What is business analytics, you might be asking? Business analytics (BA), a subset of Business Intelligence (BI), is typically leveraged by a set of tools that collects business data, analyzes it, and then generates insights and predictions to help businesses gain high-level overviews of their enterprises. Business analytics software, such as Dundas BI, analyzes data like sales figures, budget spends, employee hours, inventory and more. Then, the solution uses additional tools such as graphs, charts and maps to help give that data context.
Business analytics also helps people generate insights, such as discrepancies in data or historical trends. This takes all the different data components in business, visualizes them and tracks them in meaningful ways.
Business analytics also help decision-makers, managers and officers make more sound and data-informed decisions. By obtaining a grand view of the business’s performance, you can gain actionable data to inform choices. For example, users might decide not to increase ad spend based on sales data related to marketing and advertising outreach. Or they might choose to increase bonus payouts based on projected income.
This type of software usually employs four different types of analytics to help users make decisions:
- Prescriptive analytics
- Descriptive analytics
- Predictive analytics
- Diagnostic analytics
Share insights and visualizations
Data without delivery is dead. The sharing of insights via intuitive dashboards, reports and visualizations is an essential component of business analytics. But reports, dashboards and visualizations are not three different ways of saying the same thing.
Reports are static pieces of content, usually a generated spreadsheet or document that takes advantage of visualizations in order to convey meaning from accrued data. They are typically the end result of an experiment or are generated automatically at days end for review and digestion.
A dashboard, on the other hand, is a dynamic page (often within the app itself), that makes use of live-updating, interactive visualizations. Dashboards are usually specialized in one business function or another. For example, marketing may have their own interactive analytics dashboard, and then they might generate reports based on that dashboard.
Visualizations are the complex visual tools that convey meaning and given context to collected data. Some examples of visualizations include:
- Heat maps
- Flow charts
- Word clouds
Because business analytics gives you such a powerful look at your business, most users choose to set benchmarks for their company’s performance. These benchmarks are often known as key performance indicators, or KPIs. The point in using KPIs is to set baseline performance metrics, ideal performance goals and track how you measure up to each of them. You might, for example, set a number of leads for marketing to achieve in the month of July. When marketing can’t hit their leads numbers, you aren’t meeting their KPIs. Business analytics makes it easier to explore why that is; perhaps there’s another data point that helps tell the story a little better?
Optimizing a business is easier when you can see pain points, victories and areas of growth or decline in empirical data. It lets you choose where to direct resources and where to capitalize on gains or losses.
Analyze and predict trends
Among the most coveted features of business analytics products is their ability to analyze trends and then make predictions on what might happen next. Business analytics predictions often work based on historical data first to find out how performance varies across time. Then variables such as seasonality and user-input are taken into account in order to produce a potential trend in data.
Analyzing trends is an invaluable tool for decision makers and managers, as it allows them to make preparations far in advance. If a product sells exceptionally well in December of this year, predictive analytics might deliver an insight that prompts managers to stock additional products for December of next.
What Do The Different Types of Analytics Do?
Each of the four types of analytics plays a unique role in a business analytics system. As a refresher, there are four types of analytics: prescriptive, descriptive, predictive and diagnostic analytics. Each one serves a unique function and is often incorporated directly into the business analutics program itself.
Prescriptive analytics serves a major function in providing an outcome for analysis — the “what to do next” that so many employees and managers scratch their heads over, hence the term “prescriptive.”
Descriptive analytics describes things as they are, often taking a look at the present and historical data and pointing out trends, victories and pain points. The key differentiator between descriptive analytics and the other three types is that it does not make predictions, offer solutions or inform users on what the next best steps might be (and why those are the best steps).
Predictive analytics utilizes historical data in order to make predictions on what might happen in the future. What is important to note is that predictive analytics only makes predictions, unlike prescriptive analytics, which makes suggestions.
And then there’s diagnostic analytics, which is an advanced form of analytics that seeks to answer the “why” question when something happens. This type of analytics is is not yet incorporated into all business analytics products.
Is My Business Ready to Utilize BA?
Whether or not you’re ready to start leveraging business analytics is dependent on a number of factors.
- Your organization’s goals
- Different and varying performance within departments
- Positive growth of the business that you’re looking to capitalize on
- Negative growth or decline that needs to be addressed
- Being unsure of your next steps
How Do I Select Business Analytics Software?
It’s not easy to select the right business analytics tools for your needs. If you feel you’re ready to start on that journey, keep a few of these things in mind.
You should consider your budget, first and foremost, as this will ultimately be the deciding factor in what software you pick. Our curated list of business analytics software provides basic pricing and scaling information.
Next, think about your specific needs as an organization. Your company, for example, might not utilize diagnostic analytics or might need a product that can produce mobile-first visualizations. Perhaps you need something web-based first, or something on-premise? Your business has unique needs. If you’re unsure what you need or what your requirements should be, we provide a tool to help you quickly and cleanly assess your needs and find the proper software for your enterprise. Alternatively, we’ve got a business analytics requirements checklist all written out for you.
The next step is to create an RFP, which is quite a task itself, which we won’t cover in this guide. Head on over to our analytics RFP article to learn more.