Business analytics (BA) is the iterative, methodical exploration of an organization's data, with an emphasis on statistical analysis. Business analytics is used by companies that are committed to making data-driven decisions. Data-driven companies treat their data as a corporate asset and actively look for ways to turn it into a competitive advantage. Successful business analytics depends on data quality, skilled analysts who understand the technologies and the business, and an organizational commitment to using data to gain insights that inform business decisions.
Specific types of business analytics include:
- Descriptive analytics, which tracks key performance indicators (KPIs) to understand the present state of a business;
- Predictive analytics, which analyzes trend data to assess the likelihood of future outcomes; and
- Prescriptive analytics, which uses past performance to generate recommendations about how to handle similar situations in the future.
How business analytics works
Once the business goal of the analysis is determined, an analysis methodology is selected and data is acquired to support the analysis. Data acquisition often involves extraction from one or more business systems, cleansing and integration into a single repository such as a data warehouse or data mart.Content Continues Below
Initial analysis is typically performed against a smaller sample set of data. Analytic tools range from spreadsheets with statistical functions to complex data mining and predictive modeling applications. As patterns and relationships in the data are uncovered, new questions are asked and the analytic process iterates until the business goal is met.
Deployment of predictive models involves scoring data records -- typically in a database -- and using the scores to optimize real-time decisions within applications and business processes. BA also supports tactical decision-making in response to unforeseen events. And, in many cases, the decision-making is automated to support real-time responses.
Business analytics vs. business intelligence
While the terms business intelligence and business analytics are often used interchangeably, there are some key differences:
Expert Wayne Kernochan provides an overview of the different types of business intelligence analytics tools on the market.