What is Business Analytics?

In today's data-driven world, businesses depend on the ability to transform raw data into meaningful insights. Business analytics is the process that enables organizations to make informed decisions, solve problems and identify opportunities for growth. With its blend of data analysis, technology and strategy, business analytics has become an essential tool across industries.

Understanding what business analytics involves, the skills required to excel and the steps to enter the field can provide a clear path if you're interested in pursuing this career.

So, What is Business Analytics in Simple Words?

Business analytics is the process of using data, statistics and technology to understand a business's performance and find ways to improve it, according to Mona Stephens, CPA. An associate dean of accounting and business analytics at Southern New Hampshire University (SNHU), Stephens has over 25 years of accounting experience and another two decades of experience in teaching. When it comes to business analytics, she said, "It is like telling a story with numbers to help businesses make smarter decisions."

At its core, business analytics answers important questions like:

• What happened? (descriptive analytics)
• Why did it happen? (diagnostic analytics)
• What might happen next? (predictive analytics)
• What should you do about it? (prescriptive analytics)

By focusing on these questions, business analytics helps organizations identify patterns and trends in their data.

What is the Role of Business Analytics?

"Business analytics aims to bridge the gap between raw data and actionable strategies," Stephens said. "It helps organizations understand trends, solve problems, identify opportunities and make informed decisions."

By analyzing data, business analytics allows organizations to identify issues and discover opportunities for growth. It also plays a critical role in predicting trends, such as customer behavior or market changes, so businesses can plan and adapt effectively. "Essentially, it ensures that decisions are data-driven rather than based on guesses," Stephens said.

Through these capabilities, business analytics supports efficiency, innovation and improved customer experiences, helping organizations stay competitive and responsive in a data-driven world.

What Are the 4 Types of Business Analytics?

Business analytics is categorized into four main types, each designed to help organizations understand and use their data effectively. According to Stephens, these four categories include descriptive, diagnostic, predictive and prescriptive analytics.

Descriptive Analytics

Stephens said that descriptive analytics focuses on understanding what has happened in the past through data. It organizes and summarizes historical information to identify patterns and trends. For example, a business might use descriptive analytics to track monthly revenue or monitor customer demographics over time. This type of analysis provides a clear snapshot of past performance and serves as the foundation for further analysis.

Diagnostic Analytics

Diagnostic analytics examines why something happened by exploring the causes behind specific outcomes. It compliments the other categories of analytics by uncovering the reasons behind trends, such as identifying why sales increased in one region but declined in another.

Predictive Analytics

Predictive analytics uses historical data to forecast future trends or outcomes. It helps organizations prepare for changes, whether it's shifts in customer behavior or market demands, said Stephens. For instance, companies can use predictive analytics to anticipate which products will be in demand during specific seasons, allowing them to optimize inventory and marketing efforts.

Prescriptive Analytics

Prescriptive analytics suggests actions based on the analysis, helping businesses decide the best course of action. Stephens said it guides businesses toward making informed decisions, ensuring they can respond effectively to challenges and opportunities. By providing actionable recommendations, such as optimizing pricing strategies or streamlining supply chain processes, prescriptive analytics helps organizations move from insights to implementation.

How Do You Become a Business Analyst?

Business analysts, sometimes called management analysts or management consultants, recommend ways to improve an organization's efficiency, according to the U.S. Bureau of Labor Statistics (BLS).

To become one, Stephens broke it down into three key steps:

1. Education: Earn a degree in a related field like business administration, business analytics or data science. BLS reported that some employers may prefer to hire candidates who have a master's degree, too.
   
   
2. Develop skills: Build technical skills in data analysis tools like Excel, Power BI, Tableau, SQL and Python. Develop good problem-solving and strong communication skills.
   
   
3. Gain experience: Look for internships, entry-level jobs or projects that give you hands-on experience in analyzing data and solving business problems.

What Are Some Skills You Need as a Business Analyst?

Business analysts require a unique combination of technical, analytical and interpersonal skills in their role. Stephens said they must also be able to tell the story of the data to various non-technical audiences.

Here are some of the essential skills for business analysts, according to Stephens:

• Communication and storytelling with data
• Critical thinking and problem-solving
• Data analysis and visualization
• Knowledge of business process and operations
• Proficiency in tools like SQL, Excel, Tableau, PowerBI or Python

One way you can help build these skills, is by focusing your education on business analytics. For example, at SNHU, you can earn a bachelor's in business administration with a concentration in business analytics. In this concentration, Stephens said you'll learn:

• Core business skills like marketing, finance and operations
• Data visualization tools like Tableau and Power BI
• How to gather, clean and analyze data
• How to make decisions based on data insights
• How to tell the story of data
• Statistical and predictive modeling techniques

"The ability to interpret data is becoming increasingly vital," said Stephens. "(Business analytics is) a flexible field, allowing you to combine your passion for numbers with strategic business impact."

Nicholas Patterson ’22 is a writer and alumnus of Southern New Hampshire University (SNHU), where he earned his bachelor’s degree in English and creative writing. He is currently honing his craft further as he pursues an MFA in Creative Writing from SNHU. Connect with him on LinkedIn.