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4 EXAMPLES OF BUSINESS ANALYTICS IN ACTION

15 JAN 2019

Matt Gavin Staff

Analytics, Business Analytics, Business Essentials, CORe, Technology

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Data is a valuable resource in today’s ever-changing marketplace. For business professionals, knowing
how to interpret and communicate data is an indispensable skill that can inform sound decision-making.

“The ability to bring data-driven insights into decision-making is extremely powerful—all the more so
given all the companies that can’t hire enough people who have these capabilities,” says Harvard
Business School Professor Jan Hammond, who teaches the online course Business Analytics. “It’s the
way the world is going.”

Before taking a look at how some companies are harnessing the power of data, it’s important to have a
baseline understanding of what the term “business analytics” means.

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WHAT IS BUSINESS ANALYTICS?

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As described in the Harvard Business Review video below, business analytics is “the use of math and Accept All Cookies
statistics to derive meaning from data in order to make better business decisions.”
 The Explainer: Big Data and Analytics

There are four key types of business analytics: descriptive, predictive, diagnostic, and prescriptive.
Descriptive analytics is the interpretation of historical data to identify trends and patterns, while
predictive analytics centers on taking that information and using it to forecast future outcomes.
Diagnostic analytics can be used to identify the root cause of a problem. In the case of prescriptive
analytics, testing and other techniques are employed to determine which outcome will yield the best
result in a given scenario.

Related: 4 Types of Data Analytics to Improve Decision-Making

Across industries, these data-driven approaches have been employed by professionals to make informed
business decisions and attain organizational success.

Business Analytics vs. Data Science

It’s important to highlight the difference between business analytics and data science. While both
processes use big data to solve business problems they’re separate fields.

The main goal of business analytics is to extract meaningful insights from data to guide organizational
decisions, while data science is focused on turning raw data into meaningful conclusions through using
algorithms and statistical models. Business analysts participate in tasks such as budgeting, forecasting,
and product development, while data scientists focus on data wrangling, programming, and statistical
modeling.

While they consist of different functions and processes, business analytics and data science are both
vital to today’s organizations. Here are four examples of how organizations are using business analytics to
their benefit.

BUSINESS ANALYTICS EXAMPLES

According to a recent survey by McKinsey, an increasing share of organizations report using analytics to
generate growth. Here’s a look at how four companies are aligning with that trend and applying data
insights to their decision-making processes.
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Microsoft

At technology giant Microsoft, collaboration is key to a productive, innovative work environment.

Following a 2015 move of its engineering group's offices, the company sought to understand how
fostering face-to-face interactions among staff could boost employee performance and save money.
Microsoft’s Workplace Analytics team hypothesized that moving the 1,200-person group from five
buildings to four could improve collaboration by cutting down on the number of employees per building
and reducing the distance that staff needed to travel for meetings. This assumption was partially based
on an earlier study by Microsoft, which found that people are more likely to collaborate when they’re
more closely located to one another.

In an article for the Harvard Business Review, the company’s analytics team shared the outcomes they
observed as a result of the relocation. Through looking at metadata attached to employee calendars, the
team found that the move resulted in a 46 percent decrease in meeting travel time. This translated into
a combined 100 hours saved per week across all relocated staff members and an estimated savings of
$520,000 per year in employee time.

The results also showed that teams were meeting more often due to being in closer proximity, with the
average number of weekly meetings per person increasing from 14 to 18. In addition, the average
duration of meetings slightly declined, from 0.85 hours to 0.77 hours. These findings signaled that the
relocation both improved collaboration among employees and increased operational efficiency.

For Microsoft, the insights gleaned from this analysis underscored the importance of in-person
interactions and helped the company understand how thoughtful planning of employee workspaces could
lead to significant time and cost savings.

2. Enhancing Customer Support at Uber

Ensuring a quality user experience is a top priority for ride-hailing company Uber. To streamline its
customer service capabilities, the company developed a Customer Obsession Ticket Assistant (COTA) in
early 2018—a tool that uses machine learning and natural language processing to help agents improve
their speed and accuracy when responding to support tickets.

COTA’s implementation delivered positive results. The tool reduced ticket resolution time by 10 percent,
and its success prompted the Uber Engineering team to explore how it could be improved.

For the second iteration of the product, COTA v2, the team focused on integrating a deep learning
architecture that could scale as the company grew. Before rolling out the update, Uber turned to A/B
testing—a method of comparing the outcomes of two different choices (in this case, COTA v1 and COTA
v2)—to validate the upgraded tool’s performance.

Preceding the A/B test was an A/A test, during which both a control group and a treatment group used
the first version of COTA for one week. The treatment group was then given access to COTA v2 to kick off
the A/B testing phase, which lasted for one month.

At the conclusion of testing, it was found that there was a nearly seven percent relative reduction in
average handle time per ticket for the treatment group during the A/B phase, indicating that the use of
COTA v2 led to faster service and more accurate resolution recommendations. The results also showed
that customer satisfaction scores slightly improved as a result of using COTA v2.

With the use of A/B testing, Uber determined that implementing COTA v2 would not only improve
customer service, but save millions of dollars by streamlining its ticket resolution process.

Related: How to Analyze a Dataset: 6 Steps

3. Forecasting Orders and Recipes at Blue Apron

For meal kit delivery service Blue Apron, understanding customer behavior and preferences is vitally
important to its success. Each week, the company presents subscribers with a fixed menu of meals
available for purchase and employs predictive analytics to forecast demand, with the aim of using data
to avoid product spoilage and fulfill orders.
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To arrive at these predictions, Blue Apron uses algorithms that take several variables into account, which
typically fall into three categories: customer-related features, recipe-related features, and seasonality
features. Customer-related features describe historical data that depicts a given user’s order frequency,
while recipe-related features focus on a subscriber’s past recipe preferences, allowing the company to
infer which upcoming meals they’re likely to order. In the case of seasonality features, purchasing
patterns are examined to determine when order rates may be higher or lower, depending on the time of
year.

Through regression analysis—a statistical method used to examine the relationship between variables—
Blue Apron’s engineering team has successfully measured the precision of its forecasting models. The
team reports that, overall, the root-mean-square error—the difference between predicted and observed
values—of their projection of future orders is consistently less than six percent, indicating a high level of
forecasting accuracy.

By employing predictive analytics to better understand customers, Blue Apron has improved its user
experience, identified how subscriber tastes change over time, and recognized how shifting preferences
are impacted by recipe offerings.

Related: 5 Business Analytics Skills for Professionals

4. Targeting Consumers at PepsiCo

Consumers are crucial to the success of multinational food and beverage company PepsiCo. The
company supplies retailers in more than 200 countries worldwide, serving a billion customers every day.
To ensure the right quantities and types of products are available to consumers in certain locations,
PepsiCo uses big data and predictive analytics.

PepsiCo created a cloud-based data and analytics platform called Pep Worx to make more informed
decisions regarding product merchandising. With Pep Worx, the company identifies shoppers in the
United States who are likely to be highly interested in a specific PepsiCo brand or product.

For example, Pep Worx enabled PepsiCo to distinguish 24 million households from its dataset of 110
million US households that would be most likely to be interested in Quaker Overnight Oats. The company
then identified specific retailers that these households might shop at and targeted their unique
audiences. Ultimately, these customers drove 80 percent of the product’s sales growth in its first 12
months after launch.

PepsiCo’s analysis of consumer data is a prime example of how data-driven decision-making can help
today’s organizations maximize profits.

DEVELOPING A DATA MINDSET

As these companies illustrate, analytics can be a powerful tool for organizations seeking to grow and
improve their services and operations. At the individual level, a deep understanding of data can not only
lead to better decision-making, but career advancement and recognition in the workplace.

“Using data analytics is a very effective way to have influence in an organization,” Hammond says. “If
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arguments and your recommendations, you’re going to be influential.”

Do you want to leverage the power of data within your organization? Explore our eight-week online course
Business Analytics to learn how to use data analysis to solve business problems.
This post was updated on June 11, 2021. It was originally published on January 15, 2019.

About the Author

Matt Gavin is a member of the marketing team at Harvard Business School

Online. Prior to returning to his home state of Massachusetts and joining HBS
Online, he lived in North Carolina, where he held roles in news and content
marketing. He has a background in video production and previously worked on
several documentary films for Boston’s PBS station, WGBH. In his spare time,
he enjoys running, exploring New England, and spending time with his family.

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