A Quick Guide to Business Analytics (No Master’s Degree Required)
The business world today is much different than it was 50 years ago—or even 10 years ago, for that matter. Computers have completely changed business operations, from increasing efficiency to minimizing errors. One of the most important ways modern technology has helped businesses get better is through more comprehensive data. It’s now easier than ever before for companies to discover critical insights. Here’s a quick guide to business analytics (no Master’s degree required).
What Is Business Analytics?
Before diving into the details of business analytics, it’s important to have a general understanding of the concept. Like many terms, different people will give you varied definition of business analytics. There are, however, a few key aspects to business analytics that are generally accepted as fact. It’s smart to think of business analytics as two-fold.
There’s the data side to business analytics, which is necessary in order to understand variables affecting a company. Think of data as the building blocks of business analytics. Blocks, however, aren’t super exciting unless you build something out of them. This is the other half of business analytics—the human element, which determines how data can be useful to a company.
How Do You Use Business Analytics?
Just because you have a lot of fancy data doesn’t mean that it’s going to help you. Business analytics is only useful if the people within your company understand the value of making quantifiable decisions—and then actually act based on data instead of emotions or gut feelings. Walmart saw that Amazon was hurting their business. So their management looked at data, and has now implemented a strategy for growing their ecommerce.
Business analytics isn’t just for the big players. Small- and medium-sized businesses can also benefit from the insights gained from this form of data analysis and execution. The important thing is that business owners and managers understand the key performance indicators (KPIs) that play a direct role in the bottom line. The priority of KPIs will depend on each individual business. For many companies, two of the most important KPIs are customer lifetime value (CLV) and customer acquisition cost (CAC). These both help inform marketing and budgeting strategies throughout a whole organization.
How Is Business Intelligence Different from Business Analytics?
This is a common question, especially for people who don’t have much experience yet in the business world. There’s a simple way to remember the difference between business intelligence and business analytics. Intelligence is simply data compressed down into a more consumable form. Business analytics goes a step further by doing the work of intelligence, but also trying to identify the causes of business outcomes. Business analytics is typically more valuable because, when done correctly, it can directly help companies create action plans.
Pursue Data That Offers the Most Potential
Not all data is equal. Even though data all boils down to numbers, there’s still a massive difference between highly relevant data and less useful data. Part of the responsibility of business analytics is identifying what sets of data actually might provide an economic benefit to a company. Since data collection and synthesis aren’t free, it makes sense to focus mostly on areas that have the greatest amount of promise for useful insights. On the other hand, there can often be incredible, unexpected revelations hidden in strange places. It’s the job of business analytics to toe the line between these two poles in order to provide companies the most value.
Regardless of industry, business analytics can help give your company a competitive edge. You don’t necessarily need an advanced degree to have a firm understanding of how business analytics can work for you.