Business Analytics to avoid dumb decisions

Some organisations perform average or poor. Some are leaders. The main difference is their decision making by applying business analytics.

What is business analytics, and why should you care? Chances are – if you don’t work in the field – it’s mostly a mystery to you.

Today companies have access to more data than they can digest. To study its importance, cause and impact, they need a new way to process this mountain of data. That's where Business Analysis comes in. Simply put, it's a data-driven process that gives meaningful insights. Advanced forms of analytics use mathematics and statistics to reach conclusions. Business analytics specifically “leverages all forms of analytics to achieve business outcomes.” 

Your firm also can use business analytics to help it determine its competitive advantage. Harvard professor and business guru Michael Porter’s famous “five forces” analysis is a good place to start assessing your company’s market position:

1. “The threat of new entrants” – New competitors crowd the market, dropping prices and making organizations less profitable.
2. “The threat of substitutable products” – The less-differentiated your product, the greater the risk of competition to your business.
3. “Competitive rivalry” – The more innovative and fast-changing your field, the more intense the competition.
4. “The bargaining power of suppliers” – The number and power of vendors can affect your organization.
5. “The bargaining power of customers” – Similarly, clients’ price sensitivity and concentration influence the marketplace and your role in it.

Organizations can employ business analytics to figure out ways to counteract or support these forces. Brands can appear more attractive by emphasizing their distinctiveness, offering the lowest price, or understanding the market’s various segments and designing strategies to reach each one.

Business Analysis can’t claim to provide value unless business managers can act on the information it provides. The value must be tangible to be allocated under the cost centre or profit centre. These can be TCO, ROI, payback, NPV, IRR etc.

All assessments must consider how the company’s strategy should balance short-term needs and long-term value.

Overall, business analytics can bring measurable benefits to an organization and can help the company attain greater productivity and profitability.