Jeff Keyes, VP of Product at Plutora, informs businesses on why advanced analytics is critical for smart decision making, improving strategies and better risk management.
Making business decisions is a tricky but necessary part of a senior leader’s job. In the early days, most will look to other businesses that are similar to see which choices were successful and which were not. For the rest, it is often simply gut instinct that helps business leaders come to a decision. But as your business grows, references from other comparable companies become less relevant, and relying on instinct alone is too risky. At this point, a business will have enough data of its own that can be used to make smarter, more efficient decisions moving forwards – and that’s exactly what advanced analytics helps you do.
How advanced analytics uses your data for good
In a nutshell, advanced analytics is a set of tools and techniques that utilise existing data to share insights on business decisions that need to be made. One of its key benefits is predicting future events based on certain actions. Advanced analytics is particularly useful when you’re planning to implement a new business activity, as you can use it to understand the impact this activity would have on the business.
For example, anyone who uses online shopping will no doubt recognise this in play. When you click on various items on a website, there will sometimes be a suggestions section lower down the screen that highlights other items that you might be interested in. It does this based on what you have already viewed, and it uses advanced analytics to predict what else you might be interested in. This is just one example of how advanced analytics helps businesses market their products. These websites take the data you generate when searching for something to determine what other content can be flagged to you that might convince you to buy something.
What businesses get from advanced analytics
Advanced analytics can be used in a multitude of ways, regardless of what type of business is using it. This is mainly because advanced analytics is not limited to practice in a particular domain, but rather the understanding of the business as a whole and improving it. Some of the benefits of this practice are:
- Making smarter decisions – Advanced analytics generates data based on strong logic and reliable information. It also provides the data of the past and the present, helping business leaders make accurate decisions for the future.
- Better business knowledge – Advanced analytics helps you understand the factors that improve the business as well as the factors that are negligible. It includes strong reporting and analytics which can identify which part of the business to focus on.
- Risk management – Businesses can use advanced analytics to identify risk based on available data. Understanding the metrics that affect the risk can help you design a business model to reduce that risk. Along with this, advanced analytics also helps you in governance, which mitigates regulatory and compliance risk.
- Building better strategies – To build a new strategy, you must understand the business based on available data and generate ideas to improve. Advanced analytics takes care of analysing the data for you, giving you more time to focus on the strategy to make the business better.
To implement advanced analytics and see these benefits realised, it’s crucial to understand the most common techniques that it is used for.
Putting analytics to good use
Advanced analytics utilises various techniques which cover visualisation, machine learning, sentiment analysis, pattern matching, etc. and these are all used in different use cases. Here are the four of the most popular uses of advanced analytics today.
1. Data Mining
Some of the data used by businesses is useful, and some isn’t. To improve your business, you have to make use of the relevant data, so you need to know what this is. Data mining is the process of extracting useful data from raw data, primarily through patterns and relationships. You can use data mining to extract different kinds of data sets as transactional data, streaming data, heterogeneous data, etc. Once the useful data is extracted, you can use it for further analysis to understand customers better and build effective strategies to improve your business.
2. Predictive Analysis
Advanced analytics can also be used to conduct predictive analysis, whereby businesses can accurately predict future trends. Using machine learning algorithms, this technique uses current and past data to identify relationships and patterns. The algorithms then build a prediction model that can help improve the business.
The more data you have the more accurate the prediction will be. But you can’t rely on the predictive analysis model to be 100% accurate. There are a lot of factors that affect businesses that the model might not consider, such as natural disasters, changes in demand for a service, etc. Predictive analysis can’t tell you what exactly will happen in the future, but you can get an idea of what might happen if you make certain decisions.
3. Prescriptive Analysis
Taking this one step further, prescriptive analysis suggests the best way to implement a business decision. Once you decide on a path, there can be more than one possible way to go down it. Prescriptive analysis uses current and past data, and finds out different possible outcomes before the decision is made. It then recommends the best course for implementing a business decision.
4. Big Data Analytics
Big data analytics involves taking a large volume of data and examining it to highlight the most useful pieces. The main advantage is that big data can be used on both structured and unstructured data, and it’s particularly helpful when the data generated isn’t in a proper format. If your business regularly generates large amounts of data and you often have to make various business decisions, big data analytics is ideal. It will help you increase revenues, decrease business strategy cost, and keep up with your competitors.
Advanced analytics as a whole is rapidly increasing in popularity across the technology industry as more and more business leaders are recognising its importance in making smart and efficient business decisions. Because it can be used in a variety of ways it has the potential to make a huge impact on business processes. Being able to meet customer needs while avoiding risk and keeping the business thriving is a difficult juggling act, and advanced analytics can help keep everything in harmony.