Business Analytics: Concepts and
Frameworks
What is Business Analytics?
Business analytics is the process of analyzing data and using insights to
make informed business decisions. It involves using various techniques,
such as data mining, statistical analysis, and predictive modeling, to
examine data and identify patterns, trends, and correlations. Business
Analytics is a way for companies to use data to make better decisions and
improve how they operate.
Let us break it down:
1. Collecting Information
2. Analysing the Information
3. Using Tools
4. Making Predictions
5. Helping Make Decisions
6. Improving the Business
7. Ongoing Process
Business Analytics Framework
The progression from data to information to knowledge to wisdom is a
common framework in Data Analytics and Knowledge Management.
This framework is often referred to as the "DIKW Pyramid" or the
"Data-Information-Knowledge-Wisdom Continuum“
1. Data – Raw, unprocessed facts and figures. Data is simply a
collection of numbers, words, or observations.
2. Information – Processed and organized data that provides meaning
and context. Information answers questions like "What?",
"Where?", and "When?".
3. Knowledge – The application and analysis of information to
understand relationships, patterns, and principles. Knowledge
answers questions like "Why?" and "How?".
4. Wisdom – The highest level of understanding, where knowledge is
applied to make informed decisions, solve complex problems, and
create new insights.
Approaches to Business Analytics
The various approaches to Business Analytics are:
• Descriptive Analytics: What happened
• Diagnostic Analytics: Why something happened
• Predictive Analytics: What is going to happen
• Prescriptive Analytics: What should be done next
Challenges of Business Analytics
• Data Quality Issues: Inaccurate, incomplete, or inconsistent data can
lead to incorrect insights and decisions.
• Data Integration: Combining data from various sources and systems
can be time-consuming and challenging.
• Scalability: Analyzing large datasets can be computationally intensive
and require significant resources.
• Interpretation: Translating complex analytical results into actionable
insights can be difficult.
• Communication: Effectively presenting findings to stakeholders with
varying levels of technical expertise.
Challenges of Business Analytics
• Domain Expertise: Lack of understanding of the business domain or
industry can lead to misinterpretation of results.
• Tool Selection: Choosing the appropriate tools and technologies for
specific analytical tasks.
• Talent Acquisition: Finding skilled analysts and data scientists can be
challenging.
• Change Management: Implementing analytics-driven decisions can
require significant organizational change.
• Security and Privacy: Ensuring the privacy and security of sensitive
data.
Challenges of Business Analytics
• Staying Up-to-Date : Keeping pace with rapidly evolving analytics
technologies and methodologies.
Benefits of Business Analytics
1. Improved Decision Making: Data-driven insights for informed
decisions.
1. Enhanced Operational Efficiency: Streamline processes, reduce
waste, optimize resources.
1. Increased Revenue and Profitability: Identify new opportunities,
optimize pricing, improve customer engagement.
1. Better Customer Insights: Understand customer needs,
preferences, and behaviors.
1. Competitive Advantage: Stay ahead of the competition with data-
driven trends and predictions.
Data
What is data?
Data refers to qualitative or quantitative attributes of a variable or set of
variables. At its most basic level, data is a collection of facts,
measurements, or observations that can be used for analysis. Data can
be structured or unstructured and can come in various forms, such as:
- Numbers (e.g., 1, 2, 3)
- Text (e.g., words, sentences, paragraphs)
- Images (e.g., pictures, graphics)
- Audio (e.g., sound waves, music)
- Video (e.g., moving images, films)
Types of Data
Structured Data
- Highly organized and formatted
- Easily searchable and machine-readable
- Fits into tables, spreadsheets, or relational databases
- Examples: names, addresses, phone numbers, financial transactions
Unstructured Data
- Lacks predefined format or organization
- Difficult for machines to search and analyze
- Includes text, images, audio, video, and social media posts
- Examples: emails, social media posts, images, videos, podcasts
Types of Data
Semi-Structured Data
● Has some level of organization but does not fit into relational
databases.
● Uses tags or labels to provide content
● Examples: XML files, JSON files, HTML files, CSV files
