Summary
Every part of decision requires human participation. The successes or failures result from the type of decisions that humans make. Economic decisions are often not consistent. They are also intransitive. People have to think about the kind of inputs that would provide guaranteed results. Whichever strategic tools that may be available for use; the human decisions vary from good to bad, depending on the results they achieve. Failure mostly comes from bad decisions while success may arise from right choices or luck.
Business Intelligence is critical to business practices. It allows the use of technology to support decision making. The collection of information and its practical use improves business performance. It has value propositions that comprise of revenue enhancement, competitive advantage, reduction of the operations cost, and increased enterprise value. Therefore, it gathers information on customer intelligence, competitive intelligence, and market intelligence.
Apart from analyzing the current status of the business, it also showcases the journey that is to be taken to be where it should be. It is the business analytics that assists a business to move from the current status to the desired goal. It involved people, processes, available technology, and insight. Others include the business, decisions and the actions to take. They all originate from the extensive use of data. Business analytics helps in the application of logic and mental processes to find meaning in data.
Both the business analytics and the business intelligence are critical to the organization. The information helps to maintain business performance while the analytics propel the business towards change and growth. Business analytics has now become essential for firms that want to move from good to better performance. It requires focused leadership, the best technology, employee empowerment, and insight.
Main Body
Making decisions that are imperative to the success of an organization starts with the right approach to planning. The contemporary society has kept on developing different means of achieving progress. Currently, there are data principles and steps of ensuring that the processes determine an achievable goal.
Planning deals with large volumes of evidence. Analytics comprises of four parts that if taken seriously could lead to organizational growth. The first part is the descriptive analytics. It deals with the past and how the organization has fared since then. The historical information delves into what occurred and why it occurred (Putler & Krider 2012). The use of inferential statistics helps to draw conclusions about populations based on the presented samples. It gives the general view about given populations. Statistics allow the organization of collected information and summarization of the same for analysis. The presentation of such reports can be through graphical or numerical data. The important aspect of such reports is that they draw conclusions about business activities.
For such analysis to be correct, the report focuses on various variables. They may be customer care concerns, economic stability, attitudes in the organizations or business transactions. They vary with the kind of report that is critical to decision making. The variables can fall into quantitative or qualitative categories. Qualitative ones deal with variables from a set of well-identifiable categories while quantitative ones deal with numerical representations. The variables could be discrete or continuous. The observations on these variables could be univariate, bivariate or multivariate (Rudis & Jacobs 2013).
Recent discoveries show that economic decisions are variable and hence require variable or perceptual decisions. The suboptimal context-dependence choices are unique in decision making (Summerfield & Tsetsos 2015). They allow the use of the general computational framework that studies the findings across the two domains.
Data presentation is essential for weighing the success of the survey. The techniques for presenting data can be graphical. The graphs can be categorical or quantitative. Another method relies on numbers. Reviews are also important in establishing the kind of population that benefit from the development. The types of sampling vary depending on the study. Systematic sampling, cluster sampling and convenience sampling are some of the choices to make. Experiments also help the planners to analyze the projects.
The analytics cover some steps to reach the proximity of the plans. It starts from the descriptive analytics that looks at what happened and why it happened (Rudis & Jacobs 2013). Predictive analytics helps to establish what will happen next and how it will happen. Prescriptive analytics goes further to shape the future of the organization. It is the moment when the planners can put details into what will happen when it happens and why. Recently, exploratory analytics became part of the system. It helps to focus on the customer analytics through the development of the social media and bid data analytics.
While the descriptive analytics is a historical view of the organization and its business activities, inferences act as complements to this idea. But the assumptions rely on samples of the population. They help to understand the summaries and provide conclusions about the population (Rudis & Jacobs 2013). The findings may be generalized to paint a summary. It uses probabilities to find the aims of plans. Inferences use probability because it generalizes results from a sample and measures the reliability. Probability measures the likelihood of an event happening or not happening. When an event has a high probability of occurring then its probability is high (Kudyba 2014).
It can be 1 or close to it. If the event has a small likelihood of occurring, then it has 0 probabilities of occurring or close to 0. The methods for determining probabilities frequently lead to inferences. It begins with the probability theory of sampling, and then inferential techniques.
The sample space of probability experiment is the collection of all possible outcomes. The collection of results from a probability experiment is the event. All the outcomes must add up to 1. Whatever has a low probability of occurring is the unusual event. Its percentage is usually not more than 5% (Rudis & Jacobs 2013). When using probability to determine the suitability of a project, three methods are useful. They include the empirical, classical and subjective methods.
The practical approach can be crucial for finding the most successful or popular product. The conventional method assumes that all outcomes can happen, and should be knowledgeable in advance. Examples include throwing a dice and the brand that sells fast. The subjective method relies on personal judgment. It does not require an experiment. An example is when financial experts give their views on the likelihood of a recession or market growth.
Right or wrong decisions arise from such information. When the leadership analyses the data, the decisions become meaningful to the organization. Behavioral scientists are still carrying out studies on what determines good behavior (Summerfield & Tsetsos 2015). The probabilities contribute to quantifying the uncertainties about the state of nature, products, and performance. Probabilities can also add to building a consensus.
Hypothesis testing is important in determining whether there is enough statistical evidence supporting a particular belief. It qualifies or disqualifies the assumption that is in place at the time of the study with quantifiable evidence. Sometimes there is no need for statistics to test a given hypothesis (Summerfield & Tsetsos 2015). For instance, in a criminal court, it is the plaintiff or the jury who have the burden of proof. They have to present evidence.
Apart from probabilities, other inferential methods are useful depending on the prevailing circumstances and the population to measure. Therefore, there are many methods for validating or measuring the company’s background. They also help to determine the future. Business Performance Management refers to the assessment of processes towards achieving the already determined goals. If well utilized, it leads to the improvement of business performance.
While BPM applies to all types of organizations, Corporate Performance Management only favors the industry and the consultants (Rudis & Jacobs 2013). The Enterprise Performance Management is mainly for the vendors. BPM bridges the gap between strategy and execution through improvement plans. It helps to link communication, collaboration, control, and coordination amongst the executives and the workers. BPM also leads to inward focus to provide insight into the needed plans for growth. It also points to the problems in the operation section. Some market opportunities are also identifiable through BPM. It also leads to the reduction of operational costs in the long run.
For BPM to succeed, it requires the organization to strategize, plan, monitor and analyze its business prospects. It should also take corrective action. The summary of them all is to formulate business strategy and to modify and execute that plan.
Strategy planning requires several tasks. One should carry out a current situation analysis, scan the environment, and create a strategic vision. The plan should indicate where the organization wants to be in the long term. A majority of the organizations fail to accomplish their vision. Some of the gaps arise because of failure in communication, resource mobilization and allocation, lack of focus, and no proper planning of rewards and incentives. The plan must involve the operational aspects, translation, and definition of goals, and be setting the time frame for operations (Kudyba 2014).
The way to get to the desired future is through thorough financial planning and budgeting. But sometimes humans make irrational economic decisions. The volatile economic situations sometimes lead people to estimate costs, prices, income with the wrong perception. For instance, when demand for housing or land goes up, people would still bid for them at increased prices without asking questions. The same items could have been selling at lower prices just a few days ago (Summerfield & Tsetsos 2015).
Sometimes an organization may have to change its strategy for survival benefit. It can be through product orientation, new markets entry, new customers or business, and processes are streamlining. In doing this, the organization may also experience failure. The traditional Business Activity Monitoring needs to focus on improvement of the business. Business Intelligence provides the IT infrastructure and applications to implement the BPM. BPM has the process that supports the BI.
There is also need to measure performance. If BPM bridges the gap between strategy and execution, then it provides a continuous evaluation towards the attainment of goals. The measures should include the past, present and any future projects. They should also balance the needs of all stakeholders. They should also base their finding on research and not just opinion. The Balanced Scorecard uses the financial and non-financial measures. It has four perspectives that include financial, customer, internal business processes, and learning and growth. Automation is required to ensure the implementation of the BSC. The Six Sigma is also another statistical method to measures progress. It has two methodologies each with five phases (Leleur 2012).
The first method that helps improve the existing processes has the Define, Measure, Analyze, Improve, and Control. The second methodology creates new product or process designs. The improvement section deals with management and its steps towards recovery. The revenue segment deals with the sales and distribution, the service and growth. Operational execution, purchasing, and supply management belong to the cost section. Innovation deals with technology and employees. The Six Sigma promotes motivation of the leader, manager’s improvement and innovation by employees. It also links Business Performance Index to the expected profitability. The Critical Success Factors touch on the Organization, technicality, and the related methodology.
The organization can also use the Total Quality Management principles. TQM helps organizations seek to improve the product quality and service through continuous improvements. There also has to be an ongoing feedback. It is also a philosophy for organizational quality. It requires that everyone is involved in the process of improving the organizational context.
The TQM measures internal actions and is developed by experts in departments. The Six Sigma deals with strategic measurements and procedures prepared by the top executives and leadership. The TQM deals with the product, while the Six Sigma measures financial and customer satisfaction artifacts. The TQM does not have the complete view of the financial record. The Six Sigma deals with predicted and actual financial figures. TQM may be a once in a while session (Leleur 2012). The Six Sigma is a continuous process.
The Lean Manufacturing cuts on production costs and aims at reducing product costs by preventing waste (Putler & Krider 2012). It also monitors all the company activities that the firm must perform so as to deliver the product to the customer. The Balanced Scorecard is strategy oriented. The BSC is a tool that is used worldwide by organizations with the aim of improving their efficiency. It also measures the Key Performance Indicator.
For organizations to succeed, they must embrace planning. Strategic tools are essential for pointing the leadership in the right direction (Summerfield & Tsetsos 2015). However, without analyzing the past, the organization may not realize the challenges that affect growth. Business analytics puts emphasize on the steps taken to move an organization from the level of complacency to maturity through data mining.
It is the expectation of the management to use the available means to catapult the firm towards success. Lean management and TQM become the critical mechanisms for internal management of resources. Various studies have indicated that decision-making ability affects the human body. The psychoanalytic study, cognitive studies, and the electroencephalography activity have proved this. The environmental statistics also affect perceptual decisions.
References
Kudyba, S 2014, Big data, mining, and analytics, CRC Press, Boca Raton, FL.
Leleur, S 2012, Complex strategic choices, Springer, London, UK.
Putler, D & Krider, R 2012, Customer and business analytics, CRC Press, Boca Raton, FL.
Rudis, B & Jacobs, J 2013, Security using data analysis, visualization, and dashboards Wiley, Hoboken, NJ.
Summerfield, C & Tsetsos, K 2015, ‘Do humans make good decisions?’, Trends in Cognitive Sciences, vol. 19, no. 1, pp. 27-34.