DESAN NAIDOO Real-time information augmented using mathematical algorithms enables companies to compare, weigh and predict various performance metrics to assess the current and future performance of the overall business or of various departments
Business analytics and the use of near real-time, detailed information generated by such systems are increasingly being used in departments other than in companies’ financial departments, improving agility across various business processes, a panel of experts say.
The use of such systems is also making broader contextual information available across separate business units, resulting in the effects of performance or costs in specific units being correlated with specific business units and overall business efficiency, notes analytics company SAS South Africa MD Desan Naidoo.
Consultancy firm Econometrix director and chief economist Azar Jamine says the importance of analytics systems is increasing as the flow of information increases. Businesses must be flexible to respond early to changes to their environments, with business analytics being able to improve the speed at which information can be accessed and contextualised for specific business units, providing concrete bases on which to premise decisions and interventions.
Clothing retailer Edcon business intelligence manager Brent Henegan says business analytics can provide granular, detailed information on the performance of various parts of the business, enabling business unit managers and the board to assess problem areas that are often not evident in aggregated business reports.
“Business analytics enables managers and directors to drill down into various pockets of the business and identify problem areas early, after which corrective action can be taken to reduce costs, increase turnover, remove suboptimal processes or improve overall profitability,” he says.
Further, business analytics rules can also be drawn up to enable companies to assess the performance of cost centres, for example, research and development divisions, that do not generate profits but are critically important elements that impact on other parts of a business’s performance and future sustainability, says North West University business analytics professor Magiel Kruger.
“Business analytics tools, which must be based on high-quality data typically used for reporting and business intelligence, are predictive, and modelling tools enable companies and even individual business units to forecast performance and profitability and, thus, base decisions on current and historical information, rather than on experience-based ‘gut-feel’ decisions.
“However, management experience is still important, and relevant and business analytics tools enable companies to assess and forecast the impact of decisions to reduce unintended consequences, as well as model many different and varied decisions, which improve the robustness of decisions,” he says.
Henegan notes that real-time business analytics tools, coupled with the more familiar business intelligence reports used in businesses, make it possible to monitor and adjust decisions as their impact on a business unfolds.
“The integration of different business departments is important because ignorance of intelligence in other departments can interrupt decision-making processes or lead to decisions being taken based on incomplete information, leading to incorrect decisions.”