Attracted by above-average salaries and a favorable job market, many interested in joining the data economy are eager to become business analysts. While the upsides are clear — an average salary of $79,770 and 11% to 23% headcount growth over the next decade fieldwide, according to data provided by Salary.com and the US Bureau of Labor Statistics, respectively — one crucial question often remains: what does a business analyst do?
The simplicity of this question is deceptive: not only can the job responsibilities of a business analyst vary with their particular capacity and industry, but companies employ the job title inconsistently. A business analyst at one company, in other words, might very well be a data analyst at another. That said, as you’re researching a future as a business analyst, there are commonalities in the basic duties, skill set, and tools that can be instructive. In this article, we’ll uncover these and demonstrate how they feature in a real-world job description for a business analyst.
At the end, we’ll also suggest some ways to learn more if you’re interested in pursuing this career path.
What is a business analyst?
Different business analysts have different focuses, but ultimately they are all concerned with the same thing: employing data analytics to generate insights that support business needs by helping a business increase revenues, decrease costs, expand its position in a market or move into an entirely new one.
Within the broader category of business analyst, however, there are several different specializations. A business process analyst, for example, focuses on deploying analytics to find ways to streamline business operations. Management analysts, sometimes known as management consultants, can also focus on economizing operations, but might also work on a number of other initiatives such as making recommendations for growth opportunities or other ways to increase revenues. A market research analyst focuses on employing analytics to develop intelligence on consumers and markets to inform business and product decisions. A business intelligence analyst also produces new intelligence to inform business decisions, but the intelligence isn’t limited to consumer behavior and markets: they can also produce dashboards and reports on business performance, among other things.
While many online publishers consider computer systems analyst another business analyst role, a system analyst focuses primarily on designing and implementing information technology systems within businesses. As we’ll see in the next section, business analysts do need an IT skill set, but differ from computer systems analysts in their focus on employing these IT skills for data analytics.
What skills are needed to work as a business analyst?
To drive value for their employers and clients, business analysts must possess a skill set made up of skills in programming and information technology, analytics, data visualization, and business, along with several crucial soft skills.
Computer science: programming and information technology
Business analysts must be able to efficiently manage and analyze data, which means having advanced skills in Excel for spreadsheeting and Structured Query Language (SQL) for database querying. Additionally a business analyst, especially a senior business analyst, might need to possess the ability to program in Python or R programming language if they are working with machine learning.
Business analysts must utilize data analysis techniques from all four of the common areas of data analytics: descriptive analytics, diagnostic analytics, prescriptive analytics, and predictive analytics. (We’ll dive deeper into what each of these entails below.) As part of the analytics process, business analysts must also be skilled in methods of data collection (including data mining), data cleaning and preparation, and data storage.
To communicate their findings effectively to multiple stakeholders — regardless of the respective background of each particular stakeholder — business analysts must be able to transform their findings into compelling visualizations using software like Tableau and matplotlib.
Business acumen and industry expertise
It’s also crucial for a business analyst to have business acumen and industry expertise, both to communicate effectively with stakeholders and effectively design and execute analytics initiatives. For more senior roles, many companies will prefer candidates to have some experience in their particular industry.
While candidates for business analytics roles will be expected to have the above hard skills, soft skills are what will set the best business analysts apart, especially later in their careers when they gain more responsibilities and leadership. To succeed, skills like communication, project management, teamwork, and critical thinking are especially critical.
We’ve now gotten an overview of a business analyst’s broader purpose and the skills one needs to succeed. In the next sections, we’ll dive into what roles the different kinds of data analytics employed by business analysts serve and what the typical days of two different business analysts might look like.
What are the four core types of business analytics and how do they differ?
At the core of a business analyst’s activities are four core types of analytics: descriptive analytics, diagnostic analytics, predictive analytics, and prescriptive analytics. Here’s how they differ:
Descriptive analytics focuses on determining what has happened in the past, usually by analyzing single data sets using more elementary tools like Excel and SQL to identify historical trends. A business analyst working in manufacturing might employ descriptive analytics in order to quantify operating efficiency in a past quarter or fiscal year through the number of units produced.
Diagnostic analytics focuses on determining why certain past events have occurred, usually by analyzing several data sets through analytical techniques like regression, which allows trends to be identified between a dependent variable and one or more independent variables. Continuing our manufacturing example, a business analyst would employ diagnostic analytics not to identify a historical trend in efficiency, but to attempt to determine what might have impacted efficiency rates in the past.
Predictive analytics focuses on determining what events might happen in the future, either by developing projections based on methods like regression or through advanced statistical modeling or machine learning. If our business analyst determined that a factory’s efficiency depended on factors like daylight hours, availability and price of certain raw materials, and weather, they might develop a model to project efficiency rates going forward.
Prescriptive analytics focuses on determining — and perhaps even automating — the best future course of action, frequently through the use of machine learning. A business analyst working in manufacturing who identified a drop in efficiency when machines were off-line for unexpected maintenance might help devise a prescriptive model that would recommend or automate regular maintenance to avoid any surprise shut-downs.
If you’re interested in learning more about the kinds of analytics performed by business analysts, see our long-form article “What is Business Analytics?” For now, we’ll move on to giving context to these kinds of analytics by exploring what a typical day looks like for a business analyst — crucial information if you’re considering this career path.
What does the day-to-day of a business analyst look like?
To get a better understanding of a typical day of a business analyst, we’ll look at the responsibilities listed in two contrasting job descriptions, one for a business analyst role embedded on the Creator Business Analysis team at Spotify and one for a consultant business analyst role at Hatch.