Understanding Business Analytics and Leveraging Data to Make Informed Decisions
The business environment is constantly changing, and proper data acquisition and utilization is now crucial to the business ecosystem. Companies that leverage data analytics in their decision-making process are more likely to outperform their competitors. Regardless of the size or scale of your business, you need to acquire, analyze and understand data to make better decisions. In this article, we will explore how you can leverage data and business analytics to create better results for your enterprise.
What is Business Analytics?
Business analytics helps businesses to identify their most important goals, gather relevant data, analyze and interpret the data and use the insights gained to make informed decisions. Business analysis can be either descriptive, diagnostic, predictive, or prescriptive. It is the process of gathering, analyzing, and transforming historical company data into insightful knowledge that can be used to make better business choices. Now that we know the scope of business analytics, the difficulty is figuring out how to use the information we get from the analysis to guide our business decisions.
How to Leverage Data to Make Informed Business Decisions
Below are some ways businesses can use data to facilitate the decision-making process
When you analyze historical business data, you may identify trends and patterns you have eluded. You could discover that at particular periods of the year, the demand for a specific type of your offerings increases, but you lack enough supplies to meet the demand. Major corporations use the economic data calendar to identify these business and economic trends.
This resource is used to make fundamental business analysis that helps to spot or anticipate trends or events related to the economy that are likely to occur in the future and may impact the financial markets or a particular industry. For example, if you’re a business that deals with different currencies and their movement in financial markets, using an economic data calendar could help you anticipate the dollar index and choose the right time to commence a trade and with which currencies.
Your business operations can either make or mar the organization. If there are inefficient operations, data analysis can expose weak points in your business. For instance, a business analysis report on your sales data may show that it sells more of a particular product but doesn’t sell much of the other. As a result, there are some adjustments you can make to your inventory or take necessary steps that will salvage the situation.
One company that is worthy of mention and emulation when it comes to the use of data to improve business efficiency and operations is Amazon. Amazon monitors over 2000 historical data points, which it uses to track orders, minimize fraudulent transactions, and recommend products that customers are interested in.
By analyzing business data, you can predict risks and take steps to mitigate them. With this data, a company can take proactive steps to avert the impending threats to its inflow and discover wasteful outflows. Using predictive business analytics, a company can also identify possible churn and reduce customer defection. Companies like American Express are believed to use big data and historical transactions to forecast accounts that will close within four months in their Australian market. Other companies like Starbucks use big data to determine profitable locations to set up their businesses and reduce the risk associated with setting up a new business. This has helped them to choose locations with high revenue prospects with an above-average degree of success.
Businesses that measure their performance at intervals can discover what is working and what isn’t working. This allows a business to make informed decisions regarding its future investments and implement changes to its existing strategies. This is done by using essential metrics for evaluating different aspects of the business. When using data to measure business performance, it is vital to look for key performance indicators that align with the company’s ultimate goal and are relevant to growth.
Many people need to correct the mistake of tracking vanity metrics from their data which doesn’t give any insight that will be valuable to the business. Google is an excellent example of a business that measures its performance and uses the data derived to make its processes, products, and services better. In an analytics initiative called Project Oxygen, Google mined data from over 1000 performance reviews and compared it against their employee retention rate. With this data, Google discovered common attributes of high-performing managers and designed training to imbibe these behaviors in its managers.
Just before you use data for your business
The benefits of data to businesses are enormous, but you must remember that data is insufficient alone. Correctly interpreting the data at your disposal will guide any decision you make. Therefore, you must be sure about the quality of your data and the accuracy of your analysis, which will require good business acumen and great technical abilities.