Using data analytics to improve business

decisions for SMMEs

by

Rantsholo Malefane

Submitted in partial fulfilment of the

requirements for the degree

Bachelor of Technology in Engineering

in

Industrial Engineering

Faculty of Engineering and the

Built Environment

at the

UNIVERSITY OF JOHANNESBURG

Supervisor:

K Nedohe

Date:

19 March 2024
1.0 INTRODUCTION
South African has one of the highest SMMEs failure rate in the world as suggested by
BusinessTech (2021). 70% - 80% of SMMEs die within 5 years part of the reason being poor
decision taken to manage and progress at he businesss forward. Business Tech further
highlights that 5 out of 7 businesses fail within the first year. SMMEs contribute largely to
employment and consequently to the economy in both developed and developing countries.
According to the world trade organisation (WTO) in 2019, small medium enterprises
composed of 90% of businesses, employed 60-70% of the workforce and contributed to 55%
of the gross domestic product (GDP) in developed economies.

In a developing country like South Africa, small businesses generated 22% of the total
turnover, amounting to R2,3 trillion out of R10,5 trillion. Medium -sized contributed the least
at 10%, and large businesses made up the largest portion, comprising over two-thirds (68%)
of the total turnover (annual financial statistics: 2019). As a detour, one may ask themselves ‘
what are SMMEs?’. Loosely defined, SMMEs are informally, and formally (registered)
functioning enterprises that provided employment to 9,8 million South Africans (SEDA,
2020). The definition of SMMEs was revised since the national small [business] enterprise
act was passed in 1996. According to government gazette (2019), SMMEs means ‘a
separate and distinct business entity, together with its branches or subsidiaries [...], managed
by one owner or more predominantly carried on in any sector or subsector of the economy.’ It
further defines SMMEs in terms of total full time paid employees (0-250) and total annual
turnover (R0 – R210 million).

Data analytics within small and medium-sized enterprises (SMEs) involves utilizing statistical
methods and technology to analyze historical data and derive meaningful insights. These
insights can aid in strategic decision-making, enhancing performance, and shaping a more
promising business future (Wang & Wang, 2020). Unlike larger corporations, SMEs generally
exhibit a lower inclination towards embracing data analytics in their operations. Various types
of data analytics techniques can be employed to assist managers in making informed
decisions for their businesses. As outlined by Kachchi & Kothiya (2021), these techniques
encompass descriptive analytics (which elucidates what happened), diagnostic analytics
(which delves into why it happened), predictive analytics (which forecasts potential future
outcomes), and prescriptive analytics (which recommends actions based on such forecasts).

Keywords: Data analytics, improve, business decisions, SMMEs

i Design & Research Reportl
1.1 PROBLEM STATEMENT
Briefly outline the problem to be tackled based on the introduction that has been presented.

South Africa has the highest SMMEs failure rate in the world. A business stated today, have
a very high chance of extinction with 5 years of its existence. Despite the growing importance
of data analytics in enhancing business decision-making processes, small and medium-sized
enterprises (SMMEs) often face challenges in effectively leveraging data analytics to inform
their strategic choices and operational improvements. The effective application of data
analytics holds promise for addressing the probability of SMMEs facing closure. By
harnessing historical data and employing predictive analytics techniques, such as statistical
modeling and machine learning algorithms. SMMEs can gain insights into factors contributing
to their survival or failure.

1.2 AIM
To use data analytics to improve business decisions for SMMEs

1.3 OBJECTIVES


1.4 RESEARCH QUESTIONS

RQ1: How can SMMEs benefit from employing data analytics to decision making
RQ2: Which data analytics models are of immediate use to enhance business decisions

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1.7 LIMITATIONS
Include any weaknesses in your study, making sure that you consider ways to resolve these
weaknesses.

 The research is limited to the city of Johannesburg

2.0 LITERATURE REVIEW

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Effective business decision-making entails the process of identifying and evaluating different
choices, conducting comparisons among them, and ultimately selecting the one that
optimizes the company's financial gains. Business decisions are made consistent with plans
of the organisation – you cannot delink the two. Merriman (2021) argues that the types of
business decision plans includes: Strategic, tactical and operational plans. Different
manegarial level make different organisational planning. Top management is tasked with
formulating the strategic plans. Middle and lower level manangement are tasked with drafting
tactical and operations plans with the latter undertaken by lower level management.

Strategic Planning

Strategic planning are decisions that affect an entire firm’s environment (internal) and
utilisation of resources. Strategic decisions are any decisions made by business with the aim
of reaching goals (mahoto: 2022).

Smit (2019) suggested strategic characteristics to be:

 Time frame is 5 years or longer (depending on the organisation).

 The focus is on the entire organisation
 They align the organisation’s resources with the threats and opportunities

Tactical planning

Tactical planning deals with people and action to implement the strategic goals of the
organisation. The main focus is on how the organisation functions (smith: 2019). Functional
areas are: Marketing, finance, operation, resources, purchasing, etcetera. Latham (nd)
suggest that tactical plannung is focused on detailed implementation; it is a medium term
plan of the organisation.

Operational planning

This seek to realise tactical plans of the organisation. Operational plans decisions are about
client ordes, shipping requirement, demand, inventory, etceterea.

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Data analytics

Data analytics entails dissecting raw data to extract significant insights, which serve as the
foundation for informed business decisions (Stevens, 2023).
According to Boyle(2023),data analytics empowers companies to enhance decision-making
processes and analyze customer behaviors and satisfaction levels. This, in turn, can drive
innovation, resulting in the development of improved products and services. It further classify
the type of data analytics as:

 Descriptive analytics
 Diagnostics analytics
 Predictive analytics
 Prescriptive analytics

Descriptive analytics

Descriptive analytics interprets past data to understand business changes (Kelly: 2023). He
further explains that businesses use descriptive analytics to gain insights to their
performance in the past and compare them to corresponding periods in history. Simplilearn
(2023) alluded that these performance metrics can be used to identify the strengths and
weaknesses and inform management strategies. The methods of descriptive analytics are
data aggregation and data mining. The associated steps in descriptive analytics includes:

 identify which metrix to analyse

 identify and locate area of interest
 Compile the data
 Analyse the data

Diagnostic analytics

Diagnostic analystics ‘ involves drilling deeper into data to identify not only what occurred,
but why.’ (Hiller: 2022). One may say it’s a root cause analysis. Diagnostic analytics shares
similarities with descriptive analytics as it utilizes historical data. However, its distinct
characteristic lies in its focus on identifying and explaining anomalies and outliers. This
allows the company to formulate and test different hypotheses to understand the underlying
reasons behind such occurrences. Diagnostic analysis can be conducted manually,
employing an algorithm, or utilizing statistical software tools like Microsoft Excel (Cote: 2021).

Predictive analytics

Predictive analytics involves employing statistical methods and modeling techniques to

forecast future outcomes and performance based on current and past data patterns (Halton,
2023). By analyzing these patterns, predictive analytics assesses the likelihood of their
recurrence in the future. Insightsoftware (2023) suggests that there are 5 predictive models
and algorithms.

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 Model/ Algorithms Expansion
Clustering Model The clustering model organizes data into
distinct, nested groups based on shared
attributes.
Forecast model The forecast model predicts numerical
values for new data based on historical data
insights.
Time series model time series model analyzes sequential data
points over time, using the previous year's
data to generate a numerical metric and
forecast the upcoming three to six weeks.
Machine learning Involves structural data, typically presented
in tabular format, is processed by algorithms,
including both linear and nonlinear types.
Linear algorithms offer faster training, while
nonlinear ones are tailored to specific
problem types.
K-Means The K-means algorithm, employed in the
clustering model, assigns unlabeled data
points to distinct groups based on
similarities.
Top of Form

Perspective analytics

According to Segal (2022), Prescriptive analytics is a branch of data analytics aimed at

addressing the query, "What actions should we take to accomplish our goals?" This
approach leverages technology to assist businesses in making informed decisions by
analysing raw data.

The 4 types of data analytics can be summarised as a visual below:

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 Source: Medium

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3.0 METHODOLOGY
Present the approach that will be followed to investigate the problem.

Is it Qualitative or Quantitative. What type of research study is it Case study experiment etc.
Remember that your project is not purely research you are trying to solve a problem and
therefore contrary to research you will use all relevant data available it may therefore be
qualitative and quantitative.

3.1 STUDY SETTING

Describe the place where the research will be undertaken. Summarize the status-quo of your
Case Study.

3.2 SAMPLING METHODS

If you want to select a sample from the study population you have to discuss this with a
statistician before you finalize your proposal. Statistical services are available for UJ students
and staff.

Sample sizes are generally not less than 31 -the minimum required for Natural Distribution to
be valid.

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3.3 DATA COLLECTION

In this section you describe how you will collect the data. You typically have these options:
 Paper questionnaire/case report form (CRF)
 Electronic data capture device (like a tablet).
 Experimental work

Describe the process of collecting, capturing, storing and preparing the data for analysis.
Indicate how ethical standards specifically how the confidentiality of data will be maintained.

3.4 ETHICAL CONSIDERATIONS

Remember to check for:
 all possible ethical issues
 informed consent? If so, include a ‘Participant Information Leaflet’ and ‘Consent
Form’ as an appendix to the proposal.
 If no informed consent – then state justification for this and formally request a waiver
of informed consent from the ethics board / committee.
 Indicate who the custodians of the records are, and that permission to use the data
will be sought from them.

3.5 SOLUTION DESIGN

This can be a system or component design.

3.5.1 CONCEPT GENERATION

At least 3 concepts

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3.5.2 CONCEPT EVALUATION

3.5.3 CONCEPT SELECTION

3.5.4 DETAILED DESIGN SOLUTION

To include detailed engineering drawings of processes and components.

4.0 ANALSYIS AND DISCUSSION OF RESULTS

4.1 DATA ANALYSIS

Statistical and quantitative analysis of your data.
Use of tables, graphs, equations, computational apps, and other calculations

4.2 DISCUSSION OF RESULTS

5.0 CONCLUSIONS AND RECOMMENDATIONS

Include but do not limit yourself to the following:
 Re-hash what were the objectives and explain the extent to which these were
covered.
 Summarize the key results/findings and their significance
 Recommend outstanding / future work to support your work.
CFt
NPV = ∑ ( ) - Initial Investment
( 1+ r )t
300000 300000 300000 300000 300000
NPV= 1 + 2 + 3 + 4 + – 1 000 000
( 1+ 10 % ) ( 1+ 10 % ) ( 1+ 10 % ) ( 1+ 10 % ) ( 1+ 10 % )5
= R139,882.57
300000 300000 300000 300000 300000
PV OF BENEFITS= 1 + 2 + 3 + 4 +
( 1+ 10 % ) ( 1+ 10 % ) ( 1+ 10 % ) ( 1+ 10 % ) ( 1+ 10 % )5
= R1 139 881.57
PVofBenefits
BCR =
PVof C osts
R 1139881.57
=
R 1000000
= 1.14

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Route planning process
Input data: This step involves assessing the quality and relevance of the input data. Evaluate
whether the data sources are accurate, up to date, and comprehensive. Consider if real-time
data sources are integrated, as they can enhance route planning accuracy.
Data preprocessing: Data preprocessing includes cleaning, filtering, and transforming the
input data. Evaluate the preprocessing methods to ensure they effectively handle missing or
erroneous data. Assess whether data normalization and conversion are appropriate for the
chosen route optimization algorithms.
Route optimization: Route optimization is a critical step. Assess the choice of optimization
algorithms (e.g., genetic algorithms, heuristics) and evaluate their efficiency and scalability.
Consider if the software allows customization of optimization parameters to adapt to different
scenarios.
Evaluate route: In this step, evaluate the criteria used to assess the optimized routes.
Determine if it includes factors like distance, travel time, fuel consumption, and constraints
(e.g., vehicle capacities). Ensure the evaluation method aligns with the goals of the route
planning process.
Output results: Evaluate the format and accessibility of the output results. The results should
be presented in a clear and actionable manner. Check if the software provides detailed route
information, including waypoints, schedules, and expected costs.
End results: The outcome should align with the objectives of route planning, which typically
include cost reduction, improved efficiency, and on-time deliveries. Assess whether the
software meets these goals effectively. Consider whether it allows for post-routing
adjustments based on real-time conditions.
Resource allocation process
User request: Evaluate the efficiency of user request submission. Ensure its user-friendly
and accessible, and assess whether it captures essential details, such as the type of
resources needed and the requested timeframe.
Receiving request and decrypting into computer: Assess the security and data integrity of the
decryption process. Verify that the decryption is performed swiftly and without errors.
Security measures to protect sensitive data should be thoroughly reviewed.
Estimating capacity requirement: Evaluate the accuracy of the capacity estimation
algorithms. Consider how well they predict the actual resource requirements. Determine if
the algorithms are adaptable to various resource types.

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Identifying available resources: Evaluate the system's ability to swiftly identify and catalogue
available resources. Ensure that the identification process includes essential details about
each resource, such as location and status.
Discovering and establishing trucks: Assess the efficiency of the process for discovering and
setting up available trucks or resources. Evaluate whether the system can automatically
identify and prepare resources for allocation in real time.
Scheduling for trucks execution: Examine the scheduling algorithms. Ensure they are
optimized for allocating resources efficiently, considering factors like distance, time, and
priority. Evaluate the software's ability to handle scheduling complexities.
Resource allocation to requester: Evaluate the allocation process for its speed and accuracy.
Ensure that the right resources are allocated to the requester, and that the allocation aligns
with the requester's requirements and constraints.
Requesting submission for additional physical resources: Examine the process for requesting
supplementary physical resources. Ensure its well-defined and that it captures all necessary
information for procurement.
Receiving and processing request according to requirements: Evaluate the process for
receiving and processing additional resource requests. Determine if the system can
efficiently fulfil these requests while adhering to specified requirements and constraints.
Processing of computing resources: Review the process for allocating and managing
computing resources. Assess whether it can efficiently handle resource requests and
releases, optimizing resource utilization.
Framework for resource layering
Resource identification: Evaluate the process for identifying available resources. Assess the
accuracy and efficiency of the identification methods and whether they encompass a broad
range of resource types.
Resource allocation: Examine the resource allocation process for its speed and accuracy.
Ensure that the right resources are allocated to meet specific needs and constraints.
Resource utilization: Assess how efficiently allocated resources are used. Evaluate whether
resource utilization is optimized and aligned with objectives.
Transportation data collection: Examine the data collection methods. Evaluate the accuracy
and comprehensiveness of data collected from various transportation sources.
Route optimization: Assess the efficiency of route optimization algorithms. Ensure they are
designed to minimize costs and time while considering resource and capacity constraints.
Resource layering: Evaluate the concept of resource layering. Check if it effectively optimizes
resource utilization and how well it adapts to varying transport scenarios.

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Monitoring and feedback: Assess the monitoring and feedback mechanisms. Ensure that
real-time data is collected, and that the system can adapt to changing conditions.
Performance metrics: Examine the performance metrics used to measure the effectiveness
of resource layering. Ensure that the metrics align with objectives and provide actionable
insights.
Feedback loop: Evaluate the feedback loop's ability to process data and adapt resource
layering strategies. Determine how well it maintains an optimized resource allocation.
Performance analysis: Assess the performance analysis process. Ensure it provides valuable
insights for decision-making and helps fine-tune resource layering.
Report and recommendations: Evaluate the reporting mechanism. Ensure that it generates
comprehensive reports and actionable recommendations based on performance analysis.

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REFERENCES
Use the Harvard referencing style as below
Use the Harvard Referencing style for the different sources as below:

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 APPENDICES

APPENDICES

Put things such as:

 Large tables of results that do not fit well in the main body
 Sample questionnaires
 Detailed design drawings
 Algorithms and programming code

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