In today's dynamic business environment, an organisation must stay competitive by thinking tactically and strategically. Changes in the business environment directly impact revenues and profits; mostly caused by internal and external factors-political, economic, societal, technology, market (competition), demographic, etc.
To gain an understanding of the business environment, it is advisable to conduct a step-by-step analysis. Having a full understanding of various issues that affect a business will help management teams to make better decisions that will scale and sustain the business. Periodically, organisations need to evaluate their ability to provide products and services by improving its operational efficiency, which involves optimising all the processes and value chain activities.
Efficiency generally refers to the extent to which input towards a system is well used for a proposed output. Business efficiency is crucial to the success of any enterprise. It is also about figuring out how you can be more effective using fewer resources, as well as less money and time to achieve the same goal. The foundation of a successful company is being able to understand and give customers what they want. The ability of the big players in the industry to remain relevant is because they understand the dynamics and the ever-changing environment of business.
Historically, the beginning of the twenty-first (21st) century was marked by the rise of a global economy; mostly because of the advancements in technology to improve business processes. Fundamental shifts in resources, technology, and social values are also factors that transformed the business landscape. As the data revolution changed the way of doing business, companies and organisation from all industries face various kinds of risks which may be avoided by using up-to-date, relevant information. In today's business environment, every organisation wants to have the most accurate forecasts to make the right decision. Data analytics has now become the catalyst for decision making.
Business analytics gives them that advantage since cost optimisation is a business-focused, continuous discipline to drive spending and cost reduction while maximising business value. Analytics in business is the process of making sense of gathered data, measuring business performance, analysing historical data to gain new insight, and producing valuable conclusions that can help companies make informed and strategic decisions on the future of the business. It is also about using various statistical methods, techniques, and data modelling to develop new business insights. Business analytics has a wide range of applications from customer relationship management, supply-chain management, human resource management, financial management, marketing, and agriculture growth.
The Essentials of Business Analytics and its Applications are typically categorised as:
1. Descriptive Analytics
This is a method of analysing historical data to determine how to respond to current situations. Organisations leverage descriptive analytics to assess' current market position of the company and the effectiveness of previous business decision, tracks key performance indicators (KPIs) to understand the present state of a business. It also helps business learns from past decisions to understand how they will impact future outcomes. The main objective of descriptive analytics is to find out the reasons behind success or failure in the past and to understand the overall performance of the company in describing the various aspects.
2. Predictive Analytics
This method is used to analyse historical data to determine the likelihood of future outcomes. Organisations leverage prescriptive analytics to understand past performance to generate recommendations about how to handle similar situations in the future. This helps in setting realistic goals for the business, effective planning, and restraining expectations.
3. Prescriptive Analytics
This is the next step of predictive analytics that improves organisations efficiency of manipulating the future, by creating advised solutions that will also align with the goals of the companyâ€™s key metrics. It advises on possible outcomes, create the opportunity to optimise resources and help to make informed, effective decisions. It also provides further insight into why certain results may happen so related factors can be monitored when new actions are taken. Hence, it uses a strong feedback system that constantly learns and updates the relationship between the action and the outcome. Although prescriptive analytics is still at the budding stage, not many firms have completely explored its power.
Benefits of Analytics for Business Efficiency
1. Elevates Operational Efficiency
Business analytics makes it possible for a company to understand and identify operational inefficiencies and respond to them accordingly by leveraging the process's volume of data.
2. Keeps Businesses Up to Date in A Changing Environment
Not only does business analytics provide the needed knowledge for companies to survive in today's constantly changing business environment, it also makes room for growth and improvement, providing a detailed study of various opportunities and challenges that companies face daily.
3. Enhances Accurate Decision Making
Analytics can help a company make the decision-making process more accurate as it helps in understanding the sentiments of the customers towards the company, its brand, and products. With efficiency in decision making, the organisation can remain relevant and stay on top of its competitors. It can also help improve the profitability of the organisation, boost its market share and revenue, and provide a better return on investment.
4. Builds Stronger Customer Relationships
Analytics gives companies an insight into their customers' behaviour and needs. It also makes it possible for a company to understand the public opinion of its brand, to follow the results of various marketing campaigns, and plan how to create a better marketing strategy to foster fruitful relationships with its customers.
5. Empowers Companies to Plan for Growth
Analytics gives businesses the ability to forecast, making the business more agile and prepared for possible risks. This will help the business to make important decisions with more confidence, knowing that it can handle the risks and adjust the consequences.
6. Maximise Organisation Investment
Analytics provides insight into how best to utilise the company's investment leveraging business intelligence. Marketers can tailor campaigns and strategies, with public opinion in mind and eventually increasing chances of a higher return on investment.
7. Accelerate Through Uncertainty
At this time of uncertainty, owing to the lockdown across the globe, almost nobody has an idea when things will get back to normal. Many businesses have been impacted negatively by this turbulent time. Business analytics can be used to resolve supply chain issues, introduce crisis management solutions, optimise costs, and improve efficiency.
Analytics if properly utilised, helps to identify areas of modifications to a business strategy and process improvement opportunities which lead to an increase in a company's bottom line.
Credit: The post Improving Business Efficiency Through Analytics, first appeared in Phillips Consulting Blog on February 02, 2021.