific process of transforming data

into insight for making better decisions

(INFORMS).
[data => information => knowledge =>
wisdom]
Business analytics is the process by which
businesses use statistical methods and
technologies for analysing historical data in
order to gain new insight and improve strategic
decision making.
Business analytics is measuring the
performance to make improvement to the
bottom line of the business.
What is BA?
BA is the use of:
data,
information technology,
statistical analysis,
quantitative methods, and
mathematical or computer‐based models
to help managers to gain improved insight about their business
operations and make better, fact‐based decisions.
Definitions
 BA is the extensive use of data, statistical and quantitative
analysis, explanatory and predictive models, and fact‐based
management to drive decisions and actions (Davenport and
Harris).
As per a popular definition from authors
 Michael J Beller and Alan Barnett, “Business analytics refers to
the skills, technologies, and practices for continuous iterative
exploration and investigation of past business performance to
gain insight and drive business planning”
Characteristics of BA
Business analytics is the process of transforming data into insights
to improve business decisions.
 Data management,
 data mining,
 data visualization,
 predictive modeling,
 forecasting simulation, and
 optimization are some of the tools used to create insights from

data.
Business Analytics Applications
 Pricing decisions
 Financial and marketing activities
 Supply chain management
 Management of customer relationships
 Human resource planning
 Enterprise resource planning
 Production and inventory management
 Customers Relationship Management
Uses/Application of Business
Analytics
 To start a business
 Grow your business
 Analyse data
 Create business strategies
 Stay updated to business trends
 Helps to analyse mistakes
Types/Classification of BA
Types/Classification of BA
 Descriptive analytics: studying historic data and drawing

inferences, summarising data into a few key matrices;

What has happened in the past?
 Diagnostic analytics: How and why of past business
performance take learning from this historic data to correct
course, root cause analyses. Why did it happen?
 Predictive analytics: historic data, statistical models, and

machine learning-> most probabilistic future performance

in same business ecosystem. What is likely to happen? What might be happen in the future?
 Prescriptive analytics: ability to suggest the optimal

solution, a recommendation system, optimizing the

chances of a beneficial outcomes. What to do? What should we do next?
Types/Classification of BA
 Descriptive analytics: which tell us what has already happened;
 Diagnostic analytics: How and why of past performance for learning and

identify the root cause.

 Predictive analytics: Which show us what could happen
 Prescriptive analytics: which inform us what should happen in the future
Importance of Business Analytics
Data-driven decision-making
Competitive advantage
Improved performance
Better customer insights
Risk management
Relationship in variables
Reasons Why Business Analytics Is Important
 Enhance Customer Experience
 Make Informed Decisions
 Reduce Employee Turnover
 Improve Efficiency
 Identify Frauds
 Cut Manufacturing Costs
 Make The Most of Your Investment
 Improved Advertising
 Better Product Management
 Tackle Problems
 Accelerate Through Uncertainty
 Conduct A Competitor Analysis
 Tools & Techniques of Analytics
 Tools:
 Excel-Word-Spreadsheet, SPSS, Power Bi, R Programme, E-views,
MS Project, MS Visio, SQL, Mathlab,
 Techniques:

◦ Statistical Analysis :
◦ Data Mining :
◦ Quantitative Analytics : exploratory data analysis (EDA), and confirmatory data analysis (CDA).
◦ Qualitative Data Analysis :
◦ Business Intelligence :
◦ Predictive Analytics :
◦ Text Analytics:
◦ Data visualisation
Functions of Analytics
 Research and Data Analysis
 Trouble Shooting and Problem-Solving
 Data visualisation
 Communicating Corrective Plans
 Meeting all Contract Requirements
 Others:

◦ Extract Requirements
◦ Analyze Information
◦ Communicate and Document the Findings
Reports in Analytics
 An analytical report a type of business report that helps you evaluate your
business decisions based on data insights.
 What makes an analytical report different is that it gives you recommendations
instead of just plain numbers.
 Analytical reports are based on historical data, and statistics and
provide predictive analysis for a specific issue, such as the conversion rate for
new products.
 Regardless of the method you choose, your analytical report should include the
following:
 A title page – including the main topic or purpose and the type of report
 Table of contents – in a logical or chronological order
 A Methods – specifying and presenting the methods used for the activity
 The main discussion – broken down into organized sections, including the heading,

the sub-heading, and the discussion's body.

 The conclusions – according to the results and information gathered in the business

report
 The recommendations – given by the employee who created the report
 Sections for bibliography or appendices – when necessary

To write a successful analytical report, make sure you follow these instructions:
 Identify the Problem
 Explain Your Methods
 Analyze Data
 Make Recommendations
Data Scientist Roles and Responsibility in business analytics
 Data analysis and exploration
 Machine learning and statistical modelling
 Feature engineering
 Data visualization
 Predictive modelling and forecasting
 Experimental design and testing
Data Scientist Roles and
Responsibility
 Management
 Analytics
 Strategy/Design
 Collaboration
 Knowledge
 Other Duties
Business Analysis Vs Business
Analytics
 The primary focus is on  The primary focus is on data and
techniques and functionalities. statistical analysis.
 Used to solve the problems that  Used to predict the future and

exist in the business and bring plan growth strategies.

positive change.  The tasks under this domain get
 The tasks under this domain are handled by the data analysts.
handled by business analysts.  The areas that are covered under
 The areas covered under business business analytics are business
analysis are business, enterprise, decisions, big data, and future
and process. strategy planning.

Business Analysis Business Analytics

An overview of Machine Learning
 Machine learning (ML) is a branch of artificial
intelligence (AI) that enables computers to “self-learn”
from training data and improve over time, without being
explicitly programmed.
 Machine learning algorithms are able to detect patterns in
data and learn from them, in order to make their own
predictions.
Machine Learning (ML)
 ML is a branch of artificial intelligence:
◦ Uses computing based systems to make sense out of data
 Extracting patterns, fitting data to functions, classifying data, etc
◦ ML systems can learn and improve
 With historical data, time and experience
◦ Bridges theoretical computer science and real noise data.

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ML in real-life

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Supervised and
Unsupervised Learning
 Unsupervised Learning
◦ There are not predefined and known set of outcomes
◦ Look for hidden patterns and relations in the data
◦ A typical example: Clustering

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Supervised and
Unsupervised Learning
 Supervised Learning
◦ For every example in the data there is always a
predefined outcome
◦ Models the relations between a set of descriptive
features and a target (Fits data to a function)
◦ 2 groups of problems:
 Classification
 Regression

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Supervised Learning
 Classification
◦ Predicts which class a given sample of data (sample of
descriptive features) is part of (discrete value).

 Regression
◦ Predicts continuous values.

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 Machine Learning as a
Process - Define measurable and quantifiable goals
Define - Use this stage to learn about the problem

Objectives
- Normalization
Model Data -
-
Transformation
Missing Values
Deployment Preparation - Outliers

- Study models accuracy

- Work better than the
naïve - Data Splitting
approach or previous - Features Engineering
system Model Model - Estimating
- Do the results make sense Performance
in the context of the Evaluation Building - Evaluation and
problem Model Selection

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ML as a Process: Data Preparation
• Needed for several reasons
• Some Models have strict data requirements
• Scale of the data, data point intervals, etc
• Some characteristics of the data may impact dramatically on
the model performance
• Time on data preparation should not be underestimated

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ML as a Process: Feature
engineering
• Determine the predictors (features) to be used is one of the
most critical questions
• Some times we need to add predictors
• Reduce Number:
• Fewer predictors more interpretable model and less costly
• Most of the models are affected by high dimensionality, specially for non-
informative predictors
Multiple models adding and
Wrappers removing parameter
Algorithms that use models as
input and performance as output Genetics Algorithms

Filters Evaluate the relevance of the predictor Based normally on correlations

• Binning predictors
ML as a Process: Model Building
 Data Splitting
◦ Allocate data to different tasks
 model training
 performance evaluation
◦ Define Training, Validation and Test sets
 Feature Selection (Review the decision made previously)
 Estimating Performance

◦ Visualization of results – discovery interesting areas of the problem

space
◦ Statistics and performance measures
 Evaluation and Model selection
◦ The ‘no free lunch’ theorem no a priory assumptions can be made
◦ Avoid use of favorite models if NEEDED

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 Business Intelligence
Business Intelligence (BI) refers to the use of
strategies and tools that serve to transform
information into knowledge, in order to
improve the decision-making process in a
company.
An overview of Data Visualization
 Data visualization is defined as a graphical
representation that contains the information and
the data.
 By using visual elements like charts, graphs,

and maps, data visualization techniques provide an

accessible way to see and understand trends,
outliers, and patterns in data.
Data Visualisation
◦Data- Information
◦Visualisation-Pictorial/Graphical representation
 Decision making
 Finding solutions to problems
 For understanding the data clearly
 To find relationship among the data
 Comparative analysis
Data visualization can be used for:
 Making data engaging and easily digestible
 Identifying trends and outliers within a set of data
 Telling a story found within the data
 Reinforcing an argument or opinion
 Highlighting the important parts of a set of data
Examples
Sales Man Sales Target
1 450 350
2 300 350
3 350 350
4 250 350
5 150 350
6 200 350
7 300 350
8 450 350
9 300 350
10 350 350
What do you see?

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