How is analytics critical to business?
The vendors of business intelligence (BI) and business analytics software claim that business needs analytics critically. Businesses have flourished before the word “analytics” became fashionable and managers have used numbers and data for aligning strategies and decisions for a long time. Is analytics truly critical for business? Let us examine this issue-
What are the various ways analytics can help businesses
The following are some of the ways a data driven business can achieve a measurable sustained lead over a non data driven business.
- Predicting sales and aligning production (Sales forecasting)
- Allocating resources appropriately to sales and distribution (Supply Chain Management)
- Which marketing campaigns are working and which are not (Marketing Analytics and Promotion Analysis is used extensively in consumer goods, telecom,financial services and direct marketing)
- What product attributes are best liked by customer (Product Analytics and Retail Analytics especially for retailers. This includes optimizing which products sell better together which is known as market basket analysis)
- What consumer segment is best served by a particular product (Customer Analytics particularly in consumer goods domain)
- Which customers are likely to defect to competitors (Churn Analysis particularly used in Telecom and Financial Services)
- Which customers are likely to pay their outstanding debt in time and which ones are likely to default (Collections and Risk Analytics used in Banking and Financial Services)
- Enterprise resource planning
- Web Analytics helps online businesses with understanding and optimizing customer experience to maximize conversion rates
While business managers had been using spreadsheets, reports and various tools to manage this even in the past, today they can use integrated solutions from business intelligence and analytics for cohesive decision management. In a globalized world of competition, and steady erosion of profit margins, analytics helps to save costs in the long term and thus add to both top-line and bottom-line growth. The basic assumption is that systematic decision making based on statistical test, control , hypothesis, champion and challenger strategies will win over more intuitive decision making systems in the long run as domain expertise is acquired.
Analytics in Healthcare
Healthcare business is slightly different and we will examine this as follows-
In healthcare analytics helps with the following-
- compliance and documentation
- drug testing
- clinical trials
- forecasting of sales per geography
- predicting disease outbreak
- survival analysis
- optimizing sales and distribution network for rewards and incentives
- optimizing direct mail and other direct marketing efforts
- pricing for health insurance
- risk analysis for treatments
- cost analysis of health care over a period of time
Healthcare in Western countries is highly regulated and compliance to regulations is considered critical to business. Analytics helps healthcare with compliance as well as ensuring proper scientific ways of testing new and existing drugs are undertaken.
The above mentioned ways are a simple summary of the various ways businesses find it critical to invest in analytics.