1. What do you mean by business analytics?

Explain its importance in

managerial decision making.
Ans: Definition of business analytics
Business analytics (BA) refers to the skills, technologies, 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. In
contrast, business intelligence traditionally focuses on using a consistent set of
metrics to both measure past performance and guide business planning, which is also
based on data and statistical methods. (Citation needed)
Business analytics makes extensive use of statistical analysis, including explanatory
and predictive modeling, and fact-based management to drive decision making. It is
therefore closely related to management science. Analytics may be used as input for
human decisions or may drive fully automated decisions. Business intelligence is
querying, reporting, online analytical processing (OLAP), and "alerts."
In other words, querying, reporting, OLAP, and alert tools can answer questions such
as what happened, how many, how often, where the problem is, and what actions are
needed. Business analytics can answer questions like why is this happening, what if
these trends continue, what will happen next (that is, predict), what is the best that
can happen (that is, optimize).
Business Analytics: Is it Science or Art?
Most people would assume that, given the quantitative and analytical nature of
Business Analytics, it is a scientific discipline. However, there are many aspects of
Business Analytics that rely on the artistic nature of judgment, creativity, and
interpretation of data, the ability to see patterns and imagine the story behind the
numbers. It is about figuring out the story that the numbers are telling about what is
going on and then looking at where that may ultimately lead, what potential changes
in outcome are possible through changes in strategy, processes, resource allocation
and so on.
IMPORTANCE OF BUSINESS ANALYTICS FOR MANAGERIAL DECISION MAKING
The importance of decision making Globalisation means businesses across the world
have access to similar resources, including materials, components, products and even
people. As businesses also use similar technologies, competition is causing business
processes to converge towards similar standards. This is leaving the quality of a
businesss decision making as its main means for out-performing its competitors.
Digitisation, meanwhile, is driving down costs and causing commoditisation.
Intangibles enable a business to differentiate from its competitors.
They are already the main drivers of the value that a business can create. The quality
of its decision making enables a business to adapt more swiftly than its competitors to
the opportunities and threats presented by the digital age and the developments in its
markets. It is also the key intangible that unlocks the potential to develop other
intangibles within the business, such as its competitive position, its brands
reputation, and the quality of its people, its intellectual capital and how well it
implements its decision

 Business analytics is a methodology or tool to make a sound

commercial decision. Hence it impacts functioning of the whole organization.
Therefore, business analytics can help improve profitability of the business,
increase market share and revenue and provide better return to a shareholder.
Facilitates better understanding of available primary and secondary data, which
again affect operational efficiency of several departments.
Provides a competitive advantage to companies. In this digital age flow of
information is almost equal to all the players. It is how this information is utilized
makes the company competitive. Business analytics combines available data
with various well thought models to improve business decisions.
Converts available data into valuable information. This information can be
presented in any required format, comfortable to the decision maker.
2. Different types of analytics and types of analytical tools?
Ans: Companies that are attempting to optimize their S&OP efforts need capabilities
to analyze historical data, forecast what might happen in the future. The promise of
doing it right and becoming a data driven organization is great. Huge ROIs can be
enjoyed as evidenced by companies that have optimized their supply chain, lowered
operating costs, increased revenues, or improved their customer service and product
mix.
There are four types of Analytics

Diagnostic analytics: supports human decisions with visual analytics the user
models to reflect reasoning.

Descriptive analytics: gains insight from historical data with reporting,

scorecards, clustering etc.

Predictive analytics: employs predictive modeling using statistical and

machine learning techniques

Prescriptive analytics: recommends decisions using optimization, simulation,

etc.

Diagnostic analytics (DA)-why did it happen?

If you want to go deeper into the data you have collected from users in order to
understand "Why some things happened," you can use business intelligence tools
to get some insights. However, it is very laborious work that has limited ability to
give you actionable insights. It basically provides a very good understanding of a
limited piece of the problem you want to solve. Usually less than 10% of companies
surveyed do this on occasion and less than 5% do so consistently.
Used for discovery or to determine why something happened. For example, for a
social media marketing campaign, you can use descriptive analytics to assess the
number of posts, mentions, followers, fans, page views, reviews, pins, etc. There
can be thousands of online mentions that can be distilled into a single view to see
what worked in your past campaigns and what didnt.
Descriptive Analytics- what happened
This is what you get from your web server through tools like Google Analytics,
Omniture or the like. You can quickly understand "what happened" during a given
period in the past and verify if a campaign was successful or not based on simple

parameters like page views. About 35% of companies surveyed say they do this
consistently.
Descriptive analytics or data mining are at the bottom of the big data value chain,
but they can be valuable for uncovering patterns that offer insight. A simple example
of descriptive analytics would be assessing credit risk; using past financial
performance to predict a customers likely financial performance. Descriptive analytics
can be useful in the sales cycle, for example, to categorize customers by their likely
product preferences and sales cycle.
Predictive analytics- when might it happen?
Predictive analytics encompasses a variety of statistical techniques from predictive
modeling, machine learning, and data mining that analyze current and historical facts
to make predictions about future or otherwise unknown events.
In business, predictive models exploit patterns found in historical and transactional
data to identify risks and opportunities. Models capture relationships among many
factors to allow assessment of risk or potential associated with a particular set of
conditions, guiding decision making for candidate transactions.
The defining functional effect of these technical approaches is that predictive
analytics provides a predictive score (probability) for each individual (customer,
employee, healthcare patient, product SKU, vehicle, component, machine, or other
organizational unit) in order to determine, inform, or influence organizational
processes that pertain across large numbers of individuals, such as in marketing,
credit risk assessment, fraud detection, manufacturing, healthcare, and government
operations including law enforcement.
Predictive analytics is used in actuarial science, marketing, financial services,
insurance, telecommunications, retail, travel, healthcare, child protection,
pharmaceuticals, capacity planning and other fields.
One of the most well known applications is credit scoring, which is used throughout
financial services. Scoring models process a customer's credit history, loan
application, customer data, etc., in order to rank-order individuals by their likelihood
of making future credit payments on time.
Predictive analytics use big data to identify past patterns to predict the future. For
example, some companies are using predictive analytics for sales lead scoring. Some
companies have gone one step further use predictive analytics for the entire sales
process, analyzing lead source, number of communications, types of communications,
social media, documents, CRM data, etc. Properly tuned predictive analytics can be
used to support sales, marketing, or for other types of complex forecasts.
Prescriptive Analytics-how i can make it happen?
Once you get to the point where you can consistently analyze your data to predict
what's going to happen, you are very close to being able to understand what you
should do in order to maximize good outcomes and also prevent potentially bad
outcomes. This is on the edge of innovation today, but it's attainable

Prescriptive analytics is really valuable, but largely not used. According to Gartner,
13 percent of organizations are using predictive but only 3 percent are using
prescriptive analytics. Where big data analytics in general sheds light on a subject,
prescriptive analytics gives you a laser-like focus to answer specific questions. For
example, in the health care industry, you can better manage the patient population by
using prescriptive analytics to measure the number of patients who are clinically
obese, then add filters for factors like diabetes and LDL cholesterol levels to
determine where to focus treatment. The same prescriptive model can be applied to
almost any industry target group or problem.
Types of analytical tools
Business analytics is a fast growing field and there are many tools available in the
market to serve the needs of organizations. The range of analytical software goes
from relatively simple statistical tools in spreadsheets (ex-MS Excel) to statistical
software packages (ex-KXEN, Statistica) to sophisticated business intelligence suites
(ex-SAS, Oracle, SAP, IBM among the big players). Open source tools like R and Weka
are also gaining popularity. Besides these, companies develop in-house tools designed
for specific purposes.
Here is a list of 10 most popular analytic tools used in the business world.
Commercial software
1. MS Excel: Almost every business user has access to MS Office suite and Excel.
Excel is an excellent reporting and dash boarding tool. For most business
projects, even if you run the heavy statistical analysis on different software but
you will still end up using Excel for the reporting and presentation of
results. While most people are aware of its excellent reporting and graphing
abilities, excel can be a powerful analytic tool in the hands of an experienced
user. Latest versions of Excel can handle tables with up to 1 million rows making
it a powerful yet versatile tool.
2. SAS: SAS is the 5000 pound gorilla of the analytics world and claims to be the
largest independent vendor in the business intelligence market. It is the most
commonly used software in the Indian analytics market despite its monopolistic
pricing. SAS software has wide ranging capabilities from data management to
advanced analytics.
3. SPSS Modeler (Clementine): SPSS Modeler is a data mining software tool by
SPSS Inc., an IBM company. It was originally named SPSS Clementine. This tool
has an intuitive GUI and its point-and-click modelling capabilities are very
comprehensive.
4. Statistica: is a statistics and analytics software package developed by StatSoft.
It provides data analysis, data management, data mining, and data visualization
procedures. Statistica supports a wide variety of analytic techniques and is
capable of meeting most needs of the business users. The GUI is not the most
user-friendly and it may take a little more time to learn than some tools but it is
a competitively priced product that is value for money.

5. Salford systems: provides a host of predictive analytics and data mining tools
for businesses. The company specialises in classification and regression tree
algorithms. Its MARS algorithm was originally developed by world-renowned
Stanford statistician and physicist, Jerome Friedman. The software is easy to use
and learn.
6. KXEN: is one of the few companies that is driving automated analytics. Their
products, largely based on algorithms developed by the Russian mathematician
Vladimir Vapnik, are easy to use, fast and can work with large amounts of data.
Some users may not like the fact that KXEN works like a black box and in most
cases, it is difficult to understand and explain the results.
7. Angoss: Like Salford systems, Angoss has developed its products around
classification and regression decision tree algorithms. The advantage of this is
that the tools are easy to learn and use, and the results easy to understand and
explain. The GUI is very user friendly and a lot of features have been added over
the years to make this a powerful tool.
8. MATLAB: is a statistical computing software developed by MathWorks, MATLAB
allows matrix manipulations, plotting of functions and data, implementation of
algorithms and creation of user interfaces. There are many add-on toolboxes
that extend MATLAB to specific areas of functionality, such as statistics, finance,
image processing, bioinformatics, etc. Matlab is not a free software. However,
there are clones like Octave and Scilab which are free and have similar
functionality.
Open Source Software
1. R: R is a programming language and software environment for statistical
computing and graphics. The R language is an open source tool and is widely
used by the academia. For business users, the programming language does
represent a hurdle. However, there are many GUIs available that can sit on R
and enhance its user-friendliness.
2. Weka: Weka (Waikato Environment for Knowledge Analysis) is a popular suite of
machine learning software, developed at the University of Waikato, New
Zealand. Weka, along with R, is amongst the most popular open source software
used by the business community. The software is written in the Java language
and contains a GUI for interacting with data files and producing visual results
and graphs.
3.