The various terms and technologies associated with business analytics and business intelligence (BI) can be confusing. In this article, we will clarify important concepts and answer the following questions:
- What is business analytics?
- Why is it used?
- What should I know before I start?
What is business analytics?
Business analytics is a group of methods and tools used to analyze data and gain business insight.
With timely and relevant insight, companies can answer questions about customers, sales and operations and make more informed decisions.
Business analytics can also be used to automate and optimize business processes.
The growing importance of business analytics has caught the attention of many business leaders. Businesses that are able to collect, analyse and utilise rapidly growing amounts of data, captured in either internal or external systems, have stronger growth potential. In fact, the fastest growing companies are using analytics to radically improve their sales.
The fastest growing companies are using analytics to radically improve their sales. (McKinsey)
More data = More analysis and reporting
At some point, traditional tools like spreadsheets cannot keep up. There is too much data and too little time.
Leaders can’t afford to put off making decisions while waiting for hand-made reports. Employees don’t have time to search through databases while customers wait. And customers?
The are becoming less patient. They know businesses have data that can be used to deliver personalized experiences, and they expect personalized experiences in return.
At a result, demand for business analytics is increasing.
Companies use analytic software to quickly digest data and report it back in a way that is valuable for the organisation.
Reports answer questions like: What has happened? Why has it happened? and What can we improve?
To understand how this is achieved, let’s look at the elements of business analytics.
The elements of business analytics
The main elements include:
- Structured data
- Analytics platform
- Dashboards, reports and visualisations
Structured data resides in fixed fields within a record or file, like in a relational database. Some sources of structured data may be your CRM, ERP, customer support, project management system or your own databases or data marts.
The analytics platform is the motor for gathering, structuring and processing data from one or more sources. As data is updated at the source, it is updated automatically in the analytics tool and displayed on dashboards.
Like all business systems, there is a wide range in the capabilities from one tool to the other. Factors such as the size of your organisation, amount of data, type of data sources and need for mathematical calculations, statistics and modelling will play a role when you choose a system.
Dashboards, reports and visualisations
Dashboards display information in a visual way on almost any device. They provide at-a-glance views of goals, KPIs. trends, comparisons, benchmarks and other facts relevant to a particular objective or business process.
In B2B organisations, some of the most popular dashboards show the number of new leads, sales revenues versus budgets, pipeline status, win/close, conversion rates and hit rates. Any metric can be calculated if the raw data is available.
Dashboards use visualisations like charts, graphs, and tables to help people understand information quickly. Originally designed for PC desktops, dashboards now refer to visualisations on almost any device or screen including mobiles, tables, or TV screens.
Dashboards provide users a way to explore data and find answers using ‘drill-downs’ and ‘roll-ups.’ A drill-down refers to the process of viewing data at a level of increased detail, while roll-up refers to the process of viewing data with decreasing detail.
Dashboards are role-based. Access is set up so reports are visible to people according to defined rules. These vary from organisation to organisation, but are often based on the organisation chart or hierarchy. Top leaders have access to all levels of information. Administrators control access.
Why use business analytics?
One reason companies use business analytics is it offers many advantages compared to common spreadsheets.
- spreadsheets for data analysis and reporting are fast outdated – analytics are automatically updated
- spreadsheets don’t let users explore data per aggregated level – analytics let users drill down or roll up data so it can be easily understood
- there can be different versions of spreadsheets – there is only one version of dashboard reports
- spreadsheets are difficult to share and information can be hidden – dashboards provide secure access to relevant information
In short, business analytics are reliable and efficient compared to spreadsheets. Rather than someone manually creating weekly, monthly or quarterly management reports or sales reports, calculations are programmed and reports are created automatically.
Read also: How to automate and improve sales reporting
Analytic dashboards give leaders, managers and individuals access to reliable information that is relevant, timely and secure. Everyone knows the status and what they need to do.
Tinde, for example, the Norwegian builder of dream cabins, stopped using spreadsheets because they experienced an incredible growth spurt that required greater efficiency and clearer insight into status. By combining CRM software with business analytics they were able to speed up processes and execute with greater precision.
Improved decision-making and performance
Business analytics don’t only replace spreadsheets: they help organisations improve performance by making goals clear and visible. Leaders use business analytics tools to measure and monitor KPIs and make decisions.
Of more than 1,000 sales organisations around the world, a recent survey found that 53 percent of those that are “high performing” rate themselves as effective users of analytics.
According to research carried out by MIT and IBM, top-performing companies are twice as likely to apply business analytics to activities. Salesforce reports “High-performing sales teams are 2.4x more likely than under performers to rate their team’s analytics and insights capabilities as outstanding or very good.”
Organisations need to know what is happening now, what is likely to happen next and what actions should be taken to get the optimal results.
To keep the organisations focused and motivated, overall goals and KPIs are set and communicated on dashboards. This ensures employees have a good understanding of what they are supposed to do and how it is measured.
Goals are then cascaded to ensure measurable targets and alignment across departments and on individual levels. Each person can see his or her own contribution and how they fit into the larger picture. Managers can analyze their team’s performance to understand what works, and what doesn’t.
As teams get closer and closer to reaching targets, they are continuously informed and recognized for their achievement. This can be done by setting up leaderboards, team competitions or status screens in office areas. Rewards, incentives and commission dashboards also increase motivation.
5 things you should know before you start
How can you go from thinking about business analytics to getting all the insight you need? How can you extract more value from your data without taking on a big project?
Here are a few tips:
- Select one or two of your most important goals and identify activities to drive those goals.
- Identify where the data stored that is related to the goals? If your goal is revenues or profitability, then your CRM system will likely be the starting point.
- Check which business analytics tools have standard connection to the data or have customers with the same data sources.
- Be prepared to put some time and resources into improving data quality in order to get value out.
- Start small with a few users and a basic workshop. You can add more users and types of measurement as you go.
Once you are used to exploring data from one data sources, you will want to analyze and use data in all aspects of managing your business.