Advantages and Disadvantages of Business Analytics

Three businessman working and discussing business together in a meeting

Before we learn about the advantages and disadvantages of Business Analytics, the concept of Business Analytics has to be understood at a general level.

In this digital era, Business Analytics has gained immense popularity and has emerged as one of the most important analytical tools for most organizations. It is used across the industry at various levels and has become essential for the Company’s success. It analyzes past business data to identify the patterns and trends it followed earlier. The organization incorporates these patterns in their business plan.  Accordingly, they optimize future business processes and predict the anticipated increase in sales and profits.

These data insights are also used to understand about the product that has performed well in the industry and the factors that have affected the product’s performance. The respective tools that are used for Business Analytics are –


This is an easy tool to implement. In this tool, the Business Analytics team presents the data in the form of maps, charts and other visual models. So it helps the users to perform an in-depth analysis to forecast the corresponding patterns.

Micro strategy  

This tool considers several business research methodologies.  Additional sources for data retrieval are taken up for analysis.  The users can distribute the generated analysed reports from one device to another.


This tool is one of the most widely used business analytics tools in the industry.  In comparison to the above two tools, this is the most advanced tool that uses artificial intelligence and machine learning in its analysis.  This tool can also convert the unorganized and unstructured data into meaningful insights. 

The most optimal solutions arrived from this analysis help many companies to bring about an improvement in their patterns and also to achieve their intended goals.

However, in the last few years, industry experts have noticed some advantages and disadvantages of Business Analytics tools.


Below are the advantages of Business Analytics that have led to its popularity in the industry –

1)     Helps to make superior business decisions

a)      With the organization’s ultimate goal in mind, the business analyst conducts a detailed analysis of the past trends. The findings of the analysis help the organization to make better business decisions that are data-driven and not based on any intuition. However, before arriving at the final decision, the Organization properly weighs the advantages and disadvantages of Business Analytics.

b)     Business Analytics considers the past data of the organization, the current market trends and the current performance of the product to predict its future trends.  Accordingly, they design their business strategies.

2)     Helps to keep track of performance and progress

a)      Business Analytics helps in monitoring the consistent progress that the Organization has made over a period of time.  It also assists in knowing the performance of a product or a strategy at any given time in the market.  

b)     The findings of the Business Analytics report enable the Organization to know whether their strategies are working well in the market as per expectations.  So, in case they observe a deviation, the organization reviews the findings. If needed, they implement revised decisions and methodologies to improve the strategy.

c)      After the Business Analyst evaluates the quantified values and data in the Business Analytics process, the team communicates the results of this analysis to the employees. This allows the respective employees to identify their weak areas and enables them to work in such areas and enhance their productivity.

d)     Though there are advantages and disadvantages of Business Analytics, it serves as a good mechanism to keep proper track of organizational performance, behavior and progress.

3)     Improvement in customer satisfaction

The ultimate aim of any business is to keep its customers happy. Only that can bring success to an organization.  Business Analytics has the potential to identify the company’s customer base.  It understands the customer’s growing needs and behaviors and designs their strategies accordingly. It is the availability of statistical tools and models that enables the company to understand the customer experience.

4)     Reduction in Risks

a)      In spite of the advantages and disadvantages of Business Analytics, it has an innate ability to mitigate risks.  The analysis helps in identification of any past errors made by the organization. In addition, it also assists in understanding the root cause of the error.

b)     Once the error is known, the management can conduct further analysis to check whether there is any probability of its reoccurrence in future.  If it carries similar risks, the Organization can take adequate measures to prevent its reoccurrence.

5)     Cost Savings

By making use of the various Business Analytics tools and techniques, the Business Analyst re-visits the existing process from which the areas of cost savings might come into view. So the Organization can take various steps to reduce its operational costs to enhance the organization’s revenue.

6)     Increased Efficiency

Business Analytics enables businesses to strengthen their existing process and helps in allocating their resources in an efficient manner.  It also helps in reducing wastage and maximizing productivity. In addition, it improves teamwork by giving chances to the employees to share their own knowledge and insights that can make a contribution to the process of decision-making.


While studying the advantages and disadvantages of Business Analytics, the experts could also observe some disadvantages in it.

1)     Poor quality data

The entire process of Business Analytics depends on the availability of clean, structured data and also the quality of that data.  Sometimes the data is insufficient, unstructured, poorly constructed or highly complicated and that can act as a hindrance in the Business Analytics process.

At times, the organization has so much data that it becomes difficult to know how much of it is accurate and accessible.

2)     Low commitment level

For some organizations, the process of Business Analytics can prove to be costly and time-consuming. It can offer solutions but the amount of time and money involved in it can make people disinterested in continuing it further.  Its complex model requires a high dedication and the expected Return on Investment does not appear immediately. Sometimes the morale of the employees declines by looking at the advantages and disadvantages of Business Analytics. So this low commitment level can lead to a complete business failure.

3)     Data Privacy Concerns

In this digital age, Information Security has become a motto for all corporates.  To make better business decisions, companies have to collect customer data for its analysis.  But in this process, there is always a possibility of a breach of the customer’s privacy. 

There have been instances when sensitive and valuable customer data was leaked to a third party.

So it becomes essential for all organizations to collect only the vital information which is required for Business Analytics.  This would help in maintaining the confidentiality and the security of the collected data.

4)     Lack of proper Communication

Many times, the Business Analyst shares the results of the analysis only with the Senior Management.  In some companies, the flow of the communication channel is poor and data does not reach the proper team. If it is not communicated with the lower level employees, they cannot prepare the data in the expected manner and the process loses its efficiency.

Below are the recommended blogs for readers who wish to gain additional knowledge about Business Analytics –

Business Analytics Course offered by Henry Harvin

Keeping in mind the importance and the growth potential of Business Analytics in the Indian market, Henry Harvin Education also offers the Business Analytics Course for students and professionals.


The advantages and disadvantages of Business Analytics have not kept organizations away from this tool and it is rapidly growing among organizations. One of the reasons lies in the fact that the advantages outweigh the disadvantages.  This technique has brought sufficient benefits to organizations.  Hence, it would be advisable for businesses to understand Business Analytics thoroughly and put its principles into proper use.


Q 1)  What are the 4 types of Business Analytics?

1) Descriptive Analysis
2) Diagnostic Analysis
3) Predictive Analysis
4) Prescriptive Analysis

Q 2) What are the 4 pillars of Business Analytics?

1) Collecting data
2) Processing the collected information
3) Presentation of data
4) Acting on the Findings

Q 3) What is the main aim of Business Analytics?

The main aim of Business Analytics is to make a prediction of future sales and revenue by analyzing the past data and trends.

Q 4) If there are advantages and disadvantages of Business Analytics, why do organizations use it as a tool for business decisions?

All the organizations are well aware of the advantages and disadvantages of Business Analytics.  However, since the advantages outweigh the disadvantages, the organizations have adopted its principles to meet their business goals.

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