W2 What is Business Analytics-updated

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Business Computing 1 Business Analytics: What is Business Analytics? Textbook: Chapter 2, Making Knowledge Work; Chapter 3, Business Information Systems, pp 55-63 (Richardson et al., 2011)

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Transcript of W2 What is Business Analytics-updated

  • Business Computing 1Business Analytics: What is Business Analytics?Textbook: Chapter 2, Making Knowledge Work; Chapter 3, Business Information Systems, pp 55-63(Richardson et al., 2011)

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  • Slide *What you will learn:Understand the data-information-knowledge continuumIntroduction to Business Information Systems Decision support systemsIntroduction to Business Analytics Descriptive Analytics Predictive Analytics Prescriptive AnalyticsAnalytics using Spreadsheets

  • The Data, Information and Knowledge Continuum DataFacts and figures without any real context or meaning.

    InformationData that has been made meaningful and helps someone understand something.KnowledgeInformation that has been incorporated into someones view of the world.

    Explaining Big Datahttp://www.youtube.com/watch?v=7D1CQ_LOizA

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  • Data-Information-Knowledge-Wisdom The DIKW ContinuumApplicationUsageStructure ContextUnderstandingImpactDataInformationKnowledgeWisdomWhat is DATA? What is INFORMATION? What is KNOWLEDGE?

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  • Sample Examination Question: Data, Information and KnowledgeSlide *Figure 1

  • Identify examples of data, information, and knowledge that can be recognised in the charts above (see Figure 1). Slide *Sample Examination Question: Data, Information and Knowledge

    Data:Information:

    Knowledge:

  • Slide *What is an Information System?Systems that use information technology to capture data and transmit, store, retrieve, manipulate, and/or display information (Beech & Chardwick, 2005)

  • What is a Decision Support System (DSS)?A DSS is a type of Information System that includes a model based set of procedures for processing data, to support judgments that must be made when making decisions (What-IF ?)CharacteristicsA DSS incorporates both data and models Designed to ASSIST managers to take decisionsRelevant to Semi-structured tasks

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  • Slide *User InterfaceModel BaseDecision Support Systems (DSS)Some DSS Examples:

    Example: Home Loan Calculator-(http://www.anz.com/aus/personal/home-loans/calculators-tools/How-much-can-I-borrow/default.asp)

    Example: Car Loan Repayments- (http://www.gemoney.com.au/en/calculators_tools/car_loan_repayment_calculator.html)

  • Business Analyticsrefer to the application of various technologies to enable analytical processing, data mining, performance management, and reporting, so supporting better business decision-making

    We will look at how such systems can be built using Spreadsheets.In your Workshops you will learn more of this as you design and build a spreadsheet system for Hammer Wines.

    Business Analytics: Drive smarter decisionshttp://www.youtube.com/watch?v=pu3dKKzGOVU

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  • Business AnalyticsWhy is Business Analytics important?

    To see how smarter analytics, and the insights derived from it, lets various industries and businesses spot new opportunities, and uncover hidden connections, watch the following video.

    http://www.youtube.com/watch?v=HbHTvqZE3D8

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  • Forms of Business AnalyticsBusiness Analytics takes three forms:Descriptive Analytics: The use of data to understand past and current business performance and so make informed decisions.Predictive Analytics: Analysis of past performance in an effort to predict the future by examining historical data, detecting patterns or relationships in these data (i.e. creating a model), and then extrapolating these relationships forward in time. Prescriptive Analytics: Using a model where the output of the model can be optimised (maximised) by adjusting the input alternatives, so prescribing what the best decision is.

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  • Analytics using Spreadsheets:Introduction to the Excel SpreadsheetSlide *The Spreadsheet is a powerful tool that can be employed to analyse tables of business data, employing Business Analytics techniques.

    Spreadsheets are widely used in business They allow employees to manipulate data, and develop and solve models that support business data analysisThey support powerful commercial add-insThey provide many means for visualising data and communicating the results of analysisThey are widely used to support decision making in areas such as marketing, finance, and business operations

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  • Formulas are made up of: functions, numbers, cell references (Link cells & worksheets), arithmetic operatorsLabelsNumbersCell AddressTextSlide *YOU WILL GET TO DESIGN AND BUILD THIS SPREADSHEET IN THE STUDIO/WORKSHOPS!!Analytics using Spreadsheets:

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  • Analytics using Spreadsheets:

    Example: Descriptive Analytics Analysis at Hammer WinesThe Problem SituationMarilyn and Colin Hammer at Hammer Wines have questions about:The performance of their sales staffThe states of Australia that are most profitable and those that are notThe products that are generating revenue and those that are not

    What data do they have?Sales figures for the year ending June 2013 (see next slide)

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  • Analytics using Spreadsheets:Example: Descriptive Analytics Analysis at Hammer WinesSales figures for year ending June 2013

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  • Analytics using Spreadsheets:Example: Descriptive Analytics Analysis at Hammer WinesSome of the questions that could be answered, using DESCRIPTIVE analytics, based upon these figures:The performance of sales staff: Which sales representatives achieved the target set by management, and which were under target? How much commission did each sales representative earn?The states of Australia that are most profitable and those that are not: Which states of Australia produced the highest/lowest sales?The products that are generating revenue and those that are not: Which product is achieving the highest sales? Which product is achieving the lowest sales?

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  • Some Sample Excel Functions that can be usedSUM (range) finds the sum of values in a range of cellsIF (condition, value if true, value if false) a logical function that return one value if the condition is true and another if the condition is falseVLOOKUP (lookup-value, table_array, col_index_num) looks up a value in the left-most column of a table and returns a value in the same row for a column you specify. The table must be sorted in an ascending order.AVERAGE (range) finds the average of the values in a range of cellsMAX (range) finds the largest value in a range of cellsMIN (range) finds the smallest value in a range of cellsCOUNTIF (range) finds the number of cells within a range that meets a specified criterionSUMIF(range, criteria, sum_range) - sums the values in a range (sum_range) where the values in an associated range (range) meet a criteria (criteria) that has been specified.

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  • Analytics using Spreadsheets:Example: Descriptive Analytics at Hammer WinesBusiness Question: Which sales representatives achieved the target set by management, and which were under target?Slide *FUNCTION USED:IF

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  • Analytics using Spreadsheets:Example: Descriptive Analytics at Hammer WinesBusiness Question: How much commission did each sales representative earn?

    Slide *FUNCTION USED:VLOOKUP

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  • Analytics using Spreadsheets:Example: Descriptive Analytics at Hammer WinesBusiness Question: Which states of Australia produced the highest/lowest sales?

    Slide *FUNCTION USED:SUMIF

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  • Analytics using Spreadsheets:Example: Descriptive Analytics at Hammer WinesBusiness Question: Which products are producing the highest revenue, and which are producing the lowest revenue?

    Slide *FUNCTION USED:SORTING (by % Contribution to Sales)

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  • Analytics using Spreadsheets:Predictive Analytics What if AnalysisSpreadsheets support PREDICTIVE ANALYTICSAnalyse past performance to predict the future by examining historical data, detecting patterns or relationships in these data, and then extrapolating these relationships forward in time

    This is sometimes called What if Analysis. We ask, based upon past performance, what if a particular scenario takes place how will our business be affected? For example:What if demand for our products continues to grow as it has in the past?What if suppliers prices go up by 5%?What if

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  • Analytics using Spreadsheets:Example: Predictive Analytics at Hammer WinesBusiness Question: Suppose that Hammer Wines plans to expand and will take a bank loan. They will assume that for a loan of $500,000, they will make fortnightly repayments, over 10 years, and that during that time the Banks interest rate will be constant at 6.3% p.a.How much should the accountants set aside for each repayment?

    Slide *FUNCTION USED:PMT (use Excel Help to research how this Excel function works)

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  • Analytics using Spreadsheets:Example: Prescriptive Analytics at Hammer WinesBusiness Question: How well do you understand the idea of using a PREDICTIVE/PRESCRIPTIVE model for Business Analytics and how Excel can support this? Suppose that, instead of the circumstances shown on the previous slide, Hammer Wines management said that, instead of locking the loan to 10 years, they were willing to make it longer, but that the maximum amount they could repay each fortnight was $2000.

    So they want to work backwards. They know the required output ($2000 repayment per fortnight) , and they want to use a model to tell them what the input must be to achieve this result. They want the Information System to PRESCRIBE what they must do now!

    Excel includes the ability to do this It is called GOAL SEEK

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  • Analytics using Spreadsheets:Example: Prescriptive Analytics at Hammer WinesSlide *EXCEL Feature used:GOAL SEEK: set the required final value and work backwards, to prescribe what the input must be in order to achieve that final value

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  • Slide *Piazza ChallengeBefore the next workshop, see if you can work out how you could use a tool such as Excel for PREDICTIVE ANALYTICSThe Scenario: Suppose that you are in charge of the online sales of products at Hammer Wines, and you need to predict how online sales might grow in future years. You ask the question: What if the Internet continues to grow as in the past, how many Internet users there will be in 2015, who could potentially visit our companys site?Available Data: You have these figures showing the past growth in Internet users:

    BEFORE THE NEXT Workshop Using some form of information technology (e.g. Excel), how many Internet users would you estimate there will be by December 2015?

    DateNumber of Internet UsersDecember 199516 millionDecember 2000361 millionDecember 20051018 millionDecember 20102260 millionJune 20122405 millionDecember 2015????

  • Thank you

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