The advantages of next-generation business analytics.
THEterm business analytics refers to the skills, technologies, applications, and practices for continuous interactive exploration and investigation of past business performance to gain insight and drive business planning. The traditional focus of business analytics has been on developing new insights and understanding of business performance based on data and statistical methods. In contrast, business intelligence, which is also based on data and statistical methods, focuses on using a consistent set of metrics to measure past performance and guide business planning.
Business analytics can be used in a variety of ways. Banks use data analysis to differentiate between customers based on credit risk, usage, and other characteristics, and then match customer profiles with appropriate product offerings. Gaming firms and retailers use analytics in their customer loyalty programs. Some wineries quantitatively analyze and predict the appeal of their wines. Companies with capital-intensive inventory have saved billions by employing new analytical tools to optimize their inventory-management models.
Current vs. next-generation analytics
Most of the current generation analytics give insight as to “what happened” through reporting and “why it happened” by analyzing information with business intelligence tools. The information reported on and analyzed is usually from a limited number of internal sources (e.g. finance and sales data), and is normally one or more weeks old. As such, the predictive capabilities of current generation analytics are very limited. Given the relatively high cost of analytics systems and user licences, access to business analytics is limited to a few executives and senior managers.
Next-generation analytics aspire to provide real-time, user-specific, predictive business insights to a wider range of users employing a richer set of information for improved business decision-making. Analytics will increasingly focus on decisions and collaboration. The new paradigm is to provide simulation, prediction, optimization, and other analytics – not simply information – to empower even more decision flexibility at the time and place of every business process action. Some of the noted providers of next-generation business analytics solutions are IBM, SAS, and Teradata.
Improved business outcomes
The increasing capabilities (computing power and advanced database technologies) of the computing ecosystem (cloud-based grid, enterprise computers, and mobile devices), along with improving connectivity, are enabling a shift in how businesses support decision-making. It is becoming possible to run enhanced simulations or models (what-if scenarios) to predict a future outcome – rather than simply provide backward-looking data about past interactions – and to do these predictions in real time to support each individual business action.
Next generation analytics not only use internal information (sales and finance), but also incorporate external information from industry (microeconomic data) and customer insights (social media and online interactions). The world has become social and, with the power of groupthink, businesses are able to handle large problems. The use of next generation analytics encourages connections between users within the enterprise, and outsiders who can provide their own insights.
The type of analysis changes from structured and simple data analyzed by individuals to analysis of complex information of many types (text, video, etc.) from many systems supporting a collaborative process that brings people together to analyze, brainstorm, and make decisions.
User-specific insight
Business analytics information is essential for all business users at multiple levels as it allows the growth of the company’s social intelligence. Sales, marketing, business development, finance, and operations should all be using business analytics to collaboratively pull insights and accomplish mutual goals. Therefore, using next-generation business analytics needs to be easy and intuitive, allowing non-technical staff to build insights and analyses for their specific needs.
Next-generation analytics can provide appropriate, user-specific information to users, making it relevant for their job. The users do not need to pre-define their desired data. Similar to a book recommendation on Amazon, next-generation analytics use computational logic to present information the user very likely wants to see. Users gain insights they might not have reached through simple one-dimensional data analysis.
With the rise of smartphones and tablets, information needs to be available at all times. Business continuity and real-time decision-making depends on this, as it allows employees who work from home or who travel for business the same access to data as in-office staff.
Next-generation analytics leverages the synergy derived from collaborative groupthink, the enhanced ability to predict future outcomes in real time, and the latest computing/database technologies to enable higher quality business decisions. Accounting professionals at all levels of an organization can utilise next-generation analytics to weigh the outcomes of several alternatives to ensure that the best business decisions are made.