Business Analytics

Business analytics (BA) is the practice of iterative, methodical exploration of an organization’s data with emphasis on statistical analysis.  Business analytics is used by companies committed to data-driven decision making.

BA is used to gain insights that inform business decisions and can be used to automate and optimize business processes.  Data-driven companies treat their data as a corporate asset and leverage it for competitive advantage. Successful business analytics depends on data quality, skilled analysts who understand the technologies and the business and an organizational commitment to data-driven decision making.

Examples of BA uses include:

- Exploring data to find new patterns and relationships (data mining)

- Explaining why a certain result occurred (statistical analysis, quantitative analysis)

- Experimenting to test previous decisions (A/B testing, multivariate testing)

- Forecasting future results (predictive modeling, predictive analytics)

Once the business goal of the analysis is determined, an analysis methodology is selected and data is acquired to support the analysis.  Data acquisition often involves extraction from one or more business systems, cleansing, and integration into a single repository such as a data warehouse or data mart.  The analysis is typically performed against a smaller sample set of data.  Analytic tools range from spread sheets with statistical functions to complex data mining and predictive modeling applications. 

As patterns and relationships in the data are uncovered, new questions are asked and the analytic process iterates until the business goal is met.  Deployment of predictive models involves scoring data records (typically in a database) and using the scores to optimize real-time decisions within applications and business processes. BA also supports tactical decision making in response to unforeseen events, and in many cases the decision making is automated to support real-time responses.

While the terms business intelligence and business analytics are often used interchangeably, there are some key differences:

Recognizing the growing popularity of business analytics, business intelligence application vendors are including some BA functionality in their products.  More recently, data warehouse appliance vendors have started to embed BA functionality within the appliance. Major enterprise system vendors are also embedding analytics, and the trend towards putting more analytics into memory is expected to shorten the time between a business event and decision/response.