September 2019

The importance of Business Analytics in decision making

We are now living in a fast-passed era, where decisions need to be made quickly to solve a personal/Business problem while mitigating the risk of making a bad decision.

In most cases we make decisions based on our past experience, however, we have situations which require critical thinking before a decision is made. This means you need to look at the situation properly and decide how you are going to make a decision. Questions such as Who, what, where, when and why need to be asked.

A few examples I have put below:

What: What is the problem? What are the alternative solutions? What are the Strengths, Weaknesses, Opportunities, and Threats?
Who: Who is affected by this?
Where: Where will this decision take us?
When: When does this decision need to be made and implemented?
Why: Why does this decision need to be made?

Based on your situation the questions may differ and the time frame to have a decision made; this is why business analytics is crucial for any company because clarity can be made simpler if you have the data to make an informed decision. Business analytics is important and, in some cases, critical for a company’s growth.

So, what is Data Analysis?

In short, data analysis can be said it’s the process of taking data and turning it into information which can be used for decision making. This process involves collecting the data, analyzing it, scrutinizing, and converting it into an understandable format.

Why does a business need data analytics?

Well, in our current time believe it or not analytics is determining our everyday life in some way. I have added a few questions most marketing/sales teams would ask themselves:

How many people liked our social media page (Facebook/Instagram)?
How many hits we have on our website?
How many people bought our product/services?
- Who left an abandoned basket on our website?
  - Can we follow up?

You see all these questions require some form of an extraction tool to get this data and converting it to usable information to achieve your businesses objectives, this could be upselling, following up a lead or finding out why a product is not selling as it should be.

How does business analytics work?

Business analytics works by using tools to extract data from a business system. Usually, the extraction of this data is through analytical tools such as spreadsheets (excel/google sheets), SAS, Python and R. Some companies have embedded analytics such as CRM systems or HR systems that provide a better company workflow.

Most business departments such as; accounting, marketing, HR, Purchasing and R&D (Research and Development) have some form of data collection which provides key analytics on how the business is performing. This information can also provide you with your customer’s behavior by understanding how they are interacting with your product/service.

Business analytics has a wide range of applications such as financial management, marketing, HR (Human resources) and customer relationship management.

Some of these departments use business analytics for:

Reporting (KPI’s)
Monitoring and alerting of trends
Alerting irregular activities/poor performance
Forecasting
Understanding how a business is performing this includes:
- Why did something happen?
- How can we prevent it from happening?
- What can we do to improve?
Decision making

The trends show that businesses are slowly incorporating business analytics without people actually noticing big changes in their daily workflow; this is due to new software development which incorporate some form of analytical reporting. We no longer need to rely on data input methods in excel, but software integration is now possible to actually link two different systems and be able to extract data from different platforms to make decisions. One example is how you can link your eCommerce website such as Shopify with a payment system like PayPal. This will then link to your accounting software such as QuickBooks, therefore, cutting down your time of constantly converting your sales into excel; you can actually use this software to view your invoices, profit/loss, sales, expenses, tax and the list goes on.

This type of trend will allow small businesses to compete in a level playing field with larger companies because it provides information instant and allows you to make decisions based on actual data rather than guessing what is affecting your business.

Below are some links for business analytics if you are interested to read more