BUSINESS ANALYTICS

Business analytics

is the use of data, information technology, statistical analysis, quantitative methods, and mathematical or computer-based models to help managers gain improved insight about their business operations and make better, fact-based decisions.

Business Intelligence (BI)

This facilitated the collection, management, analysis, and reporting of data and can answer basic questions such as “How many units did we sell last month?” “What products did customers buy and how much did they spend?” “How many credit card transactions were completed yesterday?”. Has evolved into the modern discipline we now call information systems (IS).

Descriptive analytics

the use of data to understand past and current business performance and make informed decisions

Predictive analytics

predict the future by examining historical data, detecting patterns or relationships in these data, and then extrapolating these relationships forward in time.

Prescriptive analytics

identify the best alternatives to minimize or maximize some objective

Business Analytics Skills

and Resources

Provide the right balance of

(human) resources, Make analytics more

approachable, visual (people)

Information Environment

and Infrastructure

Upgrade the Information Structure, Change the way data is

formatted and presented, Capitalized on Advanced Analytics,

not just Reporting (technology)

Internal Processes

Manage Analytics as an

Ongoing Process, Not a

One-Off Project, Facilitate Collaboration (process)

Facilitate Collaboration

When the organization has

embraced analytics as the

foundation for business decision

making, integration across the

organization will likely follow (culture)

Outside-In Thinking

Keeping tabs on what

others in your industry are doing.

Inside-Out Thinking

Keeping a systematic

inventory of the key business processes

Financial

Services

Credit Scoring, Fraud Detection, Pricing Optimization, Trading

Analytics, Claims Analysis, Customer Profitability, Shareholder

Metrics

Retail

Product Promotions, Shelf Management, Space Optimization,

Demand Forecasting, Sales and Margin Rates, Seasonal Trends,

Product Pricing

Services

Call Center Staffing, Service Optimization

Government

Fraud Detection, Case Management, Crime Prevention, Revenue

Optimization

Transportation

Scheduling Optimization, Routing Optimization, Yield

Management

Healthcare

Drug Interaction, Preliminary Diagnosis Optimization, Disease

Management

Business opportunity

is

anything that involves leasing or sales

of products, service, equipment, etc.

that will enable the buyer-licensee to

begin the business.

statistics

concerned with describing, interpretation, and analyzing of data

analytical method

provide the math to model and predict variation

graphical methods

help making numbers visible for communication purposes

graphical displays

often used along with the quantitative measures to enable clarity of communication

outlier

a data point that is significantly greater or smaller than other data points in a data set

mean

the total of all values divided by the size of the data set

median

the middle value where exactly half of the data values are above it and half are below it

mode

the value that occurs the most in a data set

spread

refers to how the data deviates from the position measure

range

the difference between the highest and the lowest values

standard deviation

the average distance of the data points from their own mean

skewness

describes whether the data is distributed symmetrically around the mean

kurtosis

measures the degree of flatness (or peakness) of the shape

variance

measure of the variation around the mean

inter quartile range

divides an ordered data set into 4 parts

regression analysis

makes it possible to infer or predict another variable on the basis of one or more variables

Data

numerical or textual facts and figures that are collected through some type of measurement process.

Information

result of analyzing data; that is, extracting meaning from data to support evaluation and decision making.

Big data

refer to massive amounts of business data from a wide variety of sources, much of which is available in real time, and much of which is uncertain or unpredictable.

Database

a collection of related tables containing records on people, places, or things. In a ___ table the columns correspond to each individual element of data (called fields, or attributes), and the rows represent records of related data elements.

Data set

a collection of data (often a single “spread sheet” or data mining table).

Discrete

derived from counting something.

Continuous

based on a continuous scale of measurement.

Categorical (nominal) data

sorted into categories according to specified characteristics.

Ordinal data

can be ordered or ranked according to some relationship to one another

Ratio data

continuous and have a natural zero

Reliability

data are accurate and consistent.

Validity

data measures what it is supposed to measure.

Model

an abstraction or representation of a real system, idea, or object.

Verbal description

The rate of sales starts small as early adopters begin to evaluate a new product and then begins to grow at an increasing rate over time as positive customer feedback spreads. Eventually, the market begins to become saturated and the rate of sales begins to decrease.

Visual Model

Sketch of sales as an S-shaped curve over time

Uncertainty

is imperfect knowledge (of what will happen in the future).

Risk

is the potential of (gaining or) losing something of value. It is the consequence of actions taken under uncertainty.

Recognize a problem

Problems exist when there is a gap between what is happening and what we think should be happening.

Analyze the problem

experimentation or solution process, such as evaluating different scenarios, analyzing risks associated with various decision alternatives, finding a solution that meets certain goals, or determining an optimal solution.

Interpret result and make decision

Models cannot capture every detail of the real problem. Managers must understand the limitations of models and their underlying assumptions and often incorporate judgment into making a decision.

Implement the solution

Translate the results of the model back to the real world. Requires providing adequate resources, motivating employees, eliminating resistance to change, modifying organizational policies, and developing trust

Net Present Value

measures the worth of a stream of cash flows, taking into account the time value of money.

INDEX

works as a lookup procedure by returning the value in a particular row and column of an array.

Data visualization

the process of displaying data (often in large quantities) in a meaningful fashion to provide insights that will support better decisions.

Tabular data

can be used to determine exactly how many units of a certain product were sold in a particular month, or to compare one month to another.

visual chart

provides the means to easily compare overall sales of different products, identify trends

dashboard

visual representation of a set of key business measures. It is derived from the analogy of an automobile's control panel, which displays speed, gasoline level, temperature, and so on.

Line charts

provide a useful means for displaying data over time.

pie chart

displays this by partitioning a circle into pieshaped areas showing the relative proportion.

area chart

combines the features of a pie chart with those of line charts.

Scatter charts

show the relationship between two variables. To construct this, we need observations that consist of pairs of variables.

Data bars

display colored bars that are scaled to the magnitude of the data values (similar to a bar chart) but placed directly within the cells of a range.

Color scales

shade cells based on their numerical value using a color palette.

Icon sets

provide similar information using various symbols such as arrows or stoplight colors.

Filtering

means extracting a set of records having certain characteristics.

Statistics

both the science of uncertainty and the technology of extracting information from data.

statistic

summary measure of data

Descriptive statistics

methods that describe and summarize data.

frequency distribution

a table that shows the number of observations in each of several nonoverlapping groups.