Types of Business Analytics

According to a study by MicroStrategy, 56% of companies use data analytics to make better decisions. Business analytics plays a key role in helping businesses understand data and use it to grow their business. By analyzing past and current data, companies can predict future trends, solve problems, and improve their operations. There are various types of business analytics, each with a specific role, from tracking performance to identifying the most effective strategies for success. In this blog, we will explore the types of business analytics and provide a few other important details related to this topic.

What is Business Analytics?

Business analytics is the process of examining data to help businesses make better decisions. By reviewing past data, companies can identify patterns, trends, and insights that guide their future actions. It’s crucial for solving problems, planning, and making informed choices. Businesses are using this method to improve performance, make smart choices, and stay ahead in the market. By studying data, they are learning how to manage resources better, create strategies, and make their operations more efficient.

What are the Types of Business Analytics?

Business analytics help companies in tracking their performance, predicting future trends, and improving their business strategies. By using business analytics, companies can solve problems and find new opportunities. Let us take a look at some of the different types of business analytics: 

 i. Descriptive Analytics

Descriptive analytics looks at past data to find patterns and trends. It helps businesses understand what has happened and why. It can track key performance indicators (KPIs) to measure how well a company is performing. For example, companies use descriptive analytics to summarize past events like sales trends or social media activity, offering insights into overall patterns and business performance.

Here are the five steps involved in descriptive analytics:

• Deciding which business metrics will best measure performance against goals.
• Identifying the data needed to understand the current business state.
• Collecting and preparing the data by cleaning and organizing it.
• Analyzing the data for patterns that show how the business is performing.
• Presenting the results in charts and graphs to make it easy to understand.

ii. Diagnostic Analytics

Diagnostic analytics is all about finding the “why” behind what has happened. It looks deeper into data to explain the reasons for certain outcomes. By using methods like drill-downs, data mining, and correlations, businesses can understand why certain trends or events occurred.

For example, companies use diagnostic analytics to understand why customer demand is changing, identify technical problems, or figure out how customers behave. It usually follows descriptive analytics, which focuses on what happened, to provide a clearer picture of the situation.

iii. Predictive Analysis

Predictive analytics is a type of business analytics that uses historical data to forecast future events. It uses methods like machine learning, data mining, and statistical models to make these forecasts. Big companies like Starbucks, Google, and Amazon use it to recommend products, improve deliveries, and understand how customers behave.

Predictive analytics is useful in various business areas. It can predict customer preferences, detect employee intentions, and suggest relevant products. Additionally, it helps in improving customer service, prevent fraud, and manage risks. By forecasting trends and outcomes, businesses can make informed decisions and optimize their operations.

iv. Prescriptive Analytics

Prescriptive analytics provides recommendations on how to handle future situations based on past data. It uses tools, statistics, and machine learning algorithms to analyze both internal and external data. This type of business analytics helps you understand what might happen, when it could happen, and why.

Prescriptive analytics can help track changing manufacturing prices, improve equipment management, and suggest the best actions to take. It can also assist in modeling prices, evaluating hospital readmission rates, and identifying key areas for testing. By offering practical advice, prescriptive analytics supports better decision-making for future challenges.

v. Cognitive Analytics

Cognitive analytics is a new type of business analytics that combines artificial intelligence with data analysis. It examines data from various sources to find the best solutions to specific questions. This type of analytics uses multiple techniques to process large data sets and observe customer behavior and emerging trends.

Cognitive analytics can analyze unstructured data sources such as images, text documents, emails, and social media posts. By doing so, it helps businesses gain insights from diverse and complex data, leading to more informed decision-making.

Which Type of Business Analytics is Right for You?

Choosing the right type of business analytics depends on your specific needs and goals. Each type offers unique benefits and can help in different situations. Understanding these differences will help you select the most suitable analytics approach for your business. Here are some key points that you should remember to choose the right business analytics: 

• Descriptive analytics is ideal for everyday reporting and understanding past performance. It provides a clear view of historical data, which is useful for tracking key metrics and trends.
• Predictive analytics is best for forecasting future outcomes. It uses machine learning and statistical models to predict what might happen next, helping you prepare for future scenarios.
• Prescriptive analytics offers actionable insights by suggesting the best course of action based on past data. It’s particularly useful for decision-making in complex situations, such as optimizing production costs or improving healthcare outcomes.
• Diagnostic analytics helps analyze and understand the reasons behind past events. It is useful for evaluating the effectiveness of social media campaigns or digital marketing strategies by revealing what worked and what didn’t.

Different Business Analytics Job Roles

With expertise in business analytics, you can pursue various exciting career opportunities. Each job role offers a potential for professional growth within the field. Here are some popular job positions in business analytics and their average annual salaries:

Job Role	Average Annual Salary (in LPA)
Business Analyst	₹15 LPA
Business Analyst Manager	₹22 LPA
Data Analysis Scientist	₹20 LPA
Data Business Analyst	₹18 LPA
Information Security Analyst	₹17 LPA
Quantitative Analyst	₹25 LPA
IT Business Analyst	₹16 LPA

Pro Tip: If you’re looking to boost your chances of landing a business analytics job, consider enrolling in a business analyst course with a placement guarantee. This will equip you with the essential skills needed to excel in this field. 

Conclusion

Business analytics provides a wide array of powerful tools that allow companies to access data, make informed choices, and generally enhance efficiency. Each type of business analytics, whether descriptive or cognitive, fulfills a different role, allowing the business to address different problems and refine its strategies. So, whether you are looking to measure achievement or forecast new trends, the proper analytics approach may greatly enhance the business results.

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