Business analytics (BA) is the strategic analysis of an organization’s data to facilitate the decision-making process. Organizational use of BA includes statistical analysis and data-driven methods that can ideally optimize business decisions. Common examples of business analytics include predictive modeling, multivariate testing and data mining. BA processes are occasionally referred to as business intelligence (BI), but there are a number of key differences between business analytics and business intelligence. For example, BI focuses on the reporting of data while BA emphasizes analyzing and interpreting the data.
Where Are Business Analytics Used?
While most organizations realize the importance of planning, a common organizational problem is making effective and timely decisions that reflect the strategic plan. Another typical obstacle faced by many businesses is the need to periodically adjust strategic plans based on constantly-changing sales and expense data. These two critical management problems are both addressed by the activities of business analytics. In many situations, complex business planning decisions can be effectively optimized and automated. By integrating high-speed technology and the massive data generated by even small companies, quantitative and statistical analysis can help managers convert a tedious and time-consuming chore into a shorter and smoother process.
Business analytics is widely-used in a variety of businesses, government agencies and nonprofit organizations. It is a common practice for organizations new to business analytics to initially adopt BA applications in one or two departments before instituting BA processes organization-wide. Key candidates for early adoption of business analytics include customer service, product development, logistics and sales.
Can Business Analytics Be Outsourced?
Even though business analytics appears to offer multiple and impressive benefits to organizations of all sizes, BA techniques have not been universally adopted. Three key reasons identified by companies for not using business analytics are a lack of understanding, inadequate staff for implementation and the cost of adding BA. These reasons happen to coincide with the primary rationale for effective outsourcing of various tasks in many organizations.
When the topic of business analytics is first raised for consideration in an organization that has not previously used BA, an initial failure to understand the potential benefits and what is involved is a common and expected result. With business analytics terms like cluster analysis and logistic regression, immediate acceptance would be even more surprising. It would also be rare for any organization to already have the needed internal staff to carry out a brand new process involving highly-specialized statistical techniques. As for the additional expenses of implementing business analytics, any organization should evaluate what the costs and benefits are. This review should include a detailed understanding of costs and problems associated with a failure to add BA capabilities when most leading competitors are already taking advantage of business analytics.
While business analytics outsourcing seems to be a perfect solution to this dilemma, some organizations are not willing to pursue this cost-effective strategy. Even though business analytics tasks represent a prudent and smart candidate to outsource, there are other possibilities that should be considered before making a final decision. For example, one common approach is to outsource the initial business analytics on a short-term basis until a decision is made to permanently add BA to the organizational routine. At that point, a company can analyze if it makes more sense to add permanent staff for business analytics.
– Research Optimus