21MB3206 - Unit II
21MB3206 - Unit II
21MB3206 - Unit II
BUSINESS ANALYTICS
21BA3206 – BUSINESS ANALYTICS
• To fully understand why BA is necessary, one must understand the
nature of the roles BA personnel perform.
• It is necessary to understand resource needs of a BA program to better
comprehend the value of the information that BA provides.
• Firms may choose to have a modest investment, whereas other firms
may have team or a department.
• BA program requires resource investments in BA personnel, data, and
technology.
Categorizing Data
• Data can be measured quantitatively by sales or qualitatively by
preference surveys or by the amount of consumer discussion.
• A major portion of the external data sources are found in the literature.
• For example, the Indian Census and the International Monetary Fund
(IMF) are useful data sources at the macroeconomic level for model
building.
• Likewise, audience and survey data sources might include Nielsen,
psychographic or demographic data sourced from Claritas, financial
data from Money Control, NSE, BSE, Economic Times, Business
Standard, and so forth.
• Data Quality can be defined as data that serves the purpose for
which it is collected.
• It means different things for different applications, but there are
some commonalities of high-quality data.
• These qualities usually include accurately representing reality,
measuring what it is supposed to measure, being timeless, and
having completeness.
• When data is of high quality, it helps ensure competitiveness, aids
customer service, and improves profitability.
Data Issues
• When data is of poor quality, it can provide information that is
contradictory, leading to misguided decision-making.
• For example, having missing data in files can prohibit some forms’
statistical modeling, and incorrect coding of information can
completely render databases useless.
• Data quality requires effort on the part of data managers to cleanse
data of erroneous information and repair or replace missing data.
• Data Privacy refers to the protection of shared data such that
access is permitted only to those users for whom it is intended.
• It is a security issue that requires balancing the need to know with
the risks of sharing too much.
• For example, competitors can steal a firm’s customers by accessing
addresses.
• Data leaks on product quality failures can damage brand image,
and customers can become distrustful of a firm that shares
information given in confidence.
• To avoid these issues, a firm needs to abide by the current
legislation regarding customer privacy and develop a program
devoted to data privacy.
• Firms need an information technology (IT) infrastructure that
supports personnel in the conduct of their daily business
operations.
• The general requirements for such a system are stated in Table.
• These types of technology are elemental needs for business
analytics operations.
• Of particular importance for BA is the data management
technologies.
• These types of technology are necessary to handle the load of big data that
most firms currently collect.
• DBMS includes 4 capabilities for organizing, managing, and accessing
data in databases.
1. Data Definition – specify the structure of content in a database to
create database tables and characteristics used in fields to identify
content.
2. Data Dictionary – an automated or manual file that stores the size,
descriptions, format, and other properties needed to characterize data.
3. Database Encyclopedia – a table of contents listing a firm’s current
data inventory and what data files can be built or purchased.
4. Data Manipulation Language – used to search databases for specific
information. (SQL)
Database Encyclopedia Content
• Data Warehouses are databases that store current and historical data of
potential interest to decision makers.
• What a data warehouse does is make data available to anyone who needs
access to it.
• In a data warehouse, the data is prohibited from being altered.
• Data warehouses also provide a set of query tools, analytical tools, and
graphical reporting facilities.
• Some firms use intranet portals to make data warehouse information
widely available throughout a firm.
Data Warehouse
• Data Marts are focused subsets or smaller groupings within a data
warehouse.
• Firms build smaller, decentralized data warehouses (called data marts)
focused on a limited portion of the organization’s data that is placed in a
separate database for a specific population of users.
• For example, a firm might develop a smaller database on just product
quality to focus efforts on quality customer and product issues.
• A data mart can be constructed more quickly and at lower cost.
Data Marts
• Once data has been captured and placed into database management
systems, it is available for analysis with BA tools, including online
analytical processing, data, text, and Web mining technologies.
• Online Analytical Processing (OLAP) is software that allows users to
view data in multiple dimensions.
• For example, employees can be viewed in terms of their age, sex,
geographic location, and so on.
• OLAP would allow identification of the number of employees who are
age 35, male, and in the western region of a country.
• OLAP allows users to obtain online answers to ad hoc questions
quickly, even when the data is stored in very large databases.
• Data Mining is the application of a software, discovery-driven process
that provides insights into business data by finding hidden patterns and
relationships in large databases and inferring rules from them to predict
future behavior.
• The observed patterns and rules are used to guide decision-making.
• They can also act to forecast the impact of those decisions.
• It is an ideal predictive analytics tool used in the BA process.
Types of Information Obtainable with Data Mining Technology
• Text Mining is a software application used to extract key elements
from unstructured data sets, discover patterns and relationships in the
text materials, and summarize the information.
• Given that the majority of the information stored in businesses is in the
form of unstructured data, the need to explore and find useful
information will require increased use of text mining tools in the future.
• Emails, pictures, memos, transcripts, survey responses, business
receipts, and so on
• Web Mining seeks to find patterns, trends, and insights into customer
behavior from users of the Web.
• Marketers, for example, use BA services like Google Trends and Google
Insights for Search to track the popularity of various words and phrases to
learn what consumers are interested in and what they are buying.
1. Microsoft Excel:
• Microsoft Excel spreadsheet systems have add-in applications
specifically used for BA analysis.
• Analysis ToolPak is an Excel add-in that contains a variety of statistical
tools for the descriptive and predictive BA process steps.
• Another Excel add-in, Solver, contains operations research
optimization tools used in the prescriptive step of the BA process.
Organization Structures
• A program is the process that seeks to create an outcome and usually
involves managing several related projects with the intention of improving
organizational performance.
• A program can also be a large project.
• A project tends to deliver outcomes and can be defined as having
temporary social systems within or across organizations to accomplish
particular and clearly defined tasks, usually under time constraints.
• Projects are often composed of teams.
• A team consists of a group of people with skills to achieve a common
purpose.
• Teams are especially appropriate for conducting complex tasks that have
many interdependent subtasks.
Hierarchal relationships program, project, and team planning
• Senior managers establish a BA program initiative to mandate the creation
of a BA grouping within the firm as a strategic goal.
• A BA program does not always have an end-time limit.
• Middle-level managers reorganize the strategic BA program goals into
doable BA project initiatives to be undertaken in a fixed period of time.
• Some firms have only one project and others have multiple BA projects
requiring the creation of multiple BA groupings.
• Projects usually have an end-time date in which to judge the
successfulness of the project.
• The projects in some cases are further reorganized into smaller
assignments, called BA teams.
• BA teams may have;
• a long-standing time limit (for example, to exist as the main source of
analytics for an entire organization) or
• a fixed period (for example, to work on a specific product quality
problem and then end).
• Planning the BA resource allocation within the organizational structure
of a firm is a starting place for the alignment of BA to best serve a firm’s
needs.
• Aligning the BA resources requires a determination of the amount of
resources a firm wants to invest.
• Because of the varied skill sets in information systems, statistics, and
operations research methods, a more common beginning for a BA
initiative is the creation of a BA team organization.
• Another way of aligning BA resources within an organization is to use a
project structure.
• Even larger investments in BA resources might be required by firms that
decide to establish a whole BA department.
• There are different ways to structure an organization to align its BA
resources to serve strategic plans.
• In organizations where functional departments are structured on a strict
hierarchy, separate BA departments or teams have to be allocated to each
functional area.
• This Functional Organization Structure may have the benefit of stricter
functional control by the VPs of an organization and greater efficiency in
focusing on just the analytics within each specialized area.
• This structure does not promote the cross-department access that is
suggested as a critical success factor for the implementation of a BA
program.
Teams
BA Team Participant Roles
• Team members’ need for collaboration is motivated by;
• changes in the nature of work (no more silos to hide behind, much more
open environment, and so on),
• growth in professions (for example, interactive jobs tend to be more
professional, requiring greater variety in expertise sharing), and
• the need to nurture innovation (creativity and innovation are fostered
by collaboration with a variety of people sharing ideas).
• To keep one’s job and to progress in any business career, particularly in
BA, team members must encourage working with other members inside a
team and out.
• For organizations, collaboration is motivated by;
• the changing nature of information flow (that is, hierarchical flows
tend to be downward, whereas in modern organizations, flow is in all
directions) and
• changes in the scope of business operations (that is, going from
domestic to global allows for a greater flow of ideas and information
from multiple sources in multiple locations).
• To encourage collaboration;
• technology (e-mail, instant messaging, wikis, Facebook and Twitter)
• collaborative writing, reviewing, and editing efforts
• webinars, audio and video conferencing
• Reward systems should be put into place to reward team effort.
• Teams should be rewarded for their performance.
• Individuals should be rewarded for performance in a team.
• Middle-level managers build teams, coordinate their work, and monitor
their performance
• Senior management should establish collaboration and teamwork as a vital
function.
Reasons for BA Team Failures
• Aligning organizational resources is a management function.
• There are general management issues that are related to a BA program,
and some are specifically important to operating a BA department, project,
or team.
• The ones covered in this section includes;
• Establishing an Information Policy,
• Outsourcing Business Analytics,
• Ensuring Data Quality,
• Measuring Business Analytics Contribution, and
• Managing Change.
Management Issues
• There is a need to manage information, is accomplished by establishing
an information policy;
• to structure rules on how information and data are to be organized and
maintained and
• who is allowed to view the data or change it.
• The information policy specifies organizational rules for;
• Sharing,
• Disseminating,
• Acquiring,
• Standardizing,
• Classifying, and
• Inventorying all types of information and data.
1. Establishing an Information Policy
• It defines the specific procedures and accountabilities that identify;
• which users and organizational units can share information,
• where the information can be distributed, and
• who is responsible for updating and maintaining the information.
• In small firms, business owners might establish the information policy.
• For larger firms, data administration may be responsible for the specific
policies and procedures for data management.
• Responsibilities could include;
• Developing the Information Policy,
• Planning Data Collection and Storage,
• Overseeing Database Design,
• Developing the Data Dictionary, and
• Monitoring how Information Systems Specialists and End User Groups
use Data.
• A more popular term for many of the activities of data administration is
Data Governance.
• Data Governance - Establishing policies and processes for managing the
availability, usability, integrity, and security of the data employed in
businesses.
• It is specifically focused on;
• Promoting Data Privacy,
• Data Security,
• Data Quality, and
• Compliance with Government Regulations.
• Such information policy, data administration, and data governance must be
in place to guard and ensure data is managed for the betterment of the
entire organization.
• These steps are also important in the creation of Database Management
Systems and their support of BA tasks.
• Outsourcing – a strategy by which an organization chooses to allocate
some business activities and responsibilities from an internal source to an
external source.
• Outsourcing business operations is a strategy that an organization can use
to implement a BA program, run BA projects, and operate BA teams.
• Any business activity can be outsourced, including BA.
• Outsourcing is an important BA management activity that should be
considered as a viable alternative in planning an investment in any BA
program.
5. Managing Change
• Changes in an organization can be either;
• Planned (a result of specific and planned efforts at change with
direction by a change leader), or
• Unplanned (spontaneous changes without direction of a change
leader).
• The application of BA invariably will result in both types of changes
because of BA’s;
• Specific problem-solving role (a desired, planned change to solve a
problem) and
• Opportunity finding exploratory nature (unplanned new knowledge
opportunity changes).
Change Management Targets
• It is not possible to gain the benefits of BA without change.
• The intent is change that involves finding new and unique information on
which change should take place in people, technology, or business.
• By instituting the concept of change management within an organization a
firm can align resources, and processes to more readily accept changes that
BA may suggest.
• Instituting the concept of change management in any firm depends on the
unique characteristics of that firm.
• There are, though, a number of activities in common with successful
change management programs, and they apply equally to changes in BA
departments, projects, or teams.
Change Management Best Practices