Business analytics

Business Analytics
Business analytics (BA) is the practice of iterative, methodical exploration of an organizations data with emphasis on statistical analysis. Examples of BA uses include: Exploring data to find new patterns and relationships (data mining) Explaining why a certain result occurred (statistical analysis, quantitative analysis) Experimenting to test previous decisions (A/B testing, multivariate testing) Forecasting future results (predictive modelling, predictive analytics) Some popular software tools are SAS, SPSS, and SAP Business Objects. Once business goal of the analysis is determined, an analysis methodology is selected and data is acquired to support the analysis. Data acquisition often involves extraction from one or more business systems, cleansing, and integration into a single repository such as a data warehouse or data mart. The analysis is typically performed against a smaller sample set of data. Analytic tools range from spreadsheets with statistical functions to complex data mining and predictive model applications.

Data mining
As patterns and relationships in the data are uncovered, new questions are asked and the analytic process iterates until the business goal is met. Deployment of predictive models involves scoring data records (typically in a database) and using the scores to optimize real-time decisions within applications and business processes. BA answers following questions: Why did it happen? Will it happen again? What will happen if we change x? What else does data tell us that never thought to ask? Data mining parameters include: Association - looking for patterns where one event is connected to another event Sequence or path analysis - looking for patterns where one event leads to another later event Classification - looking for new patterns (may result in a change in the way the data is organized but that's ok)

Predictive model
Clustering - finding and visually documenting groups of facts not previously known Forecasting - discovering patterns in data that can lead to reasonable predictions about the future (This area of data mining is known as predictive analytics.) Web mining, a type of data mining used in customer relationship management (CRM), takes advantage of much information gathered by a Web site to look for patterns in user behaviour. A predictive model is made up of a number of predictors, which are variable factors that are likely to influence future behaviour or results. In marketing, for example, a customer's gender, age, and purchase history might predict the likelihood of a future sale. A statistical model is formulated, predictions are made and the model is validated (or revised) as additional data becomes available. The model may employ a simple linear equation or a complex neural network. These models are used in CRM, capacity planning, change management, disaster recovery, engineering, meteorology and city planning.

Business Intelligence and Analytics

Business Intelligence Business Analytics

Answers questions

What happened? When? Who? How many?

Reporting (KPI, metrics); Automated monitoring/ alerts (thresholds); Dashboards, Scorecards, OLAP (cubes, slice & dice, drilling); Ad hoc query

Why did it happen? Will it happen again? What will happen if we change x? What else does data tell us that never thought to ask?
Statistical/quantitative analysis Data mining Predictive model Multivariate testing

Includes

Cluster analysis
Cluster analysis or clustering is the task of assigning a set of objects into groups (called clusters) so that the objects in the same cluster are more similar (in some sense or another) to each other than to those in other clusters. Hard cluster: each object belongs to a cluster or not. Overlapping cluster: object may belong to more than one cluster. Hierarchical cluster: objects that belong to a child cluster also belong to the parent cluster. Outlier: object may not belong to any cluster. There are more than 100 clustering algorithms. Most popular ones are based on connectivity (hierarchical), centroid, distribution or density.

India Bazaar Retail Case

Media ads focused on everyday low price. Marketing effort was more on private labels that were priced 30-40% cheaper than national brands. VP (Marketing) wanted to understand which products tend to be purchased together. Sugar may be purchased in 2 or 5 kgs, standalone or with others. Rice of different brands may be bought in 25 or 50 kgs. Unibic Jamz and Choconut may be purchased together.