explain how information technology supports decision-making through business analytics.

The growing field of business analytics focuses on discovering and communicating patterns in data

Data collection

Data is collected from a range of external and internal sources, including business transactions, customer and employee surveys, competitor and industry analysis, macro-economic statistics and financial performance.

Supported by powerful IT

provides storage and retrieval functions.

even more important development is the ability to analyse that data.

Understanding and interpreting data is also critical in providing support for choosing strategic paths or projects in a company.

Patterns in data are identified through statistical modelling and algorithms.

These models also incorporate probability analysis to evaluate the likelihood of certain events taking place, as well as the most likely outcomes of those events. This is where business analytics—supported by IT—can be used to evaluate new strategic options. . #

Examples of applied analytics range from supporting decisions about the best marketing mix of products to making strategic acquisitions of competitors. Analytics can also help to determine strategic fit and select the best strategic option for the organisation, ensuring that qualitative assessments are supported and validated by quantitative analysis

One of the most difficult parts of the strategic plan is to estimate future macro changes in industry and the labour force in order to prioritise where current prevention-focused initiatives should be resourced.

Business analytics helps to identify and analyse these variables in a more accurate manner.

Analytics can also help with specific decisions such as whether to attempt an acquisition of a competitor and, if so, the price that should be offered.

While this still occurs, companies use analytics of external and internal data to find out more about their competitors.

merger: Such business analytics should lead to more effective negotiation and to better integration if the acquisition is approved and implemented.

Risk assessment using business analytics

In addition, business analytics can provide organisations with quantitative risk assessments that help to determine:

the likelihood or consequence of a given risk event; and

the likely outcome of a given risk treatment strategy.

As noted earlier, business analytics that harness the power of IT can be used to determine strategic fit and evaluate strategic options.

Business analytics can be used to assess risk in strategic options:

Analyse external and internal data to discover patterns: e.g. in business transactions, customer surveys, competitor analysis, and macroeconomic statistics

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Identify patterns in data
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Assess probability of certain ‘risk events’ and their likely outcome (impact) if this occurs.

Evaluating the strategic options and determining the strategic fit

There are several approaches for evaluating which options are the most appropriate and will have the greatest impact and result in the organization fulfilling its vision and mission. The following are some approaches to evaluate strategic options and fit:
• Value/effort assessment tool;
• Weighted criteria evaluation tool;
• Evaluation using business analytics; and
• Risk assessment, and ‘what-if’ analysis