Businesses generate huge amounts of data every year. Those that are smart understand the power of that data. They know that they can use it to make important decisions that shape the future. These are the companies that survive and thrive.
They do not face the future blindly. Rather, they use the data they have on hand to make strategic decisions about the coming months and years. This is the power of analytics.
Business analytics has become a core function in many companies. They are actively hiring individuals who understand how it works so that they can use it to improve operations.
Management schools also now include it in their curriculums and you’ll likely study it if you enroll in an in-person or online MBA degree such as the one offered by Aston University. Those who specialize in it often end up supervising analytics departments in leading companies.
What is business analytics and why does it matter so much today? How can you use it to make decisions about the future?
Business analytics defined
In a nutshell, analytics is the process of using scientific methods to extract meaningful insights from data so that you can make decisions. Its primary function is to identify data sets that are useful for decision-making.
Today’s businesses need to integrate analytics into their strategy. According to a 2020 Bloomberg report, 90% of them admit that success depends on data-driven decisions made at the front line.
In 2018, Forbes reported that 52% of businesses have incorporated analytics into their operations. These two statistics show just how critical it is.
Business analytics comprises 4 areas:
- Descriptive analytics – it is used to interpret historical data and identify trends.
- Diagnostic analytics – it uses data to try and find out why something happened.
- Predictive analytics – it is used to forecast future trends.
- Prescriptive analytics – also called scenario testing, it is used to compare different data sets to find out which one gives the most favorable outcome.
The type of analytics you use depends on the predictions you are trying to make. Many businesses use all 4 types of analytics concurrently so that they can generate a comprehensive forecast based on the data they have.
Why is business analytics important?
Should you care about it, especially if your business is doing well? You should, because otherwise your success will be short-lived as you are flying blind.
Your competitors have a better view of the market than you do. They can position themselves where they can be seen by customers because they understand the market.
Companies are using business analytics for the following reasons:
- They help enhance the customer experience – using business analytics software you can tell where your customers are from, what they are buying, and even when they drop off the sales cycle. You can use that information to make sure that they have a great experience every time they interact with you.
- Analytics helps identify where you are losing money – you can track every action and identify points in the sales cycle where you are making losses.
- Decisions are better informed with business analytics – you no longer have to rely on hunches when you are drafting strategies for future business.
- It is a powerful tool for competitor analysis – you can beat your competitors because you understand where they draw customers from and what they do after they acquire a new customer.
- You can identify business opportunities – analytics will point you to new customer pools.
- It is a great tool for improving efficiency – an efficient business is more profitable because it eliminates waste.
How can you use analytics in your business?
How you use business analytics depends on what you do. A restaurant, for example, may use it differently from a manufacturing plant.
A restaurant can use the process to find out its best-selling menu in the last year. A fast-food restaurant may use it to identify bottlenecks in the system that keep customers waiting.
A shipping company will use analytics to identify delays. A manufacturer can use it to track the wastage of raw materials.
The thing all these businesses have in common is that if they use analytics properly, they can eliminate waste and increase profitability. They can identify loss-makers and improve service delivery.
Should business managers study business analytics?
If you do an online MBA degree, you will encounter business analytics. Some people specialize and become experts in the area.
Whether or not you should do it depends on what you want to do in the future. If you want to head an analytics department in a big company, you should enroll in an analytics-focused course.
You may wonder whether there is much demand for business analytics professionals. The answer is yes, there is. Commercial entities understand that without business analytics they are making decisions blindly.
Small businesses may rely on analytics software, but medium and big companies hire experts to help them crunch the data that they generate and provide forecasts for the future.
According to the US Bureau of Labor Statistics, analyst jobs are expected to grow by 11% in the next decade. There will be more than 100,000 jobs for those who specialize in this area.
If you are studying for an MBA or plan to enroll in the future, choose one with an analytics module. It will make you more attractive to employers.
You can do your MBA online. It takes a shorter time and costs less. However, remember that online degrees are challenging. You cover the same material as those who are studying on campus. You have to be focused, organized and disciplined to complete your course.
Businesses rely on analytics to give them an edge. It is an important tool for making forecasts and strategic decisions. An online MBA degree is a great way to gain data analytics skills. You learn how to use data to make informed decisions. It also helps you understand outcomes.