Data by itself is just an information source. But unless one can understand it, one will not be able to use it effectively. Data analytics is a combination of processes to extract information from data-sets. The process of analytics begins with questions or business problems of stakeholders. Business problems trigger the need to analyze data and find answers. Data analytics is an iterative process involving tracing back the steps, often to ensure that you are on the right track.
Successful businesses are constantly finding new ways to streamline their operations. This meant spending months examining every single process, testing and re-testing innovative ideas, and finally implementing changes. However, this outdated mindset can sink businessmen before they gain the opportunity to make improvements.
Data analytics can improve the businesses by making data-driven business decisions, discovering new opportunities, creating a more efficient and smarter organization, and managing risk and regulatory.
James Evans defines “Analytics, is the use of data, information technology, statistical analysis, quantitative methods, and mathematical or computer-based models to help managers gain improved insight about their business operations and make better, fact-based decisions”.
Data Analytics can be categorized into four categories, namely, descriptive analytics, diagnostic analytics, predictive analytics, and prescriptive analytics.
Descriptive Analytics, is the conventional form of Business Intelligence and data analysis. It seeks to provide a depiction or “summary view” of facts and figures in an understandable format. This either inform or prepare data for further analysis. Descriptive analysis or statistics can summarize raw data and convert it into a form that can be easily understood by humans. They can describe in detail about an event that has occurred in the past.
Diagnostic Analytics is a form of advanced analytics which examines data or content to answer the question “Why did it happen?”. Diagnostic analytical tools aid an analyst to dig deeper into an issue so that they can arrive at the source of a problem.
Predictive analytics helps to forecast trends based on the current events. Predicting the probability of an event happening in future or estimating the accurate time it will happen can all be determined with the help of predictive analytical models. Many different but co-dependent variables are analysed to predict a trend in this type of analysis.
Prescriptive analytics tells what decision to make to optimize the outcome. The goal of prescriptive analytics is to enable Quality improvements, Service enhancements, Cost reductions and Increasing productivity.