BA Process:
The goal of Data Analytics (big and small) is to get actionable insights resulting in smarter
decisions and better business outcomes. How you architect business technologies and design data
analytics processes to get valuable, actionable insights varies.
It is critical to design and build a data warehouse / business intelligence (BI) architecture that
provides a flexible, multi-faceted analytical ecosystem, optimized for efficient ingestion and
analysis of large and diverse datasets.
There are three types of data analysis:
Predictive (forecasting)
Descriptive (business intelligence and data mining)
Prescriptive (optimization and simulation)
Predictive Analytics
Predictive analytics turns data into valuable, actionable information. Predictive analytics uses
data to determine the probable future outcome of an event or a likelihood of a situation
occurring.
Predictive analytics encompasses a variety of statistical techniques from modeling, machine
learning, data mining and game theory that analyze current and historical facts to
make predictions about future events.
In business, predictive models exploit patterns found in historical and transactional data to
identify risks and opportunities. Models capture relationships among many factors to allow
assessment of risk or potential associated with a particular set of conditions, guiding decision
making for candidate transactions.
Three basic cornerstones of predictive analytics are:
Predictive modeling
Decision Analysis and Optimization
Transaction Profiling
An example of using predictive analytics is optimizing customer relationship management
systems. They can help enable an organization to analyze all customer data therefore exposing
patterns that predict customer behavior.
Another example is for an organization that offers multiple products, predictive analytics can
help analyze customers’ spending, usage and other behavior, leading to efficient cross sales, or
selling additional products to current customers. This directly leads to higher profitability per
customer and stronger customer relationships.
An organization must invest in a team of experts (data scientists) and create statistical algorithms
for finding and accessing relevant data. The data analytics team works with business leaders to
design a strategy for using predictive information.
Descriptive Analytics
Descriptive analytics looks at data and analyzes past events for insight as to how to approach the
future. Descriptive analytics looks at past performance and understands that performance by
mining historical data to look for the reasons behind past success or failure. Almost all
management reporting such as sales, marketing, operations, and finance, uses this type of post-
mortem analysis.
Descriptive models quantify relationships in data in a way that is often used to classify customers
or prospects into groups. Unlike predictive models that focus on predicting a single customer
behavior (such as credit risk), descriptive models identify many different relationships between
customers or products. Descriptive models do not rank-order customers by their likelihood of
taking a particular action the way predictive models do.
Descriptive models can be used, for example, to categorize customers by their product
preferences and life stage. Descriptive modeling tools can be utilized to develop further models
that can simulate large number of individualized agents and make predictions.
For example, descriptive analytics examines historical electricity usage data to help plan power
needs and allow electric companies to set optimal prices.
Prescriptive Analytics
Prescriptive analytics automatically synthesizes big data, mathematical sciences, business rules,
and machine learning to make predictions and then suggests decision options to take advantage
of the predictions.
Prescriptive analytics goes beyond predicting future outcomes by also suggesting actions to
benefit from the predictions and showing the decision maker the implications of each decision
option. Prescriptive analytics not only anticipates what will happen and when it will happen, but
also why it will happen.
Further, prescriptive analytics can suggest decision options on how to take advantage of a future
opportunity or mitigate a future risk and illustrate the implication of each decision option. In
practice, prescriptive analytics can continually and automatically process new data to improve
prediction accuracy and provide better decision options.
Prescriptive analytics synergistically combines data, business rules, and mathematical models.
The data inputs to prescriptive analytics may come from multiple sources, internal (inside the
organization) and external (social media, et al.). The data may also be structured, which includes
numerical and categorical data, as well as unstructured data, such as text, images, audio, and
video data, including big data. Business rules define the business process and include constraints,
preferences, policies, best practices, and boundaries. Mathematical models are techniques
derived from mathematical sciences and related disciplines including applied statistics, machine
learning, operations research, and natural language processing.
For example, prescriptive analytics can benefit healthcare strategic planning by using analytics to
leverage operational and usage data combined with data of external factors such as economic
data, population demographic trends and population health trends, to more accurately plan for
future capital investments such as new facilities and equipment utilization as well as understand
the trade-offs between adding additional beds and expanding an existing facility versus building
a new one.
