Definition of Business Analytics

Business analytics is the process of transforming data into insights to improve

business decisions. Data management, data visualization, predictive
modeling, data mining, forecasting simulation, and optimization are some of
the tools used to create insights from data.
What is business analytics in simple words?

In simple words, business analytics is a process through which businesses

make use of various technologies and statistical methods to analyze data to
help in gaining new insights that can further help in decision-making.

What do business analytics do?

Business Analytics have numerous responsibilities. They work on utilizing

statistical data, big data, and data visualization to aid in business decision and
implementing organizational changes. They also help in predicting outcomes
based on insights and taking informed decisions.

What are the 3 types of business analytics?

The three main types of business analytics are:

 Descriptive Analytics

Descriptive analytics is the process of using current and historical

data to identify trends and relationships. It’s sometimes called the
simplest form of data analysis because it describes trends and
relationships but doesn’t dig deeper.

 Descriptive analytics is relatively accessible and likely something

your organization uses daily. Basic statistical software, such
as Microsoft Excel or data visualization tools, such as Google
Charts and Tableau, can help parse data, identify trends and
relationships between variables, and visually display information.
  Predictive Analytics

The term predictive analytics refers to the use of statistics and

modeling techniques to make predictions about future outcomes
and performance. Predictive analytics looks at current and
historical data patterns to determine if those patterns are likely
to emerge again. This allows businesses and investors to adjust
where they use their resources to take advantage of possible
future events. Predictive analysis can also be used to
improve operational efficiencies and reduce risk.
 Prescriptive Analytics

Prescriptive analytics is the process of using data to determine an

optimal course of action. By considering all relevant factors, this
type of analysis yields recommendations for next steps. Because
of this, prescriptive analytics is a valuable tool for data-driven
decision-making.

EVOLUTION OF BUSINESS ANALYTICS

Here's a simplified explanation of the evolution of business analytics:

Business analytics has recently developed a more sophisticated set of tools and methodologies with the
help of automation and big data. Business analytics was once exclusively employed by a selected few
corporate sectors that were exclusively connected to the largest MNCs. The first corporate computing
applications were building reports, giving presentations, and entering data using programs like Microsoft
Excel. The use of Excel add-ons like PowerPivot was later seen in more complex applications
incorporating multi-dimensional data processing and analytics. The highly regarded Gartner company,
which calls for business intelligence, had a long way to go before it reached this point.

As soon as the idea of BI was presented to the market, businesses all over the world clamored for an
action. BI helped businesses gain insightful data by evaluating business performance using various digital
tools, technologies, and measurements such as Tableau, SAS, and Microsoft Power BI to assist their
business processes. These tools enable organizations in better-informed decision-making. With the
evolution of BI, ideas like web questions, collaboration, data security, and data sourcing from databases
and distributed file systems also gained widespread acceptance.
1. Data Collection: In the early days, businesses relied on manual data collection methods, such as
surveys and paper-based records. This limited the amount and quality of data available for analysis.

2. Spreadsheet Analysis: With the advent of spreadsheet software like Microsoft Excel, businesses
started using basic data analysis techniques to gain insights from their data. This allowed for
calculations, charts, and simple statistical analysis.

3. Reporting and Dashboards: As data volumes grew, businesses began using reporting tools to
summarize and visualize data. Dashboards provided a snapshot of key metrics and allowed for
interactive exploration of data.

4. Descriptive Analytics: Descriptive analytics focused on understanding what happened in the past.
Businesses used techniques like data mining and statistical analysis to uncover patterns, trends, and
correlations in their data.

5. Predictive Analytics: Predictive analytics shifted the focus to understanding what is likely to happen in
the future. Businesses started using advanced statistical models and machine learning algorithms to
forecast outcomes and make data-driven predictions.

6. Prescriptive Analytics: Prescriptive analytics went a step further by providing recommendations on

what actions to take based on the insights gained from descriptive and predictive analytics. This helped
businesses optimize decision-making and improve outcomes.

7. Real-time Analytics: With advancements in technology and data processing capabilities, businesses
started leveraging real-time analytics. This allowed for immediate analysis of streaming data, enabling
faster decision-making and response to changing conditions.

8. Advanced Analytics: Advanced analytics techniques, such as text analytics, sentiment analysis, and
network analysis, emerged. These techniques allowed businesses to extract insights from unstructured
data sources like social media, emails, and customer reviews.
9. Self-Service Analytics: Self-service analytics tools became popular, empowering business users to
perform their own data analysis without relying on IT or data analysts. This increased accessibility and
agility in decision-making.

10. AI and Machine Learning: The integration of artificial intelligence (AI) and machine learning (ML) into
business analytics opened up new possibilities. Businesses started using AI-powered algorithms to
automate tasks, uncover hidden patterns, and make more accurate predictions.

In simple terms, business analytics has evolved from manual data collection to spreadsheet analysis,
reporting, and dashboards. It then progressed to descriptive analytics, predictive analytics, and
prescriptive analytics. Real-time analytics, advanced analytics, self-service analytics, and the integration
of AI and machine learning have further enhanced the capabilities of business analytics, enabling
businesses to make data-driven decisions and gain a competitive edge.

Benefits of Business Analytics in Decision-Making

 Business analytics enables decision-makers to base their choices on
factual data and insights rather than intuition or assumptions.
 Analytics helps in accurate forecasting, risk assessment, and
performance evaluation, leading to more precise decision-making.
 Analyzing historical and current data helps in identifying market
trends, customer preferences, and industry shifts, assisting in
proactive decision-making.
 Analytics can uncover inefficiencies in processes, supply chains, and
resource allocation, leading to streamlined operations and cost
savings.
 By analyzing customer data, businesses can gain deeper insights
into behaviors, preferences, and needs, leading to better-targeted
products and services.
 Analytics can provide a competitive edge by identifying market
gaps, potential niches, and areas for innovation.
 Through data analysis, businesses can identify potential risks and
uncertainties, enabling them to develop strategies to mitigate or
navigate these challenges.
 Ways in which business analytics affects decision-
making in companies
 Here are few of the most significant ways in which business analytics can
influence a company’s decision-making:
 • Forecasting and Prediction: Business analytics may assist organizations
with forecasting future outcomes and making predictions based on historical
data. This may involve estimating future sales, finding growth opportunities,
and anticipating future market trends.
 • Customer Analytics: By studying customer data, businesses may better
comprehend the demands, behaviours, and preferences of their customers.
This data can be utilized to enhance consumer engagement and loyalty,
optimise marketing campaigns, and find new revenue streams.
 • Operational Analytics: Business analytics can be utilized to examine
operational data and find process optimization and efficiency enhancement
opportunities. This can assist firms in reducing expenses, enhancing quality,
and increasing output.
 • Financial Analytics: Business analytics can assist organizations in
analyzing financial data in order to discover potential risk and opportunity
areas. This may involve examining financial performance measures,
projecting income and expenses, and identifying cost-cutting opportunities.
 • Competitive Intelligence: Business analytics may assist organizations to
gain insights into the strategies, strengths, and weaknesses of their
competitors. This data can be utilised to guide corporate decisions and
generate competitive and effective strategies.

What is a business analysis model?

Simply put, a business analysis model outlines the steps a business
takes to complete a specific process, such as ordering a product or
on boarding a new hire. Process modeling (or mapping) is key to
improving process efficiency, training, and even complying with
industry regulations.
Because there are many different kinds of processes, organizations,
and functions within a business, BAs employ a variety of visual
models to map and analyze data.
Take a look at these nine essential business analysis models to
include in your toolbox.

1. Activity diagrams

An activity diagram is a type of UML behavioral diagram that

describes what needs to happen in a system. They are particularly
useful for communicating processes and procedures to stakeholders
from both the business and development teams.
A BA might use a UML diagram tool like Lucidchart to create an
activity diagram to map the process of logging in to a website or
completing a transaction, like withdrawing or depositing money.

2. Feature mind maps

Business diagrams aren’t just for late-stage analysis or

documentation. They are also useful during a project’s initial
brainstorming phase. Feature mind maps help BAs organize the
sometimes messy brainstorm process so that ideas, concerns, and
requests are clearly captured and categorized.
This visual ensures initial details and ideas don’t fall through the
cracks so you can make informed decisions about project direction,
goals, and scope down the line.
 3. Product roadmaps

A product (or feature) roadmap outlines the development and

launches of a product and its features. They are a focused analysis of
a product’s evolution, which helps developers and other
stakeholders focus on initiatives that add direct value to the user.
The beauty of product roadmaps lies in their flexibility and range of
applications. BAs can create different product roadmaps to illustrate
different information, including:

 Maintenance and bug fixes

 Feature releases
 High-level strategic product goals

While product roadmaps are commonly used internally by

development teams, they are also useful resources for other groups
like sales teams.
A defined product outline and schedule helps the sales team stay on
the same page as the developers so they can deliver accurate,
updated information to their prospects and clients. Because of
product roadmaps' versatility and broad applications across teams
and organizations, they are a core part of an analyst’s toolbox.
In Lucidchart, you can link data to and set conditional formatting
within your product roadmap to quickly monitor your progress.
Check out the template below to learn more.

Product roadmap example (click on image to modify online)

4. Organizational charts

An organizational chart outlines the hierarchy of a business or one

of its departments or teams. They are especially helpful reference
charts for employees to quickly identify key stakeholders and points
of contact for projects or queries.
Additionally, organizational charts prove useful for stakeholder
analysis and modeling new groupings and teams following
organizational shifts.

Marketing org chart example (click on image to modify online)

5. SWOT analysis

The SWOT analysis is a fundamental tool in a BA’s arsenal. SWOT

stands for strengths, weaknesses, opportunities, and threats. A
SWOT analysis evaluates a business’s strengths and weaknesses and
identifies any opportunities or threats to that business.
SWOT analysis helps stakeholders make strategic decisions
regarding their business. The goal is to capitalize on strengths and
opportunities while reducing the impact of internal or external
threats and weaknesses.
From a visual modeling perspective, SWOT analysis is fairly
straightforward. A typical model will have four boxes or quadrants
—one for each category—with bulleted lists outlining the respective
results.

SWOT analysis (click on image to modify online)

 6. User interface wireframe

Another essential business diagram is the user interface (UI)

wireframe. Software development teams use wireframes (also called
mockups or prototypes) to visually outline and design a layout for a
specific screen. In other words, wireframes are the blueprints for a
website or software program. They help stakeholders assess how
users will navigate through the software or website to have a
successful experience.
The level of detail in wireframes ranges from low-fidelity to high-
fidelity prototypes. Low-fidelity wireframes are the most basic
outlines, showing only the bare-bones layout of the screen. High-
fidelity wireframes are typically rendered in the later planning
stages and will include specific UI elements (e.g., buttons, drop-
down bars, text fields, etc.) and represent how the final
implementation should look on the screen.

7. Process flow diagram

A process flow diagram (PFD) is typically used in chemical and

process engineering to identify the basic flow of plant processes, but
it can also be used in other fields to help stakeholders understand
how their organization operates.
A PFD is best used to:

 Document a process.
 Study a process to make changes or improvements.
 Improve understanding and communication between
stakeholders.
 These diagrams focus on broad, high-level systems rather than
annotating minor process details.

Business process flow diagram (click on image to modify online)

8. PEST analysis

A PEST analysis often goes hand-in-hand with a SWOT analysis.

PEST evaluates external factors that could impact business
performance. This acronym stands for four elements affecting
business: political, economic, sociological, and technological.
PEST analysis assesses the possible factors within each category, as
well as their potential impact, duration of effect, whether the impact
is positive or negative, and level of importance.
This type of business analysis helps stakeholders manage risk,
strategically plan and review business goals and performance, and
potentially gain an advantage over competitors.

9. Entity-relationship diagram

An entity-relationship diagram (ER diagram) illustrates how entities

like people, objects, or concepts relate to one another in a system.
For example, an ER diagram could show how the terms in an
organization’s business glossary relate to one another.
ER diagrams comprise three main parts:

 Entities
 Relationships
 Attributes
Attributes apply to the entities, describing further details about the
concept. Relationships are where the key insights from ER diagrams
arise. In a visual model, the relationships between entities are
illustrated either numerically or via crow’s foot notation.
These diagrams are most commonly used to model database
structures in software engineering and business information systems
and are particularly valuable tools for BAs in those fields.
In Lucidchart, you can automatically generate an ER diagram when
you import your databases and schemas. Follow this guide to try it
out, or manually build your ER diagram with the template below.

Business Analytics Tools

1. Excel
Amongst all the analytical tools available in the market, Excel is still
the most versatile tool used for business analytics. It is one of the
cheapest, most accessible, and easiest to use. With powerful features
like form creation, PivotTable, VBA, etc, it can work with small as
well as large amounts of data. Excel is one of the easiest tools to pick
up, you will even find professionals from any background excelling in
Excel. Don’t forget to check-out the course Excel Course and
Training – Self Paced
2. SAS
SAS is a robust, easy to learn, and versatile tool that finds wide
usage in the analytics industry. Loaded with a range of statistical
tools, SAS is often suitable for any large organization’s data mining
process. It uses ML, AI, and automation to meet Business Analytics
requirements by simplifying the process of analyzing large sets of data
in less time. To gain the best use for SAS analytics SAS has added
more modules for IoT, SAS anti-money laundering, Data mining, data
visualization, text analytics, forecasting, SAS analytics pro, and many
more.
3. Microsoft Power BI
Microsoft Power BI is one of the most popular business analytics tools
which excels in data visualization and helps users create interactive
user reports. It offers data warehousing capabilities including data
preparation, and data discovery, and allows users to identify real-time
trends and deliver reports. Besides providing a desktop-based
interface, the “Power BI Desktop”, it also provides cloud-based
business services, known as “Power BI Services”, which can be
accessed from almost anywhere.
4. Tableau
Tableau is another powerful Analytics tool that can connect to any data
source and create customizable data visualizations, maps, and
dashboards. Its powerful data discovery and data-cleaning function
allow users to perform analytical functions in seconds. It is easy to
learn, robust, and does not include any complex scripting. Tableau’s
statistical functions help users to perform in-depth analyses and predict
patterns based on current and historical data.
5. Qlik Sense
Qlik Sense, created by Qlik is another powerful next-generation
analytics tool that allows users to create visualizations, charts,
interactive dashboards, and many more. It is a cloud-based Analytics
software that uses Machine Learning and sophisticated Artificial
Intelligence to improve the quality of data mining and data processing.
It provides analytics capabilities for all types of users and is flexible
across public, private, and hybrid clouds.
6. Splunk
Splunk is another widely used business analytics tool that was
launched by Splunk Technology, a company from San Fransisco.
Splunk is used for processing machine log file data, capturing,
indexing, and finding correlations between real-time data. This data is
used for generating graphs, reports, dashboards, etc. Splunk is
generally used in small and medium-scale industries.
7. MicroStrategy
MicroStrategy is a top business analytics tool that offers data
discovery, data visualizations, and web services. It combines a
range of business analysis techniques that hosts other sources to fetch
data for analysis and also allows the user to create and share reports
from any location or device. It also allows the smooth processing of
unstructured text data. Operating Microstrategy requires just a basic
understanding of programming, data analysis, and SQL.
8. Sisense
Sisense is a business analytics software that allows users to perform
extensive analysis and visualization of complex and enormous
amounts of data. It is used by both small businesses as well as
enterprise-level businesses. It helps the users bring data from a wide
variety of sources, combine multiple data sets, and help make data-
driven decisions and forecast future trends. Sisense has been
recognized as a leading cloud analytics platform by various industry
experts like Gartner, Dresner, etc.
9. Board
Another top-rated business analytics tool is Board which is best known
because of its analytics model that permits users to create custom
intuitive and interactive user reports and dashboards. It can
manage massive data volumes and support accurate analysis and
forecasting by manipulating data using data visualization, drill-down,
and drill-through functionality.
10. Domo
Domo is a complete cloud-based business analytics platform that
integrates multiple data sources and provides wide connector support.
It is easy to use and offers micro and macro-level visibility and helps
users see real-time data. It is often used by both small and large-scale
companies. Domo is designed to assist businesses in finding effective
solutions and taking informed actions from the insights gained.
With businesses increasingly leveraging, the demand for business
analysts and business analytics tools is increasing in diverse sectors
including automotive, healthcare, retail, banking, hospitality, etc. Based
on your interest and skill, you may pick up the right tool for you and
master yourself in it.

If you have better suggestions about the

products/services/tools/brands listed above or feel like something
missing, please Contact Us and share your suggestions.
Benefits of business analytics
Improved decision-making
Business analytics helps organizations make better decisions by providing data-
driven insights into customer needs, competitor strategies, and other market
trends. With the help of analytics, businesses can identify areas for
improvement and develop actionable plans for achieving their strategic goals.

Cost savings
By leveraging business analytics tools and techniques, businesses can gain
visibility into their processes and identify areas for cost savings. This helps
organizations reduce operational costs and optimize resources to achieve
maximum efficiency.

Enhanced customer experience

Business analytics allows companies to understand customer needs better,
preferences, and behaviors which helps them develop products or services that
meet their expectations. Additionally, it provides insights into customer
satisfaction and helps companies identify areas for improvement.

Increased efficiency
By using analytics, businesses are better equipped to optimize their processes
and allocate resources more efficiently. This helps organizations reduce waste
and maximize productivity.
Improved strategic planning
Business analytics provides insights into market trends, competitor strategies,
and other important metrics that can inform strategic planning. By leveraging
data-driven insights, businesses can develop more effective analytics
strategies better suited to the current market conditions.

Business analytics vs data analytics vs

business intelligence
Although they are often used interchangeably, there are significant differences
between business analytics, data analytics, and business intelligence. Each of
these functions plays a vital role in delivering real-time data insights—let’s
break it down below:

 Data analytics occurs during the data extraction, load, and transformation
layers of the modern data stack. This process typically involves a data
analyst preparing large quantities of data for analysis.

 Business intelligence occurs in the interaction layer, using data

visualizations to show the past and present state of specific data sets.

 Business analytics is the final step. This is where analytics engineers and
domain experts apply their business knowledge to the business intelligence
in order to make data-driven decisions.

Use of Business Analytics in Business Verticals

Business analytics uses sorting, collating, processing, and studying data
through iterative methodologies and statistical models to generate
meaningful and business-relevant insights. These insights help
organisations in solving business problems and increase their revenue,
efficiency, and productivity.

Business analytics helps companies make better-informed decisions

regarding their finances, daily operations, and many other aspects of their
organisation. It’s a highly versatile domain and finds applications in multiple
industries.

1. Energy and Fuel

The energy and fuel sector uses business analytics in multiple aspects of its
operations. As these companies deal internationally, the severity of their
problems is also very high. Implementation of business analytics allows
them to mitigate the risks and reduce the chances of facing any prominent
issues.

Business analytics focuses on using data to find insights that an

organisation can use to make better-informed decisions. Through its use,
they can optimise the transportation of their products and pricing.

2. Agriculture

Contrary to popular belief, there are many advanced technologies and

methods such as big data and business analytics in agriculture. Farmers can
use business analytics to understand which factors influence their crops’
growth and accordingly prepare for the next season.
Business analytics and data science can help farmers manage their tools
and machines while optimising their performance depending on their
requirements and generated data.

A prominent US agricultural company, John Deere, has started offering many

data-based services to their farmers to help them make better-informed
decisions and enhance their agricultural progress.

Companies and buyers of these crops also employ business analytics to

optimise their warehousing, storage, and transportation of raw
materials. The application of business analytics in agriculture also helps with
livestock management.

3. Finance

Credit card companies generate and gather a ton of data from their
customers, such as their financial health, buying preferences, and lifestyle
choices. They share this data with their business partners enabling them to
create better deals and discount offers to enhance profits.

For example, a credit card company might share such data with retailers,
helping them locate their target audience and predict what their customers
prefer buying. Then the retailers can leverage this information to devise
more accurate marketing strategies.

4. Education

The education sector has started using a lot of technology recently. The
pandemic further fueled the need for more technological implementation in
this industry as the demand for online learning solutions rose rapidly.
Education companies use business analytics to optimise their courseware
and learning methodologies. Business analytics helps them generate
valuable insights to improve their teaching methods and enhance their
learning experiences.

Large schools and colleges have started leveraging business analytics to

optimise bus routes and improve enterprise management (inventory
management, decision-making, etc.).

5. Entertainment and Media

Netflix, Amazon Prime, and many other streaming platforms use business
analytics and big data to optimise user experiences. They gather data from
their millions of users and analyse it to personalise their recommendations
and make their user’s interaction with the platform more enjoyable.

A user’s chosen genres, watch history, and other related data help enhance
their recommendation systems. For example, a prominent music-streaming
platform, Spotify, suggests songs and playlists according to the songs,
albums, genres, and artists a user has listened to or interacted with.