INTRODUCTION

Chapter 1
INTRODUCTION

The word analytics has come into the foreground in the last decade or so. The increase of the
internet and information technology has made analytics very relevant in the current age. Analytics
is a field that combines data, information technology, statistical analysis, quantitative methods and
computer-based models into one.

This all are combined to provide decision-makers all the possible scenarios to make a well-
thought-out and researched decision. The computer-based model ensures that decision-makers can
see the performance of decisions under various scenarios.

Meaning:

Business analytics (BA) is a set of disciplines and technologies for solving business problems using
data analysis, statistical models, and other quantitative methods. It involves an iterative, methodical
exploration of an organization's data, with an emphasis on statistical analysis, to drive decision-
making.

● At its core, business analytics involves a combination of the following:

● identifying new patterns and relationships with data mining;
● using quantitative and statistical analysis to design business models;
● conducting A/B and multi-variable testing based on findings;
● forecasting future business needs, performance, and industry trends with predictive
modeling; and
● Communicating your findings in easy-to-digest reports to colleagues, management,
and customers.

Definition:

Business analytics (BA) refers to the skills, technologies, and practices for continuous iterative
exploration and investigation of past business performance to gain insight and drive business
planning. Business analytics focuses on developing new insights and understanding of business
performance based on data and statistical methods.

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Business Analytics is the process of transforming data into insights to improve business
decisions. Data management, data visualization, predictive modelling, data mining, forecasting
simulation, and optimization are some of the tools used to create insights from data.

1.1 Scope of Business Analytics

Business analytics has a wide range of applications and usages.

● It can be used for descriptive analysis in which data is utilized to understand past and
present situations. This kind of descriptive analysis is used to asses the current market
position of the company and the effectiveness of the previous business decision.
● It is used for predictive analysis, which is typically used to assess previous business
performance.
● Business analytics is also used for prescriptive analysis, which is utilized to formulate
optimization techniques for stronger business performance.

For example, business analytics is used to determine the pricing of various products in a
departmental store based on past and present set of information.

1.2 How business analytics works

Before any data analysis takes place, BA starts with several foundational processes:

● Determine the business goal of the analysis.

● Select an analysis methodology.
● Get business data to support the analysis, often from various systems and sources.
● Cleanse and integrate data into a single repository, such as a data warehouse or data
mart.

Essentials of Business Analytics

Business analytics has many use cases, but when it comes to commercial organizations, BA is
typically used to:
1. Analyze data from a variety of sources. This could be anything from cloud applications to
marketing automation tools and CRM software.
2. Use advanced analytics and statistics to find patterns within datasets. These patterns can
help you predict trends in the future and access new insights about the consumer and their
behavior.

3. Monitor KPIs and trends as they change in real time. This makes it easy for businesses
to not only have their data in one place but to also come to conclusions quickly and
accurately.

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4. Support decisions based on the most current information. With BA providing such a vast
amount of data that you can use to back up your decisions, you can be sure that you are
fully informed for not one, but several different scenarios.

1.3 Data for Analytics

Business analytics uses data from three sources for the construction of the business model. It uses
business data such as annual reports, financial ratios, marketing research, etc. It uses the database
which contains various computer files and information coming from data analysis.

1.4 Benefits of implementing BA in your organization

Apart from having applications in various arenas, the following are the benefits of Business
Analytics and its impact on business –

• Accurately transferring information

• Consequent improvement in efficiency
• Help portray Future Challenges
• Make Strategic decisions
• As a perfect blend of data science and analytics
• Reduction in Costs
• Improved Decisions
• Share information with a larger audience
• Ease in Sharing information with stakeholders

Challenges

Moreover, any technology is subject to its own set of problems and challenges. Following are
the challenges in implementing business analytics in an organization.

• Lack of technical skills among employees

• Fuss over acceptance of BA by staff
• Data Security and Maintenance
• Integrity of Data
• Delivering relevant information in the given time
• Inability to address complex issues
• Costs involved in implementing BA
• Investment of staff time in the implementation of BA
• Lack of a proper strategy to implement BA

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Figure 1: Process of Business Analytics

1.5 Business Analysis vs. Business Analytics

Business Analysis: Definition and Activities

Business analysis is the practice of assisting firms in resolving their technical difficulties by
understanding, defining, and solving those issues.

The activities that are carried out while performing Business Analysis:

1. Company analysis: Business analysis aims at figuring out the requirements of a firm in
general and its strategic direction and determining the initiatives that will enable the
business to address those strategic goals.
2. Requirements planning and management: It focuses on planning the requirements of
the development process, identifying what the top priority is for execution, and managing
the changes.
3. Requirements elicitation: It outlines techniques for collecting needs from relevant
members of the project team.
4. Requirements analysis and documentation: It explains how to establish and define the
needs in detail to allow them to be effectively carried out by the team.
5. Requirements communication: Business analysis explains methods to help
stakeholders have a shared understanding of the needs and how they will be carried out.
6. Solution assessment and validation: It also explains how a business analyst can execute
a suggested solution, how to support the execution of a solution, and how to evaluate
possible flaws in the implementation.

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Business analysis is performed by Functional Analysts, Systems Analysts, Business Analysts,

and Business Requirements Analysts.

Business Analytics: Definition and Its Applications

Business analytics is also known as data analytics. It is a process of collecting, evaluating, and
drawing valuable outcomes from the enormous amount of data available. Business analytics is
widely used in the following applications:

• Finance
• Marketing
• HR
• CRM
• Manufacturing
• Banking and Credit Cards

Business analytics is performed by Data Scientists and Data Analysts.

Figure 2: Business Analysis vs. Business Analytics

1.6 Categorization of Analytical Models:

 4 Types of Business Analytics
There are mainly four types of Business Analytics, each of these types are increasingly complex.
They allow us to be closer to achieving real-time and future situation insight application. Each of
these types of business analytics have been discussed below.

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1. Descriptive Analytics
2. Diagnostic Analytics
3. Predictive Analytics
4. Prescriptive Analytics

1. Descriptive Analytics
It summarizes an organization’s existing data to understand what has happened in the past or
is happening currently. Descriptive Analytics is the simplest form of analytics as it employs data
aggregation and mining techniques. It makes data more accessible to members of an organisation
such as the investors, shareholders, marketing executives, and sales managers.

It can help identify strengths and weaknesses and provides an insight into customer behavior too.
This helps in forming strategies that can be developed in the area of targeted marketing.

2. Diagnostic Analytics
This type of Analytics helps shift focus from past performance to the current events and determine
which factors are influencing trends. To uncover the root cause of events, techniques such as data
discovery, data mining, and drill-down are employed. Diagnostic analytics makes use of
probabilities, and likelihoods to understand why events may occur. Techniques such as sensitivity
analysis and training algorithms are employed for classification and regression.

3. Predictive Analytics
This type of Analytics is used to forecast the possibility of a future event with the help of statistical
models and ML techniques. It builds on the result of descriptive analytics to devise models to
extrapolate the likelihood of items. To run predictive analysis, Machine Learning experts are
employed. They can achieve a higher level of accuracy than business intelligence alone.
One of the most common applications is sentiment analysis. Here, existing data is collected from
social media and is used to provide a comprehensive picture of an users opinion. This data is
analysed to predict their sentiment (positive, neutral, or negative).

4. Prescriptive Analytics
Going a step beyond predictive analytics, it provides recommendations for the next best action to
be taken. It suggests all favorable outcomes according to a specific course of action and also
recommends the specific actions needed to deliver the most desired result. It mainly relies on two
things, a strong feedback system and a constant iterative analysis. It learns the relation between
actions and their outcomes. One common use of this type of analytics is to create recommendation
systems.

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Figure 3: Comparison of Business Analytics

1.7 Business Analytics Tools

Business Analytics tools help analysts to perform the tasks at hand and generate reports that may
be easy for a layman to understand. These tools can be obtained from open source platforms,
and enable business analysts to manage their insights comprehensively. They tend to be flexible
and user-friendly. Various business analytics tools and techniques like.

1. Python is very flexible and can also be used in web scripting. It is mainly applied when
there is a need for integrating the data analyzed with a web application or the statistics is
to be used in a database production. The I Python Notebook facilitates and makes it easy
to work with Python and data. One can share notebooks with other people without
necessarily telling them to install anything which reduces code organizing overhead
2. SAS The tool has a user-friendly GUI and can churn through terabytes of data with ease.
It comes with extensive documentation and a tutorial base which can help early learners
get started seamlessly.
3. R is open-source software and is completely free to use making it easier for individual
professionals or students starting to learn. Graphical capabilities or data visualization is
the strongest forte of R with R having access to packages like GGPlot, RGIS, Lattice,
and GGVIS among others which provide superior graphical competency.

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4. Tableau is the most popular and advanced data visualization tool in the market. Story-
telling and presenting data insights comprehensively has become one of the trademarks
of a competent business analyst Tableau is a great platform to develop customized
visualizations in no time, thanks to the drop and drag features.
5. Python, R, SAS, Excel, and Tableau have all got their unique places when it comes to
usage.

1.8 Data Scientist vs. Data Engineer vs. Data Analyst

1. Data scientists use their advanced statistical skills to help improve the models the data
engineers implement and to put proper statistical rigor on the data discovery and analysis the
customer is asking for.

1. Companies extract data to analyze and gain insights about various trends and practices.
To do so, they employ specialized data scientists who possess knowledge of statistical
tools and programming skills. Moreover, a data scientist possesses knowledge of machine
learning algorithms.
2. However, Data Science is not a singular field. It is a quantitative field that shares its
background with math, statistics, and computer programming. With the help of data
science, industries are qualified to make careful data-driven decisions.
3. These algorithms are responsible for predicting future events. Therefore, data science can
be thought of as an ocean that includes all the data operations like data extraction, data
processing, data analysis, and data prediction to gain necessary insights.

A Data Scientist is required to perform responsibilities –

1. Performing data pre-processing that involves data transformation as well as data
cleaning.
2. Using various machine learning tools to forecast and classify patterns in the data.
3. Increasing the performance and accuracy of machine learning algorithms through fine-
tuning and further performance optimization.
4. Understanding the requirements of the company and formulating questions that need to
be addressed.
5. Using robust storytelling tools to communicate results with the team members.

To become a Data Scientist, you must have the following key skills –
1. Should be proficient in Math and Statistics.
2. Should be able to handle structured & unstructured information.
3. In-depth knowledge of tools like R, Python and SAS.
4. Well-versed in various machine learning algorithms.
5. Know SQL(Structured Query Language) and NoSQL(Non-Structured
Query Language or not only SQL) Must be familiar with Big Data tools.

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Some of the tools that are used by Data Scientist are

• Web Scraping
• Data Analytics
• Machine Learning
• Reporting

2. A Data Engineer is a person who specializes in preparing data for analytical usage. Data
Engineering also involves the development of platforms and architectures for data processing.

• Data Engineers have to work with both structured and unstructured data. Therefore, they
need expertise in SQL and NoSQL databases. Data Engineers allow data scientists to
carry out their data operations.
• Data Engineers have to deal with Big Data where they engage in numerous operations
like data cleaning, management, transformation, data deduplication, etc.
• A Data Engineer is more experienced with core programming concepts and algorithms.

The role of a data engineer also follows closely to that of a software engineer. This is because
a data engineer is assigned to develop platforms and architecture that utilize guidelines of
software development.

For example, developing a cloud infrastructure to facilitate real-time analysis of data requires
various development principles. Therefore, building an interface API is one of the job
responsibilities of a data engineer. Tools used by Data Engineers

Some of the tools that are used by Data Engineers are –

• Hadoop
• Apache Spark
• Kubernetes
• Java
• Yarn

3. A Data Analyst is responsible for taking actionable that affect the current scope of the
company. A data engineer is responsible for developing a platform that data analysts and data
scientists work on. And, a data scientist is responsible for unearthing future insights from existing
data and helping companies to make data-driven decisions.

• A data analyst does not directly participate in the decision-making process; rather, he helps
indirectly by providing static insights about company performance. A data engineer is not
responsible for decision-making. And, a data scientist participates in the active decision- making
process that affects the course of the company.

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• A data analyst uses static modeling techniques that summarize the data through descriptive
analysis. On the other hand, a data engineer is responsible for the development and maintenance
of data pipelines. A data scientist uses dynamic techniques like Machine learning to gain
insights about the future.

• Knowledge of machine learning is not important for data analysts. However, this is
mandatory for data scientists. A data engineer need not require the knowledge of
machine learning but he is required to know core computing concepts like programming
and algorithms to build robust data systems.

• A data analyst only has to deal with structured data. However, both data scientists and
data engineers deal with unstructured data as well.

• Data analysts and data scientists are both required to be proficient in data visualization.
However, this is not required in the case of a data engineer.

• Both data scientists and analysts need not have knowledge of application development
and the working of the APIs. However, this is the most essential requirement for a data
engineer.

Some of the tools that are used by Data Analyst are

• Talend: Talend is one of the most powerful data analytics tools available in the market
and is developed in the Eclipse graphical development environment.
• Qlik Sense
• Apache Spark
• Power BI
• ThoughtSpot
• RapidMiner
• Tableau

4. Business Analyst: Business analysts use data to form business insights and recommend
changes in businesses and other organizations. Business analysts can identify issues in virtually
any part of an organization, including IT processes, organizational structures, or staff
development.
As businesses seek to increase efficiency and reduce costs, business analytics has become an
important component of their operations. Let’s take a closer look at what business analysts do
and what it takes to get a job in business analysis.

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Business analysts identify business areas that can be improved to increase efficiency and
strengthen business processes. They often work closely with others throughout the business
hierarchy to communicate their findings and help implement changes.

1.9 Tasks and duties can include:

• Identifying and prioritizing the organization's functional and technical needs and requirements
• Using SQL and Excel to analyze large data sets
• Compiling charts, tables, and other elements of data visualization
• Creating financial models to support business decisions
• Understanding business strategies, goals, and requirements
• Planning enterprise architecture (the structure of a business)
• Forecasting, budgeting, and performing both variance analysis and financial analysis

1.10 Types of Data

Figure 4: Types of Data

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1. Qualitative and Quantitative Data

Figure 5: Qualitative vs Quantitative Data

2. Nominal and Ordinal Data

Figure 6: Nominal vs Ordinal Data

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3. Discrete vs Continuous Data

Figure 7: Discrete vs Continuous Data

CONCLUSION

A business analyst might be another position in an organization but its roles and responsibilities
play a vital role in an organization’s success. While he needs to be a good orator, he should
possess the quality of bringing people closer to his team and across. His roles are not limited to
a specific step in project management. He is required one overstep till the end. From the initial
stages of evaluation to the maintenance, a company needs a business analyst’s skills.

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