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Writer's pictureRosmina Joy Cabauatan

Types of Business Analytics According to Purpose

Business analytics is the utilization of organizational data to provide fact-based timely, accurate, and actionable decisions. It is a term that refers to tools that are used to provide decision-makers the ability to conduct analysis, and the capacity to gain an accurate and deep intuitive understanding of information. It also refers to the methodologies that are used to transform data into useful knowledge that aids data-driven actions.


Among the significant benefits of business analytics include:

  1. Improvement of the decision-making process

  2. Improvement of organization's competitiveness

  3. Alignment of resources to strategies

  4. Speed up the process of decision making

  5. Increase revenues

In whatever way it benefits organizations, business analytics may also challenge organizations due to the following:

  1. Data quality

  2. Data integration from multiple sources

  3. Lack of skills in applying the analytical tools

  4. Delayed delivery of relevant information

  5. Integration of business analytics in operational applications

Business analytics are categorized according to the following purposes:

  1. Descriptive Analytics

  2. Predictive Analytics

  3. Prescriptive Analytics


Descriptive Analytics


Descriptive analytics or sometimes referred to as exploratory data analysis is a type of business analytics where statistical tools are applied to describe the initial characteristics of data. It is also used to provide a summary of the properties of data. The output can be presented in the form of visualizations and served as an initial basis for decision-making. The output tells what has happened and why and what is happening at the moment.


Visualization can also be classified according to purposes, such as comparison, composition, distribution, and relationship.




Predictive Analytics


Predictive analytics or sometimes referred to as data mining applies methods to extract patterns and trends from historical data. The output tells what is likely to happen in the future based on interestingness measures.


The algorithms used for predictive analytics are classified as supervised and unsupervised. The figure below shows the distinctions of the algorithms.


Prescriptive Analytics


Prescriptive analytics or sometimes referred to as Operations Research is an application of business analytics that recommends the optimal solution to a problem based on constraints. The output tells what might have happened and the best solution based on what-if cases.


Operations research is a scientific approach to decision-making that seeks to best design and operate a system. It uses mathematical models in providing guidelines for making effective decisions within the state of current information or in seeking further information if current knowledge is insufficient to reach a proper decision.


Mathematical modelling is the process of translating a problem into a mathematical problem. An optimization solver is used to implement the process.






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