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Unlocking the Secrets of Success

An introduction to business analytics

An introduction to business analytics
Illustration by Richard Lillash

The idea of business analysis isn’t new. Companies have been analyzing their business performance and trying to make good business decisions since the beginning of commerce. Business analysts have been part of corporate staffs for decades. Even small companies have been active in trying to figure out how to best meet their business goals. Financial wizards in the office of the CFO have been doing financial analysis to help improve their company’s performance and reduce financial risks since CFOs were invented. Analysis has been a key part of these business activities. So why all the recent hype about business analytics?

Increased Competition

Six years ago Thomas L. Friedman taught us about the new world in which we live. In his book “The World is Flat,” he described the global shifts in politics, economies and technologies that have led to increased competition. Heightened competition is forcing companies to pay closer attention to financial and operational processes, and to pursue excellence in their niches to maintain profitability.

Today, businesses that can find and use information to make better decisions faster will be more likely to succeed. Traditionally, companies have used manual or rudimentary methods of analysis, often employing only a subset of easily accessible data. These outdated methods are no longer enough for companies to remain competitive. Analytics as a technology has become sophisticated and is ripe for solving the toughest business problems and uncovering new insights to propel businesses forward.

The purpose of analytics is to answer the questions “How are we doing?” and “Why is it happening?” Analytics can help improve key business-performance indicators such as assets, revenue, expenses and financial performance. Analytics can be used to identify and avoid high-risk situations or solve industry-specific goals that can differentiate a company in the marketplace. Analytics has been helping companies in many different industries achieve better performance. The world’s top petroleum companies use analytics to better control operations and expenses by monitoring fluctuating costs for raw materials such as oil. Banks and insurance companies use analytics to detect fraudulent transactions. Retailers use analytics to identify their lowest-performing stores or products and why they lag. Healthcare providers are investigating how analytics could help them improve diagnoses. Leaders in every industry are figuring out how to apply analytics in their domains to solve the most critical problems and solve them quickly.

Beth L. Hoffman is the IBM business analytics technical leader, developing technical strategies and plans for analytics on IBM platforms.



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