Business analysis is a key part of a business’s strategic planning and success. Learn more about business analysis, including the types of business analysis, what a career as a business analyst might look like, and how to get started.
As data becomes more readily available, businesses seek insights to create effective strategic plans that generate profit and growth. To maximize this insight, data professionals use business analysis to derive the most value from data sets.
Discover more about business analysis, including the types of business analysis, what a career as a business analyst might look like, and how to start a career in business analytics.
Business analysis is the process of identifying a business’s specific needs and goals, and then using gathered data sets to make recommendations that help the business meet those stated metrics. The focus of business analysis is on where a business might make changes to better address any obstacles or shortfalls preventing the stated goals from being met. Then, a professional such as a business analyst makes plans and recommendations to help increase value for stakeholders.
A defining characteristic of business analysis is that it’s not just about making high-level recommendations. It also involves designing technical and concrete action steps to make those recommendations a reality.
The four main types of business analysis each provide a unique perspective that allows data professionals to maximize the insight gained. These four categories are:
Descriptive analytics help to describe “what happened.” It’s considered the foundational type of business analytics. Descriptive analytics uses historical data to successfully identify trends and patterns that help benefit future strategies.
Diagnostic analytics builds off of the trends and patterns of descriptive analytics. It takes the “what” and tries to explain the “why.” This type of analytics finds correlations within the data sets through data mining, data discovery, and other techniques, which helps data professionals to make sharper and more accurate insights and findings.
Predictive analytics tries to understand what might happen in the future. It takes historical data and compares it to modern trends using statistical modeling, such as regression models and decision trees. Fields like marketing often use predictive analytics to form strategies, and professionals tend to consider it a more specialized type of analytics.
Prescriptive analytics takes all of the data and insights gathered by the other types of analytics and uses them to make recommendations about what a business should do next by comparing possible outcomes. Machine learning systems tend to help data professionals extrapolate prescriptive analytics. This type of analysis is in the highest demand because of its ability to direct business decisions.
Business analysis holds a lot of value for businesses because it helps facilitate actionable change, which promotes growth and increased value to the stakeholders. It’s applicable across various industries and useful for any business that wants to make data-driven decisions. Some examples of the benefits of business analysis include:
Improve business performance: Business analysis is an effective method for identifying initiatives and strategies that work best for improving performance, often resulting in increased financial gains or profit.
Increase efficiency and productivity: Analytics, particularly predictive analytics, help businesses identify areas for improvement in their processes and procedures. By creating efficient frameworks, businesses can improve performance and save money on operational costs. Business analytics are also helpful in minimizing risks.
Make more effective decisions: Businesses that use an analysis-driven decision model tend to make more effective decisions since they are better informed about what works and what doesn’t. The analysis allows a business to be more proactive in its decision-making rather than slowly responding as events occur.
Discover competitive advantage: Business analysis methods help businesses identify exactly how to stand out in a crowded field. They accomplish this through data-driven formation of accurate target audiences, effective sales strategies, and real-time feedback.
Business analysis is used within a wide range of industries. Essentially, if a business wants to use data to make informed decisions, it typically employs a business analyst. Some examples of industries that use business analysis include IT and technology companies or financial organizations.
While many data professionals might use business analysis strategies, one role almost exclusively handles business analysis: the business analyst. Business analysts are professionals who use data, analytics, and reporting to make recommendations that improve a business’s processes and increase value for stakeholders. These analysts tailor their recommendations based on their employer’s unique needs, including high-level goals such as profitability or more granular goals such as creating an effective marketing campaign.
For a business analyst to find success, it’s necessary to have a collection of well-rounded skills to help you meet expectations. Some of these skills include:
Communication: As a business analyst, you might need to be able to effectively communicate insights and recommendations to a wide range of colleagues and leadership.
Curiosity: Business analysts require continuing education as the industry adapts over time, so it’s important to enjoy learning and asking questions.
Problem-solving: A major part of the business analyst's role is to identify problems and devise effective solutions.
Critical thinking: Business analysts must identify useful information and quickly determine how best to utilize it.
Statistical skills: As a business analyst, you will likely want to have strong statistical skills to successfully complete needed analysis, such as performing a SWOT (strengths, weaknesses, opportunities, threats) analysis.
SQL: Using different programming languages, such as SQL, is key in creating effective analytics frameworks and databases.
Business analysis differs from data science in how it’s used. Data science aims to gain insight and identify patterns and trends from collected data sets. In contrast, business analysis aims to create actionable recommendations from the data’s results that meet a business’s stated metrics.
If you’re interested in a career as a business analyst, the good news is that many entry-level roles are open to those with an applicable background, offering the opportunity to train in the job and grow in your career within a company. Once you have spent several years developing in a role, you might have the opportunity to advance into higher positions, such as a senior principal business analyst or a director of business. The average annual salary of a business analyst is $83,251 [1].
A four-year degree in a subject such as business, computer science, or analytics is typically required to pursue a business analyst role. You may want to find a program that develops your data analytics, reporting, and project management skills.
Certification is a great way to develop your skills further and make yourself stand out. Consider certifications from the International Institute of Business Analysis or the International Qualification Board for Business Analysts, which offers several different types of certification based on specializations and interests.
Business analysis is an important tool that business leaders use to improve processes and promote growth. They hire business analysts who can take data and shape effective recommendations to reach these goals. Sharpen your business analysis skills and learn more about a career as a business analyst with courses on Coursera. With options such as the University of Pennsylvania’s Business Analytics Specialization, you can learn more about the basics of business analysis.
Glassdoor. “What does a Business Analyst Do?, https://www.glassdoor.com/Career/business-analyst-career_KO0,16.htm#:~:text=%2487%2C815,%C2%A0/yr.” Accessed March 26, 2024.
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