Any company wishing to reap the benefits of business analytics needs to understand the path that it has to take to reach the goal of optimization.
Stage 1 : The first stage is reporting and data analysis. This essentially means that you gather the data from your source systems and run reporting tools on it. Various kinds of reports can be generated depending on the requirement. Data analysis implies using statistical methods to find meaning in numerical data. statistical tools can be very powerful in presenting highly summarized data and are used extensively when huge amount of data is present.
Stage 2: A company that has the basic reporting tools can then move on to OLAP based tools. OLAP stands for Online Analytical processing. Olap tools allow you to build multidimensional data. They also provide with drill down facilities to allow the user to drill down on one of the dimensions. for example, consider an FMCG company that has a location hierarchy(country-> state->city etc) as well as an item hierarchy (Electronics->television etc). people may want various kinds of numbers such as total electronics sales in a country or total television sales in a city etc. All such kinds of data can be made available from a single OLAP system.
Stage 3: reporting and OLAP system gives the user a view of the system, but the user may also want systems that may help him make sense of the information. We need data mining tools that help the user in making decisions. These include data analysis covered in step 1 but here we make use of advanced statistical concepts (inferential statistics in addition to descriptive statistics)
Stage 4: The three stages covered so far are part of what is generally referred to as business intelligence. As a company matures it looks for more capabilities in its decision support systems. It is at this point that the company starts investing into business analytics. The business intelligence answers questions such as : what does my sales records look like? or what has been my maximum selling product. The questions answered by Business analytics are : what would my demand look like within the next three months? how do i optimize my inventory so that my cost is minimum but the service level is achieved? should my supply chain be responsive or efficient?
The answer to this question needs tools such as forecasting and predictive analysis.
The answer to this question needs tools such as forecasting and predictive analysis.
Stage 5: The last stage is where the company strives for optimization across its functions. It uses a holistic approach where all its functions such as finance, marketing, operations are optimized together to arrive at a decision.