Home > Articles > Business & Management

This chapter is from the book

Business Analytics Domain

As shown in Figure 1-1, the domain of business analytics covers four major areas of study: databases and data warehouses, descriptive analytics, predictive analytics, and prescriptive analytics. Whereas data structures are used to effectively store and efficiently retrieve information, descriptive analytics can be used to report the past. Whereas predictive analytics uses past data to create models that predict the future, prescriptive analytics utilizes optimization, heuristics, or simulation models that can specify optimal solutions and prescribe the best courses of action.

Figure 1-1

Figure 1-1 Overview of business analytics

Databases and Data Warehouses

Databases and data warehouses serve as the foundation of business analytics. Every business analytics process starts by storing the data appropriately in operational databases and ensuring data integrity. The data analyst must understand the principles of database design and implementation throughout all its steps: conceptual, logical, and physical modeling. The most common design of databases is known as relational database modeling. Relational databases are distributed throughout organizations and may belong to different departments. They may be stored in different platforms and may use incompatible data formats.

Data warehouses consolidate information gathered from disparate sources and provide access of customized information to business users so they can make better decisions. It is important that data stored in disparate sources is loaded into the data warehouse in a consistent format. In addition, data warehouses combine structured, semi structured, and nonstructured data. In addition, extract-transform-load (ETL) processes can also be used to refresh and update operational databases into the warehouse target objects. Data warehouses are then available for queries through multidimensional objects such as cubes.

After the information is captured and stored in operational databases or data warehouses, the data analyst may perform online analytical processing, create business reports, visualize data, and produce operational business intelligence. Structured Query Language (SQL) is a programming language that can be used to create databases, store and update data in these databases, and retrieve information from them.

The nature of data capturing and processing has changed dramatically in the era of Big Data. Nonrelational, distributed, open-source, and horizontally scalable (abbreviated as NoSQL) databases have emerged and are used in real-time web applications.15 Whereas relational databases consist of related tables, records, and fields, NoSQL databases contain nonstructured data in the form of key-values, graphs, or documents.

Descriptive Analytics

Descriptive analytics is used to quantitatively describe the main features of organizational data. Descriptive analytics aims to summarize a sample, rather than use the data to learn about the population that the sample of data is thought to represent. Some of the common tools used in descriptive statistics include sampling, mean, mode, median, standard deviation, range, variance, stem and leaf diagram, histogram, interquartile range, quartiles, and frequency distributions. The results of descriptive statistics are often displayed via graphics/charts, tables, and summary statistics such as single numbers.

Suppose that Fandango, the leading online ticket seller for movie theaters, wants to investigate the movie preferences of its customers during the past year. Fandango sells millions of tickets to approximately 20,000 movie theaters across the United States.16 Information about customers, movie theaters, ticket sales, and show times are automatically captured and stored in structured databases. Then, periodically, this information is extracted, transformed, and loaded into data warehouses or data marts, which mostly reside in distributed servers. Fandango data scientists will then use descriptive analytics. For example, using a sample of movie titles, the analysts can investigate the correlations among total sales for different movies. Using a sample of moviegoers, they can calculate the average ticket sales for a week, the most popular movie, distribution of customers among movie genres, the busiest hours of the day in the movie theater, age distribution of moviegoers, gender distribution, and so on. This type of data analysis helps Fandango set ticket prices, offer discounts for certain movies or show times, and assign show times of the same movie in different theaters.

Predictive Analytics

Whereas descriptive statistics are considered a straightforward presentation of facts, predictive analytics uses statistical modeling to draw conclusions and predict future behavior based on the assumption that what has happened in the past will continue to happen in the future. Some of the common tools used in descriptive statistics include cluster analysis, association analysis, multiple regression, logistic regression, decision tree methods, neural networks, and text mining. Forecasting tools, such as time series and causal relationships, are also classified as predictive analytics.

How does Fandango know to send e-mails to its members with discount offers for a specific movie on a specific day? Predictive analytics tools can crunch terabytes and terabytes of data to determine that while John likes science fiction movies, he has not seen the latest sci-fi movie, which has been in the theaters since last Friday. How does a grocery store checkout system generate valuable coupons just in time and on the back of the printed receipt? Julie’s favorite whole-grain cereal was missing from the shopping basket that day. The computer matches Julie’s past cereal history to ongoing promotions in the store, and right there, on the spot, Julie receives a coupon for the whole-grain cereal that she will most likely buy.

Prescriptive Analytics

Some of the most common models used in prescriptive statistics include linear programming, sensitivity analysis, integer programming, goal programming, nonlinear programming, and simulation modeling. Practitioners use prescriptive analytics to make decisions based on data. For example, continuing with the Fandango example, the prescriptive tools allow for ticket price offerings to change every hour. Fandango has learned when the most desirable movie times are by sifting through millions and millions of show times instantaneously. This information is then used to set an optimal price at any given time, based on the supply of show times and the demand for movie tickets, thus maximizing profits.

Prescriptive analytics can help the movie industry to ensure that their pricing structures are optimally set to contribute to bottom-line results. Similarly, prescriptive analytics can help airline industries maximize their revenues by making sure that the highest prices are charged during the highest times of demand as well as by lowering the prices when the demand is low. The combination of Big Data with prescriptive tools allows the airlines to adopt pricing policies that go beyond traditional peak, off-peak, or shoulder seasons. Changes are dynamic and in real time; they can be implemented within the days of the week or even the hours of the day. Prescriptive analytics are the engine of today’s real-time business intelligence.

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.

Overview


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information


To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.

Surveys

Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.

Newsletters

If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information


Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.

Security


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.

Children


This site is not directed to children under the age of 13.

Marketing


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information


If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.

Choice/Opt-out


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information


Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents


California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure


Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.

Links


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact


Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice


We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020