What is data analytics?
Data analytics is the process of analysing raw data in order to draw out
meaningful, actionable insights.
It includes a range of tools, technologies, and processes used to find trends and
solve problems by using data.
Data analytics can shape business processes, improve decision-making, and foster
business growth.
Data analytics helps us to make sense of the past and to predict future trends and
behaviours; rather than basing our decisions and strategies on guesswork, we’re
making informed choices based on what the data is telling us.
Furnished with the insights drawn from the data, businesses, and organizations are
able to develop a much deeper understanding of their audience, their industry, and
their company as a whole—and, as a result, are much better equipped to make
decisions and plan ahead.
Data Science and Data Analytics are
Different
Data science and data analytics are both incredibly important fields in the
modern world. Both deal with the use of data to help make decisions and
solve problems.
Data analytics and data science are two areas that are often confused with
each other. The biggest difference between these two fields is their goals.
Data analytics focuses more on analysing an existing dataset, whereas
data science focuses on creating new models to generate the best
outcomes possible.
What are the different types of data
analysis?
The four main types of data analysis are:
descriptive, diagnostic, predictive, and prescriptive.
Descriptive analytics
What happened?
Descriptive analytics alters raw data from multiple data sources to give
valuable insights into the past. However, these findings simply signal that
something is wrong or right, without explaining why?
For example, Data analysts are working with an e-commerce marketing
team to review sales data to identify the sales trends and patterns, you
will see an increase or decrease in sales from last year, specifically in
what region and by what percentage.
Common examples of Descriptive analytics are company reports that
provide historical reviews like:
● Data Queries
● Reports
● Descriptive Statistics
● Data dashboard
Diagnostic analytics
Why did something happen?
Like descriptive analytics, diagnostic analytics also focuses on the past.
However, these types of analyses look for cause and effect to
illustrate why something happened. The objective is to compare past
occurrences to determine causes. Diagnostic analytics can guide by
helping to:
● Identify outliers
● Isolate patterns
● Uncover relationships
Back to our marketing example, now that you are aware that there is a
drop in sales, you can identify the reason why there a sudden drop in
sales? This may need additional examination for that might need to look
at additional data points like website traffic, marketing budgets, product
inventory availability and make a correlation to uncover relationships.
Using more complex analytics, analysts may employ probability theory,
regression analysis, or time series to isolate cause and effect
relationships.
Common techniques used for Diagnostic Analytics are:
● Data discovery
● Data mining
● Correlations
Predictive analytics
What is LIKELY to happen?
Predictive analytics tells what is likely to happen. It uses the
findings of descriptive and diagnostic analytics to detect clusters
and exceptions and to predict future trends, which makes it a
valuable tool for forecasting. It brings many advantages like
sophisticated analysis based on machine learning or deep learning
and a proactive approach that predictions enable.
It is important to keep in mind, however, that no analytics will be able to
tell you exactly what WILL happen in the future. Predictive analytics put
in perspective what MIGHT happen, providing respective probabilities of
likelihoods given the variables that are being looked at.
Now that we know the reason for the drop in sales. Predictive
analytics helps to find what would be the expected sale in the next
month, quarter, or year, etc. The goal is to determine a trend,
correlation, causation, or probability for the next purchase.
Techniques that are used for predictive analytics are:
● Linear Regression
● Time Series Analysis and Forecasting
● Data Mining
Basic Cornerstones of Predictive Analytics
● Predictive modeling
● Decision Analysis and optimization
● Transaction profiling
Prescriptive analytics
What action should be taken?
The purpose of prescriptive analytics is to literally prescribe what
action to take to eliminate a future problem or take full advantage of
a promising trend. It uses advanced tools and technologies, like
machine learning, business rules, and algorithms, which makes it
sophisticated to implement and manage. Besides, this
state-of-the-art type of data analytics requires not only historical
internal data but also external information due to the nature of the
algorithms it’s based on.
As part of prescriptive analytics, if sales are falling then you can
make timely decisions such as to cut prices, market more, or
discontinue the product. If an item is selling off the shelves, you can
be sure to stock inventory accurately across channels.
