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Business analytics
Business analytics (BA) is the practice of iterative, methodical exploration of an organization’s
data with emphasis on statistical analysis. Business analytics is used by companies committed to
data-driven decision making.
BA is used to gain insights that inform business decisions and can be used to automate and
optimize business processes. Data-driven companies treat their data as a corporate asset and
leverage it for competitive advantage. Successful business analytics depends on data quality,
skilled analysts who understand the technologies and the business and an organizational
commitment to data-driven decision making.
Examples of BA uses include:
 Exploring data to find new patterns and relationships (data mining)
 Explaining why a certain result occurred (statistical analysis, quantitative analysis)
 Experimenting to test previous decisions (A/B testing, multivariate testing)
 Forecasting future results (predictive modeling, predictive analytics)
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Today`s Business Challenges
1. Uncertainty
All human beings, but it seems business leaders in particular, find great discomfort in un
certainty. Uncertainty in the global economy, uncertainty in the credit markets, uncertainty in
how new regulations will affect business, uncertainty about what competitors are doing, and
uncertainty about how new technology will affect the business—these are just the start of a
never-ending list. The bottom line is that uncertainty leads to a short-term focus. Companies are
shying away from long-term planning in favor of short-term results, with uncertainty often the
excuse. While this might feel right, we believe that a failure to strategically plan five years into
the future can end up destroying value.
2. Globalization
Understanding foreign cultures is essential to everything from the ability to penetrate new
markets with existing products and services, to designing new products and services for new
customers, to recognizing emergent, disruptive competitors that only months earlier weren’t even
known. The problem to be solved is to better understand international markets and cultures
through better information gathering and better analysis of what it all means. Similarly, the
incredible degree of government intervention in nearly all major economies of the world is
leading to much greater uncertainty (see No. 1 above) in the global marketplace, making
international operations ever harder to manage.
3. Government Policy & Regulation
A changing regulatory environment is always of concern in certain industries, but uncertain
energy, environmental and financial policy is complicating the decision making for nearly all
companies today. It’s true that things seem to have settled down over the past couple of years,
but have they really? We find that they haven’t; it’s simply that dealing with an unknown
regulatory environment is fast becoming the new normal and companies are deciding to get on
with it—whatever “it” may be—despite the angst. Whether a demand from customers or
shareholders to become more “green,” the threat of increased costs due to new carbon taxes,
constant talk of changes to corporate tax rates, or the impending healthcare mandate for

businesses in the US (postponed until 2015), much is unsettled. The problems to be solved are to
understand the meaning of regulation and government policy in your industry, its implications
for your business, and to develop the skills necessary to deal with it.
4. Technology
The pace of technological improvement is running at an exponentially increasing rate. While this
has been true for several decades, the pace today makes capital investment in technology as
much an asset as a handicap because a competitor may wait for the next-generation technology,
which may only be a year away, and then use it to achieve an advantage. Of course waiting to be
that competitor can be equally risky. What’s a CEO to do? Similarly, the ability for even the best
of technologists to stay informed about emerging technology is in conflict with the need to
master a company's current technology. The problem to be solved is to develop a long-term
technology strategy while remaining flexible enough to take advantage of unforeseen technology
developments.
5. Complexity
There’s no doubt that life and business have gotten more complex, even as certain tasks and
activities have become easier due to information technology. The pace of change is quickening.
The global economy is becoming still more connected, creating a much larger and more diverse
population of customers and suppliers. Manufacturing and services are increasingly targeted at
smaller, specialized markets due to the flexibility that IT provides in these areas. The 3D printing
revolution is a perfect example. We know from our knowledge of the patterns of evolution that,
in reality, systems tend to become more complex as they evolve, then become simplified again.
The problem is how to develop better systems-thinking capability so you can design your
business models, processes, products and services in a way that minimizes unnecessary
complexity.
6. Information Overload
It is said that the only true constant is change, and in today’s world nothing is changing more, or
growing faster, than information. A March 2010 estimate put global Internet traffic at 21
exabytes—21 million terabytes. By 2016, global traffic will reach 1.3 zettabytes, according to a

report released in May 2012. Every day, 2.5 quintillion bytes of data are created. The ability of
companies, much less individuals, to consume and make sense of the information that is
available (and necessary) to make good decisions is becoming a nearly insurmountable
challenge. The problem to be solved is to deal with this mountain of information with both
technology and human know-how, then to convert this information into valuable knowledge.
7, Supply Chains
Because of uncertainty in demand and the need to stay lean, companies are carrying smaller
inventories than ever. At the same time, uncertainty in supply, driven by wildly changing
commodity prices, an apparent increase in weather-related disruptions, and increasing
competition for raw materials makes supply chain planning more challenging than ever. Smaller
suppliers that, five years after the global financial crisis, still struggle to get the credit they need
to keep up with their larger customers’ demand exacerbates an already unwieldy situation. The
problem to be solved is to develop a supply-chain strategy that not only ensures the lowest costs,
but also minimizes the risk of crippling supply-chain disruptions.
8. Cash, Borrowing, and Resource Management. Cash is King! We’ve all heard this maxim
and it is more true today than ever before. A healthy profit may look nice on your financial
statements, but if capital expenditures or receivable collections are draining your cash, you won’t
be able to stay in business for long. Too often executives and small business owners fail to focus
enough on cash flow generation. In order to head off this problem, businesses must either be
adequately capitalized and must shore up cash reserves to meet all obligations as they are needed
and to handle downturns and emergencies that may arise. Cash management becomes even more
important during recessionary times when cash is flowing more slowly into the business and
creditors are less lenient in extending time to pay. For small businesses, handling business
accounting and taxes may be within the capabilities of the business owners, but professional help
is usually a good idea. The complexity of a business’ books go up with each client and
employee, so getting assistance with managing cash and the bookkeeping can allow you to excel
when others are calling it quits. Cash flow challenges are exacerbated by the lending climate,
particularly for small businesses. Bankers are unlikely to be more liberal in their lending policies
any time soon.

9.Marketing and Customer Loyalty. Along the same lines as increased selection and
competition is the challenge to market to potential customers effectively and retain your existing
customers. Smartphones, social media, texting, email, twitter and other communication channels
are making it easy for businesses and individuals to get their messages out. Figuring out the
right marketing channels is key for businesses to be successful in the future. Where are your
customers and how do you best reach them and what is the right messaging? Once you get a
new customer, how do you keep these customers when they are constantly barraged by
competitors of all types, sizes, and locations, trying to convince them that they can do it better or
provide it cheaper? Identifying what your customers want and doing a better job of giving it to
them will make all the difference in your company’s future. The conservative spending climate
is also causing a shrinking customer base. Consumers are still quite conservative with their
pocketbooks, and as a result, organic growth from current and new customers is not growing as
quickly as businesses would like. Business owners and executives are spending more time
figuring out how to go above and beyond to keep existing customers, while at the same time
figuring out how to cost-effectively reach new customers — without competing solely on price,
which always ends up to be a race to the bottom.
10. Finding the right staff. Without exception, every business executive I speak to says that one
of their biggest challenges is staff – finding the right staff, retaining them, and ensuring they buy
into the vision of the business. I’ll freely admit that I have no magic answers here. In fact, if
someone could develop a formula for recruiting and engaging the right team members, they
would make millions. A small business is almost like a family, and, like many families, they can
work well, or they can be dysfunctional. In big companies, the human resource challenge is
politics and fit in the workplace, but when it comes to small business, its personalities and skill.
When you work in a small environment, each team member’s personality can have a huge impact
on the harmony and productivity of the business. The key is to learn how to deal with different
personalities, figure out what drives each individual team member and tailor your management
accordingly. Despite high unemployment, many companies struggle to find the right talent with
the right skills for their business. Many new manufacturing jobs require high-tech skills. They
include positions at factories where computers are used to create products like airplane parts and
machinery. And some require several years of training. Because of changing technology,

businesses are struggling to find qualified workers with IT skills, problem solving abilities, and
deductive reasoning skills.

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