THE NEED FOR BUSINESS ANALYTICS: TOWARDS ACHIEVING COMPETITIVE ADVANTAGE AND MAKING SMARTER DECISIONS


Written By:
Oladimeji Shotunde,
Recent Graduate,
Lagos State University.


Many years ago, companies had little or no data to work with in order to make business-defining decisions. More troubling was the fact that the companies that had data to analyse were either faced with the challenge of their personnel not having sufficient analytical skills or the company itself not seeing the usefulness of the data. However, as the contemporary business world and the world of work evolved, companies began seeing the need for analytics and how it would impact considerably and significantly on their operations.

"Analytics", for the purpose of this write-up entails the use of data, information technology, quantitative analysis, statistical tools and computer based models, all geared towards making informed decisions. "Business Analytics" on the other hand refers to the use of statistics, visualization, simulation, data, models (computer and mathematical), amidst others to assist business in making informed decisions.

Business Analytics can be viewed from the angle of descriptive, predictive and prescriptive analytics. Descriptive analytics has to do with using an organized set of data to have an adequate understanding of both past and present business performance and to, based on that understanding, make informed decisions. Predictive analytics, as the name implies, involves evaluating historical data, identifying the relationship between these data and using the gleaned results to predict likely future happenings. Prescriptive analytics involves using company data to identify the best alternatives that would help in ensuring optimality.

As apparent as the usefulness of Business Analytics might be, it could become challenging both to an individual and a company when there isn't an adequate understanding of what it entails, or when there is a challenge of insufficient analytical skills and technical know-how, or more commonly, when there's a challenge of adequate data-mining tools. All these are challenges posed when dealing with business analytics. It is, however, incontrovertible that provided these challenges are surmounted, the use of business analytics has its attendant benefits, which include: making faster and well-informed decisions, reducing costs, guaranteeing and optimizing productivity, better risk management, upscaling a firm, higher profitability and lastly, a higher customer satisfaction. All these, among others, are the probable benefits which a company stands to gain when it employs the use of business analytics.

Although, carrying out quality analytics studies could be quite costly, especially for emerging companies, a careful inquiry into the benefits in juxtaposition to the costs of not using analytics would show that the benefits of employing analytics in business far outweighs its cost implications. The results or outcomes deduced from using analytics can be applied to different facets of any company, and this includes - price fixing, understanding market trends and customers' perception, helping to unlock or identify the best location to situate industries, using data to group customers on the basis of location or product or buying behaviour, all classified as segmentation, amongst other applications. It is quite evident that business analytics is a very crucial tool required by successful business owners or companies.

Achieving competitive advantage vis-à-vis embracing analytics and its application is a phenomenon we should consider. In the present business environment, where companies are constantly seeking for means of gaining the competitive edge, embracing the use of business analytics might be the deciding factor in a company's progression towards business prosperity.

Business Analytics tools used in making informed decisions include; data visualization, spreadsheets, statistical methods, data mining, simulation, what-if analysis, optimization, etc. A combination of these tools, if properly utilized and professionally done would put any business on a major pedestal toward attaining excellence and success in its operations and dealings. This would undoubtedly lead to a competitive advantage, in the sense that while company A primarily makes decisions based on personal discretion and intuition, a subjective process which could prove disastrous, company B on the other hand makes decisions based on carefully analysed company or market data, thereby drastically increasing the chances of profitability, efficiency and effectiveness.

Effective use of data and its ability to put any company ahead of its contemporaries in the industry cannot be overemphasized. Making reference to a statement made by McKinsey Global Institute in 2011, the release posited that "the effective use of big data has the potential to transform economies delivering a new wave of productivity growth and consumer surplus. Using big data will become a key basis of competition for existing companies, and will create new competitors who are able to exhaust employees that have the critical skills for a big data world." This statement proves just how much data utilization would serve as the tie-breaker between a company and its contemporaries. Hence, there is no gainsaying the fact that embracing business analytics and adopting it in business operations would help in achieving a competitive advantage for any company that will put such company in the right stead for sustained growth and development.

The crux of business analytics lies in the ability of firms or companies to make informed and smarter decisions, which would culminate in reduced operational costs, risk management, enhanced productivity and identification of the best alternatives to maximize business objectives.

Thank you for reading.

Contact: Shotundeoladimeji07@gmail.com

Great article sir. Employing the use of data analytics in business cannot be overemphasized no matter which angle we choose to look at it from as "Business Analytics" helps a business to project/foresee possible happenings in future in order to make favorable decisions and avoid catastrophes.

But in as much as it's importance is, the cost of carrying it out in a country like Nigeria where businesses find it hard in getting funds to even carry out production or improve the kind of services they offer is not small and it's difficult to come by.

All in all, business analytics is important for every emerging or established business.

Regards!


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