WHAT IS DATA ANALYTICS?

Consider how many times over the past decade that you read an article
referring to big data as “the future” or “the new oil.”

In 2021, big data is a big cliche.

To many, big data analytics is just a buzzword—or shorthand for innovative

technology that most laypeople don’t fully comprehend. Gartner dropped the
term from its hype cycle five years ago and today, big data is just another fact
of today’s business landscape. Despite all of the buzz and widespread
adoption, few businesses have realized the full potential of big data.

In this article, we’ll take things back a bit and answer the question, “what is
data analytics?” We’ll then break down the concept of big data analytics and
why, despite the hype, it remains one of the most transformative technologies.

Data Analytics Definition

Before we dig in, let’s first settle on a data analytics definition. While data
analytics is a broad category, the term is best described as the science of
analyzing raw data to extract insights.

Data analytics is typically used to provide operational insights into a business.

This process involves looking back at historical data, then pulling out lessons
learned from the past to solve the complex business problems of the present.

Historically, data analysis was conducted by humans who would manually

scan through data, looking for relevant information with a specific goal in
mind. Today, many of the techniques and processes associated with data
analytics have been automated into processes where algorithms and
mechanical processes analyze, categorize, and extract information for human
consumption.

Why is Big Data Analytics Important?

Thanks to big data analytics, organizations can now leverage their massive
data sets and use them to identify new opportunities and incoming threats
and to optimize operations.

According to the 2019 New Vantage Partners Big Data and AI Executive
Survey, AI and big data adoption are on the rise. 92% of respondents
increased spending on AI and big data initiatives, and 62% say they’ve already
seen measurable results from those investments. Additionally, nearly half of
participants believe their organization competes on data, while 31% consider
themselves “data-driven.”

Forrester’s Data Strategy & Insights 2019 Survey found that 58% of
respondents say their organization has appointed a chief data officer to lead
new initiatives as big data becomes an increasingly critical factor in driving
business value.

While big data analytics adds value in several different ways, here are a few of
the primary benefits it provides:

 Faster, smarter decision-making. Businesses can analyze large

amounts of data instantly and make informed decisions on the fly.
 Cost savings. Big data technologies allow companies to quickly identify
better ways to do business and provide a cost-effective data storage
solution.
 A deeper understanding of what customers want. Big data unlocks
insights that help companies pinpoint customer needs and gauge
satisfaction. This gives companies the information they need to
develop lasting customer relationships and offer higher-quality
products and services.

As more companies adopt Internet of Things (IoT) technologies, cloud-based

tools, and omnichannel marketing campaigns, the sheer volume of data
stands to increase exponentially.

Successful adopters have a powerful tool at their fingertips for driving profits,
making better decisions, and improving customer satisfaction—giving them a
significant edge over competitors that fail to make big data a priority.
How Does Big Data Analytics Work?
Big data is a term used to describe these huge amounts of raw, structured,
and unstructured data captured from a diverse range of sources.

Big data is typically defined as having four main characteristics known as the
“4Vs,” which break down as follows:

 Volume. References the size of the data sets that need to be analyzed,

processed, and stored (often larger than terabytes or petabytes).
 Velocity. High-velocity data is generated at a rapid pace, which can put
a strain on traditional data processing systems.
 Variety. Big data includes both structured and unstructured data from a
wide range of sources. Examples include everything from IoT sensors
to marketing metrics, application logs, and credit card swipes.
 Veracity. Veracity describes the quality of the data that’s being
analyzed. Low-veracity data offers little value and can bury high-quality
insights and take up valuable storage space.

The 4Vs underscore both the promise of big data and the challenges it
presents.

For example, in a manufacturing setting, organizations might have data from

IoT devices, production equipment, metrics from multiple SaaS tools used by
office workers, etc.

To capture accurate, real-time insights from all of those sources, that

company will need more computing power and even some support from AI to
gather and analyze data on-demand.

Organizations must be able to answer the following questions to implement a

strategy that provides real value:

 How do we store the massive volumes of data?

 How do we protect the data?
 How do we extract knowledge from the data?
 How can we ensure the data is accurate?
Big data analytics allow organizations to analyze their data from
heterogeneous sources (think sensors, social media feeds, video, application
logs, and more) to uncover patterns, correlations, and other insights
imperceptible to the human eye—often in real-time.

That said, many tools/capabilities fall under the broader category of big data
analytics, including data cleaning, storage, and management, as well as data
mining and warehousing.

The common link here is that big data must be analyzed and processed with
advanced analytics and algorithms to tackle the challenges of the 4Vs and
leverage insights toward improving products and processes.

Types of Data Analytics

There are four main types of data analytics, each of which help organizations
find answers to their questions by analyzing unstructured data and turning it
into usable information.

4 Types of Data Analytics to Drive Business Value

Each category serves a different purpose, which we’ll explain in more detail
below.

 Predictive (The “If”). Predictive analytics helps companies forecast

trends based on current circumstances by analyzing a range of co-
dependent variables to make predictions. These tools are used to
examine hypothetical situations, determine the probability of a future
event, or estimate the time for an event to happen.
 Prescriptive (The “How”). Prescriptive analytics takes predictive
analytics a step further, applying AI to big data analytics to help predict
outcomes and recommend the best course of action.
By using machine learning technology, prescriptive analytics platforms
help answer questions like “what happens if we do X?” and “what is
the best action?” without literally testing each variable. Additionally,
prescriptive analytics may even suggest new variables that may yield a
better outcome.
 Descriptive (The “What”). Descriptive analytics answers essential
questions (what, when, where, and how many) that tell users what
they’re looking at. They might be used to summarize information
about a past event, identify patterns, and interpret historical data to
inform better business strategies.
Descriptive analytics can fall into two categories: canned reports and
ad hoc reports. Canned reports are pre-designed templates that
contain information related to a specific subject. Think marketing
performance or profit and loss reports. Ad hoc reports are “custom
builds” and are useful for collecting information about a specific query.
 Diagnostic (The “Why”). Diagnostic analytics is used to examine data to
understand why something happened. These platforms often allow
users to run queries and drill-downs to get more detail from a report.
For example, if you notice that sales were down last month, you might
use a drill-down to find out that half of your reps were on vacation, and
as a result, fewer deals closed.

What is the Role of Data Analytics in Your Business?

While the buzz surrounding big data has long since passed, with the onset of
technologies like 5G, edge computing, and IoT, data analytics or, more
specifically, real-time analytics are now more critical than ever. Business
intelligence is now embedded in every device, system, and sensor, and those
without a solution for managing this massive mountain of information will get
left behind. As such, organizations need to invest in a data-driven culture that
focuses on finding answers to critical questions and the solutions that serve
up insights they can act on.

Data Science and Analytics are an essential craft in creating world-class

digital products. Learn how 3Pillar can help you succeed in the digital
economy.

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Types of data analytics

There are 4 different types of analytics. Here, we start with the simplest
one and go further to the more sophisticated types. As it happens, the
more complex an analysis is, the more value it brings.
Descriptive analytics
Descriptive analytics answers the question of what happened.  Let us bring
an example from ScienceSoft’s practice: having analyzed monthly revenue
and income per product group, and the total quantity of metal parts
produced per month, a manufacturer was able to answer a series of ‘what
happened’ questions and decide on focus product categories.

Descriptive analytics juggles 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 this reason, our
data consultants don’t recommend highly data-driven companies to settle
for descriptive analytics only, they’d rather combine it with other types of
data analytics.

Diagnostic analytics
At this stage, historical data can be measured against other data to
answer the question of why something happened. For example, you can
check ScienceSoft’s BI demo to see how a retailer can drill the sales and
gross profit down to categories to find out why they missed their net
profit target. Another flashback to our data analytics projects: in the
healthcare industry, customer segmentation coupled with several filters
applied (like diagnoses and prescribed medications) allowed identifying
the influence of medications.

Diagnostic analytics gives in-depth insights into a particular problem. At

the same time, a company should have detailed information at their
disposal, otherwise, data collection may turn out to be individual for every
issue and time-consuming.

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Predictive analytics
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.
Check ScienceSoft’s case study to get details on how advanced data
analytics allowed a leading FMCG company to predict what they could
expect after changing brand positioning.

Predictive analytics belongs to advanced analytics types and brings many

advantages like sophisticated analysis based on machine or deep learning
and proactive approach that predictions enable. However, our data
consultants state it clearly: forecasting is just an estimate, the accuracy of
which highly depends on data quality and stability of the situation, so it
requires careful treatment and continuous optimization.
Prescriptive analytics
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. An example of prescriptive analytics from our project portfolio: a
multinational company was able to identify opportunities for repeat
purchases based on customer analytics and sales history.

Prescriptive analytics 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 algorithms it’s based on. That is why,
before deciding to adopt prescriptive analytics, ScienceSoft strongly
recommends weighing the required efforts against an expected added
value.

How does a successful enterprise data analytics solution look?

Our experts explain

What types of data analytics do

companies choose?
To identify if there is a prevailing type of data analytics, let’s turn to
different surveys on the topic for the period 2016-2019.

For the 2016 Global Data and Analytics Survey: Big Decisions, more than
2,000 executives were asked to choose a category that described their
company’s decision-making process best. Further, C-suite was questioned
with what type of analytics they relied on most. The results were the
following: descriptive analytics dominated (58%) in the “Rarely data-driven
decision-making” category; diagnostic analytics topped the list (34%) in the
“Somewhat data-driven” category; predictive analytics (36%) led in the
“Highly data-driven” category.

The survey findings are in line with ScienceSoft’s hands-on experience as

they show the need for one or the other type of analytics at different
stages of a company’s development. For example, the companies that
strived for informed decision-making found descriptive analytics
insufficient and added up diagnostics analytics or even went as far as
predictive one.

For another survey, BARC’s BI Trend Monitor 2017,  2,800 executives

shared their opinion on the growing importance of advanced analytics.
The term advanced analytics was the umbrella term for predictive and
prescriptive analytics types.

According to the 2018 Advanced and Predictive Analytics Market Research,

advanced analytics was for the first time considered “critical” or “very
important” by a majority of respondents.

Within the BARC's BI Trend Monitor 2019 survey, C-suite still named

advanced analytics among the most important business intelligence
trends.

What types of data analytics does your

business need?
To define the right mix of data analytics types for your organization, we
recommend answering the following questions:

 What’s the current state of data analytics in my company?

 How deep do I need to dive into the data? Are the answers to my
problems obvious?
 How far are my current data insights from the insights I need?
The answers to these questions will help you settle on a data analytics
strategy. Ideally, the strategy should allow incrementally implementing the
analytics types, from the simplest to more advanced. The next step would
be to design the data analytics solution with the optimal technology stack,
and a detailed roadmap to implement and launch it successfully.

You may try to complete all these tasks with the efforts of an in-house
team. In this case, you’ll need to find and train highly qualified data
analytics specialists, which will most probably turn lengthy and pricey. To
maximize the ROI from implementing data analytics in your organization,
we advise you to turn to an experienced data analytics provider with a
background in your industry. A mature vendor will share the best
practices and take care of everything, from the analysis of your current
data analytics state and selection of the right mix of data analytics to
bringing the technical solution to life. If the described approach resonates
with you, our data analytics services are at your disposal.
*****************************

Data Analytics Examples: 9 Ways

Businesses Are Channeling the Power
of Data
By Ashley Brooks on 06/15/2020

From the outside looking in, technology careers can almost seem like
mystical jobs, where every employee is working on an innovative project that
will profoundly shape our future. While this can sometimes be the case, it’s
important to remember that many technology careers also have practical
applications for life and work today.

The field of data analytics is changing business best practices in industries

from manufacturing to marketing. “Data analytics technologies and
techniques are widely used in commercial industries to enable organizations
to make more informed business decisions,” says Pushpraj Kumar, business
analyst at iFour Technolab.

You know this tech career is important, but you’re still not clear on exactly
how data analytics shapes the decisions organizations make on a daily basis.
We spoke with experts to bring you nine data analytics examples in a variety
of industries. Prepare to be surprised as you see how far-reaching a career in
data analytics can be!

What is data analytics?

Before we talk about how data analytics is being used, you need to
understand what it is. Data analytics may seem complicated, but the idea
behind it is actually quite simple: It’s the process of sorting through raw data
to find meaningful patterns. Data analytics is a powerful decision-making tool
that allows business leaders to have all the information they need to move
their organization in the right direction.

“There are oceans of useless raw data around us, and it is data analytics that
closes the gap by making this data useful,” says Kirill Rebrov, cofounder
of Demografy. Data analysts use a variety of tools and technologies to
gather all sorts of data, like statistics about how much time users spend on a
website, demographic information about customers or traffic patterns in a
city.

Kumar shares that there are four main types of data analysis:

 Descriptive analytics reveal what happened in the past

 Diagnostic analytics answer why something happened
 Predictive analytics tell what will probably happen in the future
 Prescriptive analytics show what actions should be taken to make
progress or avoid problems in the future

Once that data has been gathered and organized, it’s up to data analysts to
interpret it according to the four types of data analytics. “Data can tell many
different stories. The analysis lens you use will determine the outcome,” says
Ryan Prestel, cofounder and CEO of JadeTrack.
9 Exciting examples of data analytics driving change
Businesses in every type of industry can harness the power of data analytics.
“There are entire industries most people never think about for a career that
leverage analytics skills,” says Jen Hood, analytics coach at The Career Force.
These are just some of the ways business across various industries are
putting data to work.

1. Increasing the quality of medical care

Healthcare facilities across the nation are making use of data analytics to
provide higher-quality care and improve patient outcomes. One organization
“analyzed data to predict negative health events that seniors could
experience from home care,” Kumar says. Thanks to their data analysis, they
were able to significantly reduce the number of patient hospitalizations and
ER visits.

That’s just one example. With the implementation of electronic health

records systems and an increasingly digitized healthcare system overall,
there are worlds of opportunity for data-based innovations and
advancements within the medical field.

2. Fighting climate change in local communities

Many local governments are dedicated to fighting the effects of climate

change by creating a more sustainable community. It’s a goal they couldn’t
achieve without help from data analytics. “By providing transparency to city-
wide sustainability analytics, such as water use, energy use, waste and
recycling and emissions, the entire community can do its part to improve
energy efficiency and accelerate climate action efforts,” Prestel says.

3. Revealing trends for research institutions

Organizations that conduct research using polls or surveys rely on strong

data analytics to find patterns in their results. “Data analytics is vital in
analyzing surveys, polls, public opinion, etc. For example, it helps segment
audiences by different demographic groups and analyze attitudes and trends
in each of them, producing more specific, accurate and actionable snapshots
of public opinion,” Rebrov says.

4. Stopping hackers in their tracks

Cyber security is increasingly important in our digital world. Data analytics—

sometimes called security analytics in this field—helps these professionals
protect businesses and individuals from hackers. “Data sets are gathered and
analyzed in order to create improved detection of threats and create a
proactive way of dealing with those threats,” says Will Ellis, founder
of Privacy Australia and IT security consultant.

5. Serving customers with useful products

Companies that create and sell products drill into their data to learn more
about what their customers are looking for. Data analytics gives product
developers insights into things like customers’ budgets and the features they
want to see before making a purchase. The work of data analysts influences
everything from the design of next year’s trendiest baby stroller to the
features of a new luxury sedan.

6. Driving marketing campaigns for businesses

Marketing and data analytics often go hand in hand. Marketing teams refer
to data analytics on a regular basis so they can gauge the success of their
campaigns and make changes if necessary. “Data analytics is used by
marketing teams to run targeted marketing campaigns by segmenting
audiences since segmented campaigns produce higher return on
investment,” Rebrov says.

7. Promoting smart energy usage for utility companies

Many people don’t think much about their household’s energy usage, but
utility companies are taking advantage of data analytics to change that. “For
example, energy companies are offering customers up to one-minute real-
time energy data,” Prestel says. “With the ability to track performance,
customers easily understand and manage their energy demand to save time
and money.”
8. Improving the insurance industry

Insurance companies have always relied heavily on data to make business

decisions that serve customers well. Now technology advancements in data
analytics are taking the industry even further.

“Data is already being used to help insurers set fairer and more accurate
policy premiums, identify fraudulent claims and improve their marketing
efforts,” Kumar says. He adds that some companies take this further by
offering programs like good-driver discounts that allow them to monitor
their driving habits and use the data to reduce pricing.

9. Creating manufacturer warranties that make sense

Cars, computers and everything in between come with free or paid

warranties. Many people don’t realize that manufacturing companies need to
carefully analyze the data about their products to offer these warranties.
“Most larger manufacturers have warranty departments which rely on
analysts to predict what expenses are going to be,” Hood says.

Dig into the data

These data analytics examples have shown you how much of an impact this
tech career can have on all types of organizations. You’re intrigued by the
possibilities of working in data analytics, but you still need to learn more
about daily work in this career.

Dig into even more data about this job title with our article, “What Does a
Data Analyst Do? Exploring the Day-to-Day of This Tech Career.”