Going by the dictionary meaning of analytics, it is “the systematic computational analysis of data or statistics.” It includes understanding, computation, and analysis to provide insights of the available data. Organizations make use of analytics to describe, predict, and improve business performance with the various types of analytics such as predictive analytics, market optimization, enterprise decision management and much more. Analytics require extensive computation and in this ever-competitive age, analytics become a critical consideration. So, let’s have a look at the five essential principles for understanding analytics.
1. Identifying the problem – Recognizing a problem is the first step to quantitative analysis. Technically, this step in decision analysis is called as framing and is one of the most critical parts of the whole analysis process. At this stage, one must systematically identify and assess the problem along with considering alternate framings. It would be advantageous to seek assistance from quantitative analysts who have a good knowledge in the subject of alternate framings.
2. Working with quantitative analysts – Let’s start by saying ‘experts know it best’. While sitting for an analysis, you will have the understanding of the problem your business is facing or the problem it wants to counter. Similarly, the quantitative analyst will have the understanding of data compilation and analysis. Hence, both you and the analysts will have to be in sync with each other, where you will be responsible for making the analyst understand your business problem completely, maybe by offering an on-hand experience of the business segment in the discussion, and the analyst must responsibly engage with the issue, communicate the interpretation with you in an understandable manner, and work at the recognised problem until you are satisfied.
3. Understanding different types of data and their implications – There is much hype being created about big data these days, and the terminology gets used indiscriminately. However, there is something called as small data too, and it is very important to know the difference between these two types of data. Small data is of manageable size, having a structured form, and does not change frequently. It mostly includes internal information of your organisation like financial systems, supply chain management and the like. Whereas big data refers to a relatively unstructured and frequently changing data encompassing external aspects such as opinions of customers, social media trends, and what kind of questions are being raised to your call centre representatives. Big data is a vast subject and it requires special expertise to decipher it.
4. Understanding different types of analytics and their implications – Descriptive analytics with simple reports and dashboards ruled the analytics space for a very long time, and is of importance even now. But, increasing competition among brands and services have resulted in two new types of analytics namely, predictive and prescriptive. Predictive analytics as the name suggests uses past data to predict the future whereas prescriptive analytics create recommendations and assists employees in decision making. Yet again, automated analytics is the latest inclusion in the field of analytics where analytical decisions are made by computers.
5. Internal and external uses of analytics – Until recently, analytics were used mainly for internal decision making, but with changing times analytics are being used for creating new services and products too. And this change is not confined to digital players like Google, rather it is seeping into mainstream businesses like fertiliser companies, power generation companies, banks and the like. Thus, it is necessary to understand and explore this new change in the use of analytics.
Knowing these five principles for understanding analytics may not turn you into an expert analyst. But, it will definitely make you competitive enough to harness the potential of this emerging resource because being aware of analytics in today’s business world could prove to be very advantageous for your company’s growth and survival.