Business Analytics in the Real World
Business Analytics (BA) is about using data and models to make better decisions. This can help governments to improve policy-making or companies to develop better strategies. The aim is to use information to improve the day-to-day performance of the organisation.
But how do companies in the ‘real world’ take decisions using data? The classic tool is Microsoft Excel. Companies have built Excel sheets over years that are no longer understood because the creator has left for a rival firm, yet the labyrinth of code hidden within the sheet is trusted as the only way to analyse data and take decisions. Recognise that scenario?
It’s a common problem because organisations are finding that they have access to more and more data, yet often a spreadsheet is the only analysis tool that managers know how to use.
But when the data about your organisation is constantly changing or is so vast that a Big Data approach is required then how can a single spreadsheet cope? Managing Big Data requires a different approach to analysis. You don’t have the luxury of being able to load up all the available data on a PC so a user can burrow around using queries.
So the problem itself is that the amount of data is just too big to handle all at once, and the tools required need to be more robust than the trusty spreadsheet. But what are the real business decisions being taken with BA tools and how does the data analysis process improve the decisions?
- In the airline business, employees and aircraft need to be in the right place at the right time to maximise efficiency. This is a complex planning procedure when things are going right, but when a flight is delayed or a key staff member is ill or a plane requires unscheduled maintenance then the knock-on effect can be huge. Analyzing the possible options is a great example of how BA can influence real decisions.
- Hotels want guests in their rooms as often as possible. Empty rooms in a hotel mean lost profit and a hotel that quickly sells out a particular night may have been able to charge more for the rooms on that evening. Analyzing past customer behaviour, the competition, and other influencing factors such as big sport or music events in the neighbourhood is another classic example of how data can feed into a specific business decision – how much to charge for a room.
- Banks and finance companies need to make quick decisions about whether to lend money to a particular customer based on limited information – such as the salary. However there are many other factors that could determine whether the individual is good for the loan or not and these can all be quickly factored together to provide a decision.
- Supermarkets always seem to have full shelves these days. Can you remember Saturday afternoons where many big supermarkets would run out of important products? With the entire history of each product and how it sells in each store it is now far easier for supermarket managers to ensure they are ordering the correct stock levels.
These are just four entirely different industries, but in each one it is clear that Business Analytic tools are changing how managers make decisions in those companies. The trend is obvious – information really matters in just about every industry you can possibly name.
However, data is not information. Moving from a sea of data to a set of information that can be used for ‘what-if’ planning within the business is a big step. If you already have BA expertise in-house then this is where outsourcing is going to kick-start your business by introducing those skills and changing the way your own management team takes decisions. This is not about outsourcing to save 10% of your IT costs; this is a classic example of when the most sensible option is to bring in the experts.
Better decision-making leads to increased efficiency, a better use of existing resources, and the opportunity to perform better – to earn more by delivering a better service. For this reason, managers in all industries should be thinking about what Business Analytics can do for them. It’s the future of decision-making in every industry.