The Business Value of Data Analytics
Back in 2017, The Economist published a landmark article boldly stating that “The world’s most valuable resource is no longer oil, but data.”, firmly defining data analytics as one of the most valuable assets for any modern business.
Data analytics is a powerful tool for any business, empowering companies by improving the ways they offer products or services by leveraging their processes and operations on data. It can be used to drive productivity and make changes that translate data into action. Data value can be measured by using these three metrics: increase revenue, decrease cost, and manage risk.
To start, it is helpful to define “data analytics“. Data analytics refers to the process of examining data in order to find useful information or patterns. This information can then be used by companies for a variety of purposes, such as understanding customers better, so they know how best to market their products and services.
Since data analytics and business intelligence tend to be used interchangeably, it’s worth noting the differences between the two. According to this definition, “Business intelligence (BI) leverages software and services to transform data into actionable insights that inform an organization’s strategic and tactical business decisions. BI tools access and analyse data sets and present analytical findings in reports, summaries, dashboards, graphs, charts and maps to provide users with detailed intelligence about the state of the business.” Therefore, we can say that business intelligence produces data analytics from a historical perspective.
Another term used in place of data analytics is business analytics which refers to finding business insights in data. In fact, business analytics started as a subset of data analytics and was focusing exclusively on business usage of the analytics, but nowadays most people use the broad term of data analytics when referring to business analytics.
According to Gartner’s Analytic Value Escalator, the ways that businesses are using data analytics are:
- descriptive analytics is where data is used for reporting and visualization insights from historical datasets, thus responding to the question “what happened?“
- diagnostic analytics deals with the question of “why did it happen?“, trying to find out the reasons of a specific business event or occurrence.
- predictive analytics is where we make predictions about the future based on data and what has happened in the past. It responds to the question of “what will happen?“
- prescriptive analytics is a process of analysing data to identify opportunities and find the best course of action, the question here is “what can we make it happen?“
Data Analytics Business Value
Data analytics skills are in demand, and for the first time it has been proven that data-driven companies will outperform those who rely on instinct. With more than 90% of CEOs agreeing with this statement, it is not surprising to see how many organizations have already begun investing in data analytics capabilities as part of their business strategy.
A report by Dimensional Research and Snowflake Computing (Data Analytics: Beyond the Hype), who surveyed 376 individuals with responsibility for data initiatives including 104 executives, found that as many as 88% of data initiatives faced failure in one form or another. The report goes on to say that the reason for this is due to a lack of data strategy, poor data governance and inflexible data infrastructure. The ability to capitalize on insights from data depends on a foundational set of fundamentals which are found across the entire organization. This includes a set of technical capabilities and sound business processes. Understanding the processes through which your company collects data is crucial in order process that data and use it to make insightful business decisions.
The data analytics value it is not only in the KPIs. There are many ways to get benefits from data analytics, and the most important one is being able to predict future outcomes with better precision than before. For example, data analysts might look at past sales data and use machine learning algorithms to forecast what will happen with a particular product in the near future.
It is no secret that data-driven organizations spend less on marketing because they know their target audience so well. And a data-driven strategy ROI is something tangible, which can be seen in company’s balance sheet and can make your shareholders happy while you focus on steering the company into the uncharted waters of the future.
A data-driven company can also solve problems that were previously too difficult to tackle and be proactive instead of reactive. For example, it is possible for a data-driven organization to identify fraud before they happen or find out what the customer wants by looking at their behaviour patterns.
The use of data analytics for creating new products or services is another way it can drive a company’s success. One example of this was when Amazon used data from its website clicks on various items to determine what people were looking and what are they comparing the product with. This data helped them to create a new ad campaign for their website by focusing on items that are not currently advertised but were high in interest, and it also helps Amazon keep an eye out for what is popular so they can stock up accordingly.
How else data analytics can help your business? Data analytics can drive your bottom line by extract insights and generate value from all available data in the organization. It can help your company CEO and Directors to make decisions with confidence on ever changing market dynamics, customer needs and competition. There are three key areas where data analytics is used: Business Intelligence, Machine Learning and Artificial Intelligence. By creating a sound strategy in each of these areas and incorporate into a larger vision about all your organization data strategy, data analytics can help your business grow.
Data analytics is a powerful tool for any company to make better decisions, and it is in demand. If you need help implementing your data strategy or would like more information on how can increase your organization data and analytics capabilities, please do not hesitate to contact us.
The digital era has transformed many industries in marketing, sales, finance, transportation, etc., it’s hard to find a business field in where data analytics have not made an impact. In today’s fast-moving world, data analytics is a real asset, make the most of it.
This post was originally published on gabrielneagu.com.