Wednesday, February 20, 2019

Simplifying Decision Making ( The Importance of Data analysis )






SIMPLIFYING DECISION MAKING

The importance of data Analysis Business analysis, to Decision making process


Hello, welcome to my first Article

In this post I will discuss some tips regarding the data analysis and it’s relation and importance to Business analysis and decision making process

Managers and stack-holders or in short decision makers always involved in making decisions from the daily routine to the corporate strategy

in business process from planing to the feedback , or from the establishment to the termination, extending or shrinking the business volume ,

Investment decisions in a dynamic environment where political and economic variants have impact in a direct or indirect way,

while decision makers often get sudden with those two factors without prior knowledge either these decisions are positive or negative, or in other words , either the political and economic decisions have positive impact which represents opportunity, or negative impact which represents a threat

So , for those two factors , no thing to do or we can’t change them or we have no time to change our situation to avoid the negative impact or to take the advantage of the opportunities.

Nothing rather than forecasting., but there are other factors have impact also on our decisions, mainly

      - The product or service we provide ,

      - Other’s products or services ( competitors ) ,

      - The products or services we get in the market, for example suppliers and transportation service providers

      - The products or services we provide and other relevant products or substitute products that consumer can replace our’s with , for example ( Rice and Spaghetti, Chicken and fish ,..) and many other factors have impact on our business.

      We will not go deeper in the managerial process of the decision making, but we will focus on the data, and how we can make use of it to support the decision making

In big size corporations with professional marketing departments and top experienced executives that acts like consultants, or consulting offices that produce or publish forecasting reports outlines the market circumstances which helps to make decisions ,

When it comes to data, reports and other sources of information that we use to make or build our decisions, which called BUSINESS INTELLIGENCE , it may figure a question in our minds that do we need to hire detectives to collect information about he market and other competitors , and the answer is NO.

Big corporations depends on their IT system to collect and analyze data of the daily information ( sales, Employees pay role , Expenses,.. and so on) for example Amazon.com collects a very big amount of data of sales and consumer interests

So starting with what in our hands is the best source of information, and also is the most trusted source of information.

This for the big size business, what about medium or small size business, if those two sizes of business don’t have IT system, then they should have ( Build or buy one ) it became cheaper, easy to use and easy to install due to the development in IT Market, , also medium or small size business are not in a need to to buy expensive data base enterprise edition, since the volume of the data is not very big, community edition, or other type with free license will be suitable,

It’s not logical that a company with revenue of few millions of dollars will buy a Sybase database, or design a Cluster data center to manage their business, but MYSQL , Microsoft Sql server will be suitable or they can use the cloud service according to their budget.

The goal is to have your data in hand.

A well designed system will give better information output that will cut the time of the data analysis process to approximately 60 % to 70%.

Collecting publications from the internet such as market reports and statistical reports , News letter, reade organizations websites, other governmental trade organizations publications will be good information source, text reports can be analyzed to extract information and summarized in a structured format for better analysis and then shared to the decision makers.

Building or creating surveys and perform a sentiment analysis will help to explore more information about customer satisfaction , employees satisfaction,…. Or to learn more about your customer / consumer behavior which will lead to a decision that will be translated to more sales and more customer satisfaction ., your social media page can be a good source of information through analyzing visitors comments.

Measure the relationship between two or more factors that have impact on your business will drive to better decisions 

Now we will back to the data collection of the daily routine and the overall business process.

Prediction and Business analysis

Coulombs Lines Company provides a transportation service of goods through ocean, it has only one boat ( Ship) and they provide the transportation service of goods from port X to port Y,

The distance between port X to port Y is short and the Captain always navigate it safely and in short time

As the Coulomb's Customers expanding their business, They want the company to deliver the goods to port Z which is longer distance and the captain never sailed in this area in the ocean, the captain now has a challenge of a lot of unknown factors, The captain started to plan for the trip to the new port which requires him to collect more information / Data.

Collecting data statrs with asking questions

- Which area we will sail in?

- What is the distance to reach the new port?

those two questions are easy to answer

The area and the distance data can be collected through maps which are available, but other questions appeared

- what about boat (ship) capability to navigate to the port Z ?

- what is our budget for the trip?

- in which conditions we will sail?

 Of course the captain collected some data again about his ship capabilities and the budget, he makes use of the data available in his hand and known to him such as

- The maximum load of the ship

- How many Crews on Board

- The feul consumption rate

- The food he needs for himself and for the crews per day

 and many other information

he has all the information required to answer the questions relevant to his ship / crews / budget ,….

which we call the Internal environment of the business

and he succeeded to answer these questions only because he was keeping records of the daily routine

on the ship that was sailing from x to Y with different speed / crews/ and condition

the speed and conditions data are kept along the past trips gave him the ability to design a model to predict the cost of fuel that he needs to to navigate to the new port

and the crew records data gave him the ability to predict their salaries, the food they need for the longer distance, he had data about the crews of different experience, efficiency , ages , and capabilities

But he still analyzing the internal environment and about the past known area he was sailing in and his prediction is not accurate for the new distance specially this distance is anew area and por Z is in another country

Now our Captain and the owner are facing a challenge that their customers of the transportation service to the port Z and want to know the Lead time to deliver the goods.

Back to our Captain , he only answered the questions about his internal environment only

and he ignored the third question about the conditions ( the weather ) he will sail in.

 the results gave him inaccurate decisions which is not satisfactory for him neither for his customers

He needs analysis about the external environment which in his case:

- The weather conditions in the new area

- The port entrance fees in the new country

- The currency exchange rate of the new country

after answering the above question , our captain was able to answer the following questions:

- How many Crews he needs on board to accomplish the trip

- how much do their salaries cost?

- How much food and fuel he needs?

 Going to the external environment analysis requres also collection of data , Our captain started to collect data about the weather conditions in this area in a certain time of the year.
Weather forecasting

Although Captains and Crews has a nautical experience to forecast the weather for the coming couple of days through visual observations of the atmosphere or through the weather factors observation tools installed on the ship to measure ( temperature, Humidity, Pressure, Wind speed,...) , they can forecast if it will rain, if strong wind will raise,….

Their forecasting is limited to the coming couple of days , which is not enough for planning for a trip for a month in the ocean, they depends on the weather forecasting data the comes from the land stations,

Land Stations have weather observation devices and records of the current weather factors as above ( Temperature, Humidity, air pressure , wind peed and direction , ) they record that approximately every hour and submit it to the central database which has records for the hourly weather observations of the past years , and here comes the rule of Data Science to use these observations a statistical data set and analyze them using predictive models to forecast the coming days weather , and provide the results to the different ports and those concerned. Such as Captains, Pilots, TV’s ,websites, and so on.

After studying the weather conditions and forecasting, the Captain found that the navigation course should be changed and to use another course ( Way ) to avoid a strong wind that raise in this area in this time of the year, which will change the previously calculated Distance to the Port Z

He also collected the data of the port Z entrance fees,

The Currency Exchange rate is also not stable or changeable , and laso is a subject of prediction to avoid the risk of loss

After all these questions have been answered , Our captain found that he needs more crews than previously calculated , which means more salaries and food, more fuel for the longer distance his budget has increased for the rip, but this time his prediction and calculations is accurate, and as a result he made a decision to reduce the weight of the ship load to reduce the fuel 

The external environment had an impact on the internal environment, and vise versa

The weather , currency, exchange rate, distance, vessel load, Crew efficiency , Salaries, Time and ….etc represents either strength or a weakness,

The customer’s expansion of their business to the new port, new country was opportunity

the time to provide the shipping service in an unknown weather, currency exchange, the safe navigation course ( the way ) was a threat.

BY data collection process and designing a predictive models to predict the unknown information the captain accomplished the transportation business to the new port, and by collecting more information and data analysis the company developed new customers and expanded their business the deliver goods to more ports in different countries

BUSINESS ANALYSIS PROCESS starts with asking questions regarding Strengths, weaknesses, Opportunities and Threats , Each should be analyzed on the base of exteranal and internal environments of the business, this is managerially called SWOT technique , while there are other techniques to analyze the business , all of them consists of a group of questions built on top of each other, every question require to answer one or several questions or generate a group of questions to be answered , and to answer these questions data analysis, prediction ( forecasting ) is a must.

 So keeping records of every process, decision is a must also, thus with no data, no analysis and decisions will not be suitable.

In a business environment, big amount of data requires IT systems to record and retrieve and analyze these data and predict the required information or forecast the future conditions to either take advantages of opportunities or to avoid the risk.

So when designing t system for your business, you need to consider some tips to be built in your system, for example

try to be more or even more specific when collecting data, you can even say that you will collect data about how many cups of coffee your employees consume per day.

Your Database must has validation rules to validate the data at the entry process, rather than going through data transformation or estimating the missing values or exclude rows from your data when getting analysed.

Design your table to categorize your data as much as possible,

for example, when entering the country name or department name in their fields, it’s better to make

Countries or departments values Comes from a list of value instead of let your employees entering them themselves , which will create multiple categories of the same category and then needs to be manipulated before staring the analysis.

Consider you data format is validated ( int for numbers , String for text, Date for dates , and so on )

and avoid null values

Add more fields ( columns ) when describing a product or specifying a case, for example,

when describing imported order of fruit, you can add the size of the fruit seed it self ( the radius of an orange or an apple) , or the geographical region or skin color of a patient in a hospital, these extra descriptions ( variable or features ) will give you better results when predicting the price of an apple price or to predict the probability of readmission of the patient .

 you can design an application with built in analysis functionalities, but it will give you a limited capabilities and will return only the primary analysis results. Or you will need to implement all the analytical methodologies within your application, and also this will limit the capability to play with these methodologies to analyze the data since your methods implementations will be statically deployed in your application.

You will be in a need for the specialized applications to analyze the data to use the analytical methodologies in an efficient way .

Your data base is not the only source of data, It’s only for the internal environment for your business

there are the public market reports (researches ) a text analysis can extract in formation from these reports and transform the information into a structured data , then linked to your database to perform more analysis and explore more information and answer your business analysis questions.

For big data, when analyzing it, you should consider DATA VISUALIZATION, , Data visualization gives a great summery and capability to compare date for better and overall analysis that answer your questions

Data analysis is a prat of the business analysis process to support decision making, it can be used in decision making of the overall business, or partially to solve a problem in performing a partial task of the business, or used to figure the business strategies .

In the coming posts we will analyze some data according to the available public data sets and explore some use cases. and implement different analysis technique that are suitable to the case.

Wish that was helpful in exploring some functionality of the data analysis and it’s relationship with Business analysis and decision making

A copy of this article is available Here

Thank you

Hammam Samir

Cairo, Egypt

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