Learn Four Types of Business Analytics Model

Today, we have access
to more forms of data than ever before! The high volume of data available for
the business world has brought severe problems to the decision-makers. But the
question is how to turn this unstructured data into useable insights to make
better business decisions? Additionally, how to find a correlation between
various variables to predict the result efficiently?  The simple answer is by leveraging a business
analytics solution.

Business analytics uses
predictive modeling, statistical tools, and models to uncover market trends and
industry changes. Furthermore, based on historical events, specific tools can
also precisely predict what might happen in the future. As such, every company
is trying its best to utilize business analytics for their decision-making
purposes. Depending on the data analysis requirement, there are four types of
business analytics – descriptive, diagnostic, predictive, and prescriptive. When
used correctly, these four types of business analytics solutions answer
everything a business owner must know, from what’s going on in the organization
to what solutions to be adopted for streamlining the functions.

While these four types of business
analytics are interrelated, each of them offers a different insight. From e-commerce to the healthcare sector- most companies
rely on one of these four types of business analytics to make the right business decisions.

Let’s look at each of these four types of
business analytics
 solutions a
little more in-depth.

Four Types of Business Analytics Model

#1:
Descriptive Analytics

It can be called the
simplest of these four types of business analytics, as its primary purpose is gathering
and summarizing the market findings. Usually, descriptive analytics focuses on
historical data, providing the context that is a prerequisite for understanding
information and numbers.

Out of these four types
of business analytics, descriptive analytics seeks answers about what happened,
without performing the more complex analysis demanded in predictive models.
Another feature that makes this form unique is that it will result in
visualizations like pie charts, line graphs, bar charts, and other more
straightforward graphical displays. Descriptive
analytics employ simple statistical tools instead of more complex calculations
that predictive and prescriptive analytics perform.

#2: Diagnostic
Analytics

Diagnostic analytics is
one of the four types of business analytics that uses probabilities,
likelihoods, and the distribution of outcomes for the analysis. Diagnostic
analytics typically comprises data discovery, drill-down, data mining, and
correlations.

Diagnostic analytics tools
will allow you to understand why the sales have decreases or increases for a
specific period. But, it has a limited ability to give actionable insights. Out
of the four types of business analytics, the diagnostic analytics tool takes it
a step further to unveil the reasoning behind specific results. Apart from the
other four types of business analytics, diagnostic analytics takes a broader
look at data to recognize its root causes. Indeed, these insights are valuable
in determining what factors and events contributed to the outcome.

#3:
Predictive Analytics

As the name suggests, predictive
analytics is utilized to predict likely outcomes. While technologies cannot
foretell if an event will occur in the future, it can assuredly forecast the
event’s occurrence.

Predictive analytics
uses existing data to extrapolate the future occurrence or predict future data.
If the model is adapted correctly, it can support complex sales and marketing
forecasts as it goes a step ahead of the standard business intelligence in giving
accurate predictions. In addition to this, predictive analytics helps detect
fraud, optimize marketing campaigns, improve operations, and reduce business
risks.

#4: Prescriptive
Analytics

Prescriptive analytics
is different from the other four types of business analytics as it allows users
to prescribe several different possible actions and guides them towards a
solution. While all these types are about presenting business advice,
prescriptive analytics go beyond descriptive and predictive analytics by
suggesting one or more possible action courses.

If implemented
correctly, prescriptive analytics can have a massive impact on how businesses
make decisions. As such, leading firms are already leveraging prescriptive
analytics solutions to optimize supply chain operations, streamline production,
and enhance the customer experience. Because of its unique power to recommend
favorable solutions, prescriptive analytics is the ultimate frontier of
advanced analytics.

 Conclusion

While all these four types of business analytics model’s core objectives are almost the same- companies must smartly choose the type based on their business requirements. In most of the scenarios, businesses often jump straight to prescriptive analytics. However, prescriptive analytics is not always the right type to run behind. Hopefully, the four types of business analytics models mentioned in this writing price will help you make the right choice for your business.

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  • ONPASSIVE
  • ONPASSIVE
  • 16 September, 2020
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