Business Analytics Strategy

Strategic business analysis involves

• outcome focused thinking
• simultaneously understanding business context
• business challenges
• complexities of the internal and external environment
 Program Strategy

 provides the foundations for a

transformation or change
 It helps to determine how to solve business
problems in a way that will ensure the best
result.
Sponsorship and Governance Framework

 The sponsorship and governance framework

creates a terms of reference document that
outlines the program organization
structure, roles, and responsibilities of
each of the functional areas.
Stakeholder Strategy

The purpose of the stakeholder

strategy is to form partnerships with
the stakeholders, with the “term
partnership” referred to as
establishing working and committed
relationships.
Execution Roadmaps

Execution roadmaps have value

because they provide a high-level view
of all the moving parts of programs in
context. They also provide focus on
the outcome and what is needed when
and by whom.
Business Case

A business case captures the reasoning and

justification for initiating the program or
project and the anticipated commercial
benefits. It enables the executive to make
an investment decision.
Sourcing Strategy

A sourcing strategy guides

procurement. It ensures alignment
with the information, communication,
and technology (ITC) strategy.
User Journeys

User journeys are the

visualization of the strategy.
Their construction leverages
design thinking and are part of
sense making for stakeholders.
Transition Strategy

A transition strategy focuses on the long-

term strategy of the transformation and the
future releases and generations. It helps
inform the sourcing strategy and
procurement of services for ongoing
support and maintenance of products and
services.
Change and Adoption Strategy

A change and adoption strategy focuses on

adoption and the strategies for change. It is
key to delineating the strategic change and
activities required for the transformation
and the organization change and activities
required.
Discussion on Business Analytics Strategy
 Defining Objectives: How can organizations align their business
analytics strategy with their overall objectives and goals? What are
the key performance indicators (KPIs) that should be prioritized in
this process?
 Data Collection and Integration: What are the challenges and
opportunities associated with collecting and integrating data from
various sources within an organization? How can businesses ensure
data quality and integrity to derive accurate insights?
 Analytical Tools and Technologies: What role do analytical tools and
technologies, such as data visualization software, predictive modeling
tools, and machine learning algorithms, play in a business analytics
strategy? How can organizations choose the right tools to meet their
specific needs?
Continue..

 Talent and Skills: What skills and expertise are required

to implement a successful business analytics strategy?
How can organizations cultivate a data-driven culture and
ensure that employees have the necessary analytical
skills?
 Ethical and Privacy Considerations: How should
businesses address ethical and privacy considerations
when collecting and analyzing data? What measures can
be implemented to protect customer privacy and ensure
data security?
Data Analytics Trends
Data Analytics Trends
 Smarter and Scalable Artificial Intelligence
 Agile and Composed Data & Analytics
 Data Fabric
 Hybrid Cloud Solutions and Cloud Computing
 Edge Computing For Faster Analysis
 Augmented Analytics
 The Death of Predefined Dashboards
 Xops
 Engineered Decision Intelligence
 Data Visualization
Examples
AI-Powered Data Analytics

AI-powered data analytics is

responsible for the change in business
operations in the current world.
AI-powered data analytics are now
trending due to advanced and dynamic
algorithms
Example
Data-Centric AI

 One of the data analytics trends, data-centric

artificial intelligence
 focuses on understanding, applying, and making
decisions based
 It does not rely on algorithms
 uses data analytics and machine learning
Example
Metadata-Driven Data Fabric

 Data fabric is a system that isolates information

from metadata, learns, and takes actions
 itflags out the opportunities or issues associated
with data and offers suggestions to overcome
them
 The main goal is to manage data systematically,
Think-Pair & Share
 Think: Take a moment to consider your own experiences and
knowledge of business analysis strategy. Reflect on the following
questions:
 What is your understanding of business analysis strategy?
 What are some key components or elements of an effective business
analysis strategy?
 Can you recall any examples of successful business analysis strategies
implemented in organizations you're familiar with?
 How do you think business analysis strategy contributes to overall
business success and competitiveness?
Continue..
 Pair: Now, pair up with a partner, whether it's a colleague, friend, or someone
nearby. Discuss your thoughts and experiences with business analysis strategy.
Share your answers to the questions above and listen to your partner's
perspective. Consider the following prompts to guide your discussion:
 What similarities or differences do you notice in each other's understanding of
business analysis strategy?
 Are there any specific examples of successful business analysis strategies that
stand out to your partner?
 How do you think organizations can develop and implement effective business
analysis strategies?
 Share any challenges or obstacles you've encountered in implementing
business analysis strategies in your own work or organization.
Continue..
 Share: Finally, come together as a group and share some of the insights and
observations from your discussions. Encourage each person to contribute their
thoughts and experiences with business analysis strategy. Consider the
following discussion points:
 What are some common themes or patterns that emerged from your
discussions?
 Did you uncover any new perspectives or ideas about business analysis
strategy?
 How do you think organizations can leverage business analysis strategy to
drive innovation and growth?
 Are there any best practices or strategies for overcoming challenges in
implementing business analysis strategies?
Edge Computing

 Edge Computing, is a range of devices and networks near

the users
 It offers a path to collect data from devices via low-
latency connectivity, high-performance processing, and
secure platforms
 It is an emerging computing paradigm where data is
processed at the periphery of the network
 edge computing speeds up the data travel from a device
to a nearby edge.
Applications of BA in Business
APPLICATIONS

 Finance
 Marketing
 HR
 CRM
 Manufacturing
 Credit
Marketing Analytics

 Businesses need to use analytics the market, and

develop effective strategies
 By leveraging analytics, businesses can gain
valuable insights
 create strategies that will help them to achieve
their desired objectives.
Financial Analytics

 With the help of analytics, a Financial Analyst can gain valuable insights into
their:
 investments
 portfolio management strategies
 forecast their financial performance
 plan for the future.
HR Analytics

 HR Analysts ensure making the right hiring decisions

 finding most qualified and capable candidates
 Analytics play a crucial role in helping HR professionals make the best hiring
decisions.
 By using analytics to collect information about high performing applicants,
analyze performance, and track the effectiveness of recruitment processes
Role Play: Developing a Business Analysis
Strategy
 Characters:
 Sarah - Business Analyst
 Alex - Operations Manager
 Emily - Marketing Manager
 John - Finance Manager
 [Scene: A meeting room at the company's headquarters. Sarah, Alex, Emily, and
John are seated around a table, discussing the development of a business
analysis strategy.]
 Sarah: Good morning, everyone. Thank you for joining me today to discuss our
business analysis strategy. As our company continues to grow, it's essential that
we have a clear plan for analyzing data and making informed decisions to drive
our success.
Continue..
 Alex: Absolutely, Sarah. I couldn't agree more. Having a solid business analysis
strategy in place will help us identify opportunities for improvement, mitigate
risks, and optimize our operations.
 Emily: I agree. As the marketing manager, I'm particularly interested in
leveraging data analytics to better understand our customers' preferences and
behaviors. A robust business analysis strategy will enable us to tailor our
marketing efforts more effectively.
 John: From a finance perspective, I see immense value in utilizing data
analysis to optimize our budgeting and financial forecasting processes. By
identifying cost-saving opportunities and revenue-generating initiatives, we
can ensure our financial health and sustainability.
Continue..
 John: In finance, we can utilize financial modeling
techniques and advanced spreadsheet software
like Microsoft Excel to conduct financial analysis
and scenario planning.
 Sarah: Agreed. Lastly, we need to establish
processes for data collection, storage, and
governance to ensure data quality and integrity.
Regular review and updates to our business
analysis strategy will also be essential to adapt to
changing business needs and technological
advancements.
Forecasting Techniques
Forecasting Techniques
 Managers require good forecasts of future events.
 Business Analysts may choose from a wide range of
forecasting techniques to support decision making.
 Three major categories of forecasting approaches:
1. Qualitative and judgmental techniques
2. Statistical time-series models
3. Explanatory/causal models
Qualitative and Judgmental Forecasting
 Qualitative and Judgmental techniques rely on experience and
intuition.
 They are necessary when historical data is not available or when
predictions are needed far into the future.
 The historical analogy approach obtains a forecast through
comparative analysis with prior situations.
 The Delphi method questions an anonymous panel of experts 2-3
times in order to reach a convergence of opinion on the
forecasted variable.
Example 9.1: Predicting the Price of Oil

 Early 1988 – oil price was about $22 a barrel

 Mid-1988 – oil price dropped to $11 a barrel because of oversupply,
high production in non-OPEC regions, and lower than normal demand
 In the past, OPEC would raise the price of oil.
 Historical analogy would forecast a higher price.
 However, the price continued to drop even though OPEC agreed to cut
production.
 Historical analogies cannot always account for current realities!
Statistical Forecasting Models

 Time Series – a stream of historical data, such as weekly sales

 T = number of periods, t = 1, 2, …, T
 Time series generally have components such as:
- random behavior
- trends (upward or downward)
- seasonal effects
- cyclical effects
 Stationary time series have only random behavior.
 A trend is a gradual upward or downward movement of a time series.
Example 9.4: Identifying Trends in a Time
Series  The Energy Production & Consumption
 General upward trend with some short downward trends; the time series is
composed of several different short trends.
Seasonal Effects
 A seasonal effect is one that repeats at fixed intervals of time, typically a
year, month, week, or day.
Cyclical Effects
 Cyclical effects describe ups and downs over a much longer time frame,
such as several years.
Forecasting Models for Stationary Time
Series
 Moving average model
 Exponential smoothing model
 These are useful over short time periods when trend, seasonal, or cyclical
effects are not significant
Moving Average Models

 The simple moving average method is a smoothing method based on the idea
of averaging random fluctuations in the time series to identify the underlying
direction in which the time series is changing.
 The simple moving average forecast for the next period is computed as the
average of the most recent k observations.
 Larger values of k result in smoother forecast models since extreme values have
less impact.
Example 9.5: Moving Average Forecasting
 The Tablet Computer Sales data contains the number of
units sold over the past 17 weeks.

 Three-period moving average forecast for week 18:

Spreadsheet Implementation of Moving
Average Forecasting
Excel Moving Average Tool
 Data Analysis options

We do not recommend
using the chart or
error options because
the forecasts
generated by this tool
are not properly
aligned with the data
Example 9.7: Moving Average Forecasting
with XLMiner
 Select Smoothing from the
Time Series group and
select Moving Average
 Enter the data range and
move the time variable and
dependent variable to the
boxes on the right. Enter
the interval (k).
Examnle 9.7 Continued
 XLMiner
results
Error Metrics and Forecast Accuarcy
 Mean absolute
deviation (MAD)

 Mean square error

(MSE)

 Root mean square

error (RMSE)

 Mean absolute
percentage error
(MAPE)
Example 9.8: Using Error Metrics to Compare
Moving Average Forecasts
 Tablet Computer Sales data
 2-, 3-, and 4-period moving average models
 2-period model ahs lowest error metric values
Exponential Smoothing Models

 Simple exponential smoothing model:

where Ft+1 is the forecast for time period t + 1, Ft is the

forecast for period t, At is the observed value in period t, and
a is a constant between 0 and 1 called the smoothing
constant.
 To begin, set F1 and F2 equal to the actual observation in
period 1, A1.
Example 9.9: Using Exponential Smoothing to
Forecast Tablet Computer Sales

Forecast for week 3 when α = 0.7: (1 – 0.7)(88) + (0.7)(44) = 57.2

Example 9.10: Finding the Best Exponential
Smoothing Model for Tablet Computer Sales

The forecast using α = 0.6 provides the lowest error metrics.

Example 9.11: Using Excel’s Exponential
Smoothing Tool
 Select Data Analysis from the Analysis group and then
choose Exponential Smoothing
 Note that Damping factor = 1−α
 The first cell of the Output Range should be adjacent to
the first data point
Example 9.11 Continued

 Exponential Smoothing tool results

Example 9.15: Regression-Based Forecasting
for Natural Gas Usage
 Gas & Electric Excel file
 Use a seasonal categorical
 variable with k = 12 levels.
 Construct the regression
model using k - 1 dummy
variables, with January
being the reference month.
Example 9.15 Continued

 Data matrix
 Example 9.15 Continued

 Final
regression
results (time
and February
were
insignificant)
Regression Forecasting with Causal
Variables
 In many forecasting applications, other independent
variables besides time, such as economic indexes or
demographic factors, may influence the time series.
 Explanatory/causal models, often called econometric
models, seek to identify factors that explain statistically
the patterns observed in the variable being forecast,
usually with regression analysis
Example 9.18: Forecasting Gasoline Sales
Using Simple Linear Regression

 Excel file Gasoline Sales

 Simple trendline using week as the independent variable

Predicted sales for week 11 = 812.99(11) + 4790.1 = 13,733 gallons

Example 9.19: Incorporating Causal Variables
in a Regression-Based Forecasting Model

 The average price per gallon changes each week, and this
may influence consumer sales. Average price per gallon is
a causal variable.
 Develop a multiple linear regression model to predict
gasoline sales using both time and price per gallon.
Example 9.19 Continued
 Multiple regression model

Predicted sales for week 11

= 72,333 + 508.7(11) − 16,463(3.80) = 15,368 gallons
The Practice of Forecasting

 Judgmental and qualitative methods are used for

forecasting sales of product lines and broad
company and industry forecasts.
 Simple time-series models are used for short- and
medium-range forecasts.
 Regression methods are typically used for long-
term forecasts.
Case lets: Retail Store Expansion Strategy

Background: A retail company, XYZ

Mart, is considering expanding its
operations by opening new stores in
different regions. The company wants
to develop a business analysis strategy
to determine the most profitable
locations for expansion.
Continue
 What are the key factors XYZ Mart should consider when
analyzing potential locations for new stores?
 How can XYZ Mart use market research and data analysis
to identify promising locations for expansion?
 What analytical tools or techniques could XYZ Mart utilize
to evaluate the potential profitability of each location?
 How should XYZ Mart balance factors such as market
demand, competition, and operating costs when making
expansion decisions?
 What risks or challenges might XYZ Mart encounter during
the expansion process, and how can these be mitigated
through effective business analysis?