Module 1

Introduction to
Business Analytics

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What Is Business Analytics? - YouTube
What is Business Analytics (BA)?
Business analytics is a set
of automated data analysis
practices, tools and services
that helps one understand both
what is happening in the
business and why, to improve
decision-making and help in
planning for the future.
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 What is Business Analytics (BA)?
The term
“business analytics”
is often used in
association with
business
intelligence (BI) and
big data analytics.
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 Evans

A glimpse about big data Copyright © 2013 Pearson Education, Inc.

publishing as Prentice Hall

MULTIPLES OF BYTES
NAME (SYMBOL) VALUE BINARY USAGE
kilobyte (kB) 103 210
megabyte (MB) 106 220
gigabyte (GB) 109 230
terabyte (TB) 1012 240
petabyte (PB) 1015 250
exabyte (EB) 1018 260
zettabyte (ZB) 1021 270
yottabyte (YB) 1024 280
A glimpse about big data
Evans
Copyright © 2013 Pearson Education, Inc.
publishing as Prentice Hall

•A zettabyte (symbol ZB, derived from the SI prefix zetta-) is a unit of information or
computer storage equal to one sextillion bytes.

•As of April 2012, no storage system has achieved one zettabyte of information. The
combined space of all computer hard drives in the world was estimated at approximately 160
exabytes in 2006.[6] This has increased rapidly however, as Seagate reported selling 330
exabytes worth of hard drives during the 2011 Fiscal Year.[7]

•As of 2009, the entire World Wide Web was estimated to contain close to 500 exabytes.[8]
This is a half zettabyte.

•1,000,000,000,000,000,000,000 bytes = 10007 bytes = 1021 bytes

The term "zebibyte" (ZiB), using a binary prefix, is used for the corresponding power of 1024
3 key competencies people need to
successfully compete in the BA world
1. Information management skills to manage data. This
competency involves expertise in a variety of techniques for
managing data to achieve quality data.
2. Analytics skills and tools to understand the data.
3. Data-oriented culture to act on the data. Within the
organization, everyone involved must believe strongly in
fact-based decisions arrived at using analytical methods.
Business Analyst Career Path

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Difference between BA and ManSci/OR
BA does use the same quantitative methods that
have been the hallmark of ManSci/OR for years.
The main difference is that BA uses big data to
solve business problems and provide insights, and the
technology is now available to use huge data sets for
statistical and quantitative analysis, predictive
modeling, optimization and simulation.
What is Business Analytics (BA)?

Business analytics is the use of data, information

technology, statistical analysis, quantitative methods
and mathematical or computer-based models to help
managers gain improved insight about their business
operations and make better fact-based decisions.
Some applications of Business Analytics
1. Direct marketers analyze enormous customer
databases to see which customers are likely to respond
to various products and types of promotions.
Marketers can then target different classes of customers
in different ways to maximize profits – and given their
customers what they want.
Some applications of Business Analytics
2. Hotels and airlines, through the analysis of enormous
databases, have been able to devise very clever pricing
strategies, where different customers pay different
prices for the same accommodation. For example,
seats are reserved for business travelers at a higher
price since these travelers makes a plane reservation
closer to the time of travel than a vacationer would.
Some applications of Business Analytics
3. Financial planning services have a virtually unlimited
supply of data about security prices and have customers
with widely differing preferences for various types of
investments. Financial planners are under extreme
pressure to analyze masses of data to provide informed
decisions to their customers since they can easily pull-
out and divert their investments if good decisions are
not made on their behalf.
 Some common types of decisions that can be
enhanced by using analytics:
•Pricing
•Customer segmentation
•Merchandising
•Location
•Social Media
Business analytics by James Evans
Business analytics by James Evans
 Scope of Business Analytics

 Descriptive analytics (What has happened?)

 Uses data to understand the past and the present
 Diagnostic analytics (What is causing it?)
 Determines the cause behind business problems
 Predictive analytics (What could happen in the future?)
 Analyzes past performance
 Prescriptive analytics (What should be done?)
 Uses optimization techniques

Business analytics by James Evans

 Scope of
Business
Analytics

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Business analytics by James Evans
Business analytics by James Evans
Business analytics by James Evans
Business analytics by James Evans
Business analytics by James Evans
Data sets and databases
 Types of Data
In general, data are compilations of facts, figures, or other
contents, both numerical and nonnumerical. An important
step for making decisions is to find the right data and prepare
it for analysis.
Data that have been organized, analyzed, and processed
in a meaningful and purposeful way become information.
We use a blend of data, contextual information,
experience, and intuition to derive knowledge that can be
applied and put into action in specific situations.

Business analytics by Jaggia, et al (2021)

 Types of Data

Business analytics by Jaggia, et al (2021)

 Types of Data

Business analytics by Jaggia, et al (2021)

 Types of Data
In most instances, it is not feasible to collect data that
comprise the population of all elements of interest for two
main reasons:
1. Obtaining information on the entire population is
expensive.
2. It is impossible to examine every member of the
population.
Therefore, a subset of data, or a sample, is used for the
analysis.
Business analytics by Jaggia, et al (2021)
 Types of Data:
Cross-Sectional and Time Series
Sample data are generally collected in two ways:
1. Cross-sectional data are those collected by recording a
characteristic of many subjects at the SAME POINT IN
TIME.
2. Time-series data refer to data collected over several time
periods focusing on certain groups of people, companies,
specific events, or objects.

Business analytics by Jaggia, et al (2021)

 Types of Data:
Cross-Sectional and Time Series

Business analytics by Jaggia, et al (2021)

 Types of Data:
Structured and Unstructured Data
Data come in multiple forms:
1. Structured data reside in a predefined row-column format.
Spreadsheets and database applications are used to enter,
store, query, and analyze structured data.
2. Unstructured data tend to be textual (e.g. written reports,
email messages, videos, and audio data). Examples are
social media data from Twitter, Facebook, and blogs.

Business analytics by Jaggia, et al (2021)

 Types of Data: BIG DATA
Big data is a catchphrase, which means a massive
volume of both structured and unstructured data that are
extremely difficult to manage, process, and analyze using
traditional data-processing tools.
More formally, it is “high-volume, high-velocity and/or
high variety information that enables enhanced insight,
decision-making, and process automation.

Business analytics by Jaggia, et al (2021)

Types of Data:
BIG DATA

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big-data-volume-velocity-and-variety&psig=AOvVaw18dxIwC87T6Am-
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Business analytics by Jaggia, et al (2021) AABAD
 • https://cdn.ttgtmedia.com/rms/onlineimages/
data_management-big_data_vs_mobile.png

Business analytics by Jaggia, et al (2021)

 The 7Vs of Big Data

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Data-Volume-Velocity-Variety-Variability-Veracity-Value-and_fig1_341622174&psig=AOvVaw18dxIwC87T6Am-
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AAABAW

Business analytics by Jaggia, et al (2021)

 Types of data

Business analytics by James Evans

 Types of data

Business analytics by James Evans

Measurement scales
Measurement scales (Jaggia et al, 2021)
Example: Classifying data elements
DATA SOURCES AND FILE FORMATS
Structured data have been used extensively for
many years and are often found in tabular formats.
Formatting data in an agreed-upon or standardized
manner is important for allowing other people to
understand the data contained in a file.
DATA SOURCES AND FILE FORMATS:
Two Common Layouts

1. Fixed-width (fixed-width) Format – each column starts and

ends at the same place in every row. The actual data are
stored as plain text characters in a digital file. Data can be
found at the exact same location for every record. The files
tend to be significantly smaller in size compared to other
data formats.
 DATA SOURCES AND FILE FORMATS:
Two Common Layouts
2. Delimited Format – In this format, a comma is called a delimiter,
and the file is called a comma-delimited or comma-separated
value (csv) file. Sometimes, semicolons or other characters are
sometimes used. In a delimited file, each piece of data can
contain as many characters as applicable.
Fixed-width and delimited files usually include plain text
data that can be opened in Microsoft Word and Notepad in
Microsoft Windows, TextEdit in Mac and online tools like
Google Docs.
DATA SOURCES AND FILE FORMATS:
Two Common Layouts: Fixed-Width
DATA SOURCES AND FILE FORMATS:
Three Widely-used Mark-Up Languages
A markup language is a computer language that
uses tags to define elements within a document. It is
human-readable (markup files contain standard words),
rather than having typical programming syntax.
1. eXtensible Markup Language (XML) – one of the
most widely used formats for sharing structured
information between computer programs, between
people, and between computers and people.
DATA SOURCES AND FILE FORMATS:
Three Widely-used Mark-Up Languages
2. HyperText Markup Language (HTML) – a markup
language that uses tags to define its data in web pages.
The key distinction between XML and HTML is that XML
tells (us or the computer applications) what the data
are, whereas HTML tells the web browser how to
display the data.
3. HavaScript Object Notation (JSON) – is a standard for
transmitting human-readable data in compact file.
DATA SOURCES AND FILE FORMATS:
Three Widely-used Mark-Up Languages
 Models in Business Analytics

Business analytics by James Evans

 Three forms of a decision model
Descriptive Decision Models
 Simply tell “what is” and describe relationships
 Do not tell managers what to do
Example: An Influence Diagram for Total Cost
Influence Diagrams
visually show how
various model
elements relate to one
another.
Business analytics by James Evans
 Descriptive Decision Model: Example

Business analytics by James Evans

 Descriptive Decision model

Business analytics by James Evans

 Descriptive Decision model

Business analytics by James Evans

 Predictive Decision model
A Linear Demand Prediction
Model
As price increases, demand
falls.

Business analytics by James Evans

 Predictive Decision model
A Non-linear Demand
Prediction Model
Assumes price elasticity
(constant ratio of % change in
demand to % change in price)

Business analytics by James Evans

 Assumptions of a model

Business analytics by James Evans

 Three forms of a decision model
Predictive Decision Models
 Often incorporate uncertainty to help managers analyze
risk.
 Aim to predict what will happen in the future.
 Uncertainty is imperfect knowledge of what will happen in
the future.
 Risk is associated with the consequences of what actually
happens.

Business analytics by James Evans

 Three forms of a decision model
Prescriptive Decision Models
Help decision makers identify the best solutions.
 Optimization – finding values of decision variables that
minimize (or maximize) something such as cost (or profit).
 Objective function – the equation that minimizes (or
maximizes) the quantity of interest.
 Constraints – limitations or restrictions.
 Optimal solution – values of the decision variables at the
minimum (or maximum point).
Business analytics by James Evans
 Three forms of a decision model

Prescriptive Model:
Spreadsheet Model

Business analytics by James Evans

 Example of a prescriptive pricing model

Business analytics by James Evans

 Variations of prescriptive models
✓ Deterministic prescriptive models have inputs that are
known with certainty.
✓ Stochastic prescriptive models have one or more inputs
that are not known with certainty.
✓ Algorithms are systematic procedures used to find optimal
solutions to decision models.
✓ Search algorithms are used for complex problems to find a
good solutions with guaranteeing an optimal solution.

Business analytics by James Evans

Let’s take a
tour…
A tour to Excel
References:
• Albright C. and Winston W. (2015) Business Analytics: Data Analysis
and Decision Making. Cengage Learning.
• Evans J., (2017). Business Analytics. Pearson Education
• excel_tutorial.xlsm

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