Contextual Analysis – new dimension to BI

By | November 4, 2015

More and more companies have started using Business Intelligence tools to answer the question “Why” things happen the way they happen, while earlier the traditional use of a BI tool was to inform what happened, is happening or will happen in the future.

If BI tools can be used to answer the “Why” question it would very well help companies gain an understanding of why customers buy what they buy, why employees produce more/less sitting under the same environment, why stock markets fall/rise, why equipments breakdown, why the situation developed and became a crisis…

The study of “why” in any scenario is the realm of “contextual analysis”. Contextual analysis “is a method to analyze the environment in which a business operates… context analysis considers the entire environment of a business, its internal and external environment. This is an important aspect of business planning. One kind of context analysis, called SWOT analysis, allows the business to gain an insight into their strengths and weaknesses and also the opportunities and threats posed by the market within which they operate. The main goal of a context analysis, SWOT or otherwise, is to analyze the environment in order to develop a strategic plan of action for the business.” This is according to Wikipedia. The word “business” can be replaced with “environment”, “situation”, “behaviour”… to apply this definition for any area.

Now let us look at three specific examples of how inputs from contextual analysis is used in business.

Retail – to understand why customers choose products from a specific rack/aisle, why they abandon shopping carts, why increased engagement levels don’t mean increase in conversion rates, why some customers prefer coupons overs discounts… contextual analysis can explain the trend that is prevailing might be a temporary or a permannent one.

Stock market – most players in the stock market do make certain amount of prediction while making their investments on a company/scrip. This prediction is based on the understanding on why a certain board would make such a decision, to answer the question “why”, publicly available data on the board members, their voting patterns, financial data points are used in addition to external environment and public sentiment.

Energy and natural gas – Contextual analysis answers questions like why certain weather patterns lead to fall in productivity, why a piece of equipment is damaged at a certain level of operation…answering these questions can ensure workarounds or prevention to increase productivity.

To get more info on contextual analysis, suggest this article in Informationweek.



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