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Business Analytics:
What is Business Analytics?
Textbook:
Chapter 2, Making Knowledge Work;
Chapter 3, Business Information Systems, pp 55-63
(Richardson et al., 2011)
What you will learn:
Understand the data-information-knowledge continuum
Introduction to Business Information Systems
Decision support systems
Slide 2
The Data, Information and Knowledge Continuum
Data
Data is a collection of facts, such as numbers, words, measurements,
observations or even just descriptions of things.
Information
Data that is (1) accurate and timely, (2) specific and organized for a
purpose, (3) presented within a context that gives it meaning and
relevance, and (4) can lead to an increase in understanding and decrease
in uncertainty.
(source: http://www.businessdictionary.com/definition/information.html#ixzz3TBSQ34pB)
Knowledge
Facts, information, descriptions, or skills, which is acquired through
experience or education by perceiving, discovering, or learning.
Derived from information but it is richer and more meaningful than
information.
Slide 3
Data-Information-Knowledge-Wisdom
The DIKW Continuum
What is DATA?
What is INFORMATION?
What is KNOWLEDGE?
Wisdom
Knowledge
Information
Data
Slide 4
Sample Examination Question: Data,
Information and Knowledge
Figure 1
Comparative Analysis % Sales:% Profit Contribution
45.00%
40.00%
35.00%
30.00%
15.00%
10.00%
5.00%
0.00%
BEER RTDs SPIRITS WINE
Slide 5
Sample Examination Question: Data,
Information and Knowledge
Identify examples of data, information, and knowledge that can be recognised
in the charts above (see Figure 1).
Data:
Information:
Knowledge:
Slide 6
What is an Information System?
Slide 7
What is a Decision Support System (DSS)?
Slide 8
Decision Support Systems (DSS)
Database Model Base
User Interface
User
Some DSS Examples:
Example: Home Loan Calculator-
(http://www.anz.com/aus/personal/home-loans/calculators-tools/How-much-can-I-borrow/default.asp)
Slide 9
Business Analytics
Slide 10
Business Analytics
Slide 11
Forms of Business Analytics
Business 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.
Slide 12
Analytics using Spreadsheets:
Introduction to the Excel Spreadsheet
The Spreadsheet is a powerful tool that can be employed to
analyse tables of business data, employing Business Analytics
techniques.
Slide 13
Analytics using Spreadsheets:
Formulas are made up of:
functions, numbers, cell references
(Link cells & worksheets), arithmetic
Cell Address operators
Labels
Numbers
Text
YOU WILL GET TO DESIGN AND BUILD THIS SPREADSHEET IN THE STUDIO/WORKSHOPS!!
Slide 14
Analytics using Spreadsheets:
Slide 15
Analytics using Spreadsheets:
Example: Descriptive Analytics Analysis at Hammer Wines
Sales figures for year ending June 2013
Slide 16
Analytics using Spreadsheets:
Example: Descriptive Analytics Analysis at Hammer Wines
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?
Slide 17
Some Sample Excel Functions that can be used
Slide 18
Analytics using Spreadsheets:
Example: Descriptive Analytics at Hammer Wines
Business Question: Which sales representatives achieved the
target set by management, and which were under target?
FUNCTION USED:
IF
Slide 19
Analytics using Spreadsheets:
Example: Descriptive Analytics at Hammer Wines
Business Question: How much commission did each sales
representative earn?
FUNCTION USED:
VLOOKUP
Slide 20
Analytics using Spreadsheets:
Example: Descriptive Analytics at Hammer Wines
Business Question: Which states of Australia produced the
highest/lowest sales?
FUNCTION USED:
SUMIF
Slide 21
Analytics using Spreadsheets:
Example: Descriptive Analytics at Hammer Wines
Business Question: Which products are producing the highest
revenue, and which are producing the lowest revenue?
FUNCTION USED:
SORTING (by %
Contribution to Sales)
Slide 22
Analytics using Spreadsheets:
Predictive Analytics What if Analysis
Spreadsheet support PREDICTIVE ANALYTICS
Analyse 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
Slide 23
Analytics using Spreadsheets:
Example: Predictive Analytics at Hammer Wines
Business 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?
FUNCTION USED:
PMT (use Excel Help to
research how this Excel
function works)
Slide 24
Analytics using Spreadsheets:
Example: Prescriptive Analytics at Hammer Wines
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!
Slide 25
Analytics using Spreadsheets:
Example: Prescriptive Analytics at Hammer Wines
Slide 26
Piazza Challenge
Before the next workshop, see if you can work out how you could use a tool such as
Excel for PREDICTIVE ANALYTICS
The 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?
Slide 27
Thank you
Slide 28