The indispensability of Business Analytics

The indispensability of Business Analytics

Gone are the days when business analytics used to be a tiny blip on the tech horizon, which even the C-suite was finding hard to grapple with. Today, large, medium and small enterprises are all recognizing how analytics can break down vast troves of data into digestible chunks of information which can prove beneficial for business growth. 

In the Global State of Enterprise Analytics, a research study conducted in 2018 by Micro strategy, it was predicted that 71% of companies worldwide would increase their investments in data analytics by 2021. Going by those figures, it is safe to say that analytics will play a pivotal role in helping businesses gain a substantive competitive edge, in this era of social distancing and rapid market transformation.

If you are a small or medium business owner, it is imperative that you do not distance yourself from data at this time of heightening competition. Rather, if you use it smartly, taking inputs from the right sources, data can majorly help you drive business growth. But how exactly can analytics do that? 

Let's break that down. 

Broadly speaking, analytics can drive growth in three significant ways:

1. Gaining insights  

As mentioned, business analytics requires collecting huge amounts of data and then parsing it efficiently to diagnose useful trends and patterns. These could then help you devise strategies from an elite vantage point. A mature model of data analytics not only helps you remove personal biases, but also helps you make more informed decisions. Moreover, collecting data on your business journey will also help build clarity about your overall progress. 

According to Gartner's Data Maturity Model, a mature analytics model can be structured as having these four steps:

(i) Descriptive analytics - the simplest form of analysis, it is the first step of this complex process. The objective of descriptive analysis is to find out what happened from collected data. Descriptive analytics could lead to really powerful insights, even while using simple arithmetic techniques like median, mode and averages etc. 

(ii) Diagnostic analytics - moving one step forward, diagnostic analytics takes a look at the question of why. In this step, one takes a deeper look at historic data, and using different techniques like drill-down, correlations and probabilities, among others, try to answer the why questions. For eg: "Why are sales higher/lower this year?"

(iii) Predictive analytics - going further ahead, predictive analytics can tell us what is likely to happen in the future. It requires a reasonably high amount of data to get predictive analytics done accurately, and the occurrence of particular events are not hundred percent guaranteed. At a reasonably high level of accuracy though, it can provide useful insights, aid in decision-making and demand-forecasting.

(iv) Prescriptive analytics - the final step is the prescriptive one. It is concerned with the question of which action to take, and attempts to delineate the course of action to be taken in order to achieve a particular outcome. This way, each layer of analytics maturity adds more refinement to the insights you receive.

2. Problem Solving  

Analytics can help you solve the most complex business issues. Yet, the process could get really overwhelming if you don't know where to look or how to act. With the help of experts who utilize the latest analytics tools, businesses can cut down on both cost and effort to extract structured data in simple form rather than working with large swathes of unstructured data.

Once you have the structured data that you want to use, strong visualizations can help trigger the right understanding and action on the go. According to researchers at Cornell University, scientific claims presented purely using words and numbers were immediately believable only to 68% of participants in their study. But on introducing a simple graph along with the claim, the number leapt to 98%. If that's any indication, visual data can prove to be one of the most valuable resources that can help key-decision makers identify problems swiftly and take appropriate action. 

3. Improving outcomes

Finally, investing in analytics gives you a very direct advantage, it increases your revenue. For instance, insights from social media can help businesses identify the right target group and message, so as to drive sales, subscriptions and so on.  

This study by McKinsey reported a jump upwards of 6% in profits for businesses that chose to invest in big data. For businesses who had done this regularly for five years, the number rose to 9%. Another study by BARC also revealed a similar pattern companies who regularly invested in analytics reported revenue gains upwards of 8%. Not only that, gains were accompanied by a reduction in operational costs of up to 10% as well. For a tool whose potential remains majorly untapped to date, these numbers are highly promising.

Moving beyond financial gains, analytics also helps streamline business operations and tweak infrastructure. For instance, KPMG has reported that firms using predictive analytics are successfully anticipating maintenance and operational issues much before they escalate into crisis. 

Taken together, these three benefits can provide a significant boost to overall business growth, especially for small and medium enterprises. Nonetheless, becoming a data driven organization that takes beneficial action requires working with data experts who can use analytics in the most strategic ways possible. 

According to this Gartner survey, 87.5% of respondents found themselves mired in low data and analytics maturity, due to their use of outdated technologies, flimsy data quality, lack of vision and skills, and inexperience in strategic planning and deployment. 

Improving the quality of your data assets requires progressing through the data analytics maturity levels quickly and working with the right people is central to achieving that goal. Tellingly, in 2019, LinkedIn listed business analytics among skills most needed for companies, or in other words, skills that were in high demand relative to their supply. 

At Cogent Infotech, we specialize in providing cost-effective high quality digital transformation solutions, including social listening and business analytics. The skills and talent we have onboard gives us a unique positional advantage for delivering on these goals, for global brands, startups, small or medium enterprises alike. When it comes to business analytics that helps you achieve your goals cost-effectively, Cogent Infotech is the problem solver you need.