What is Data Analytics? How is it Used in Business?
Data has become a household word and standard industry practice, especially over the past three decades. But humans have a long history of recording data. Early forms included tally marks on the walls of caves or stone tablets, commonly tracking inventories of food.
However, the amount and diversity of the collected data have consistently evolved and expanded. Early astrological studies and time-keeping data are also attributed to further analysis and scientific discovery. Perhaps the most remarkable growth in data collection developed in the 19th century when population data was collected for census reports.
With the computer’s creation in the mid-20th century, the rise of data collection and storage grew precipitously. Even further, computer innovations launched forward with the production of the internet in the 1990s. As the use of the internet expanded, the result has been a historically unprecedented amount of data collection, complexity, and analysis.
Businesses of all sizes now rely on some degree of data and analytics to operate. It has become a new standard to comprehend broad swaths of data and analyze these resources for business decisions.
This article examines an understanding of what constitutes data analytics and how it functions for a business.
What is data analytics?
The term data analytics broadly references the processes of collecting and assessing various sets of information. Multiple techniques can be employed to extract data and analyze patterns and trends that contribute to practical insight, inform further research, or decide on effective business strategies. Many of these techniques use intricate systems or software that can fuse automation with machine-learning algorithms and various other modalities.
Data analytics incorporates a wide diversity of methods and processes that can render it a difficult concept to define accurately. Towards that effort, a few examples of data analysis types can assist in understanding the numerous facets of data analytics.
Predictive analysis is a method of analyzing data that seeks to offer foresight about future events or outcomes. Data previously derived from past analysis is assessed and reported to provide predictions for forthcoming options. For instance, a business attempting to predict sales for the coming year will turn to data about past sales in an effort at foresight that can derive actionable decisions. Predictive analytics can also be applied to more complex predictions relating to qualified leads, risk assessment, or customer satisfaction.
Descriptive analysis has a primary focus of providing a report on events or outcomes that have previously occurred. By analyzing past data on a specific subject, descriptive analysis can portray what the data indicates. It is common to use descriptive analysis to assess key performance indicators (KPI), revenue, sales leads, and various other vital business components.
Diagnostic analysis serves to provide an answer to an essential question about why a particular scenario occurred. In other words, once descriptive analysis has been produced, a diagnostic analysis can provide insights as to the reasons for the data’s results. For instance, a business may witness sales growth in a specific demographic. Diagnostic analysis can give more awareness of how or why this growth in sales occurred, such as potential marketing efforts that produced more effective results.
Prescriptive analysis is a data analytics field that amalgamates the data from each of the three previously mentioned analysis types. By combining the collective analysis of the other three types, prescriptive analysis can provide actionable data. This is data that can be utilized to plan or implement strategies for a business.
Data Analytics for Business
Businesses may collect and analyze historical or trending data. The type of data collected depends on the intent for its use. Data may also be collected directly from customers, site visitors, or purchased from third parties. This data ranges widely in terms of content. Common interests for data often include information on customer demographics, interests, behaviors, and numerous other factors a business determines relevant.
It is essential to realize that data analytics are increasingly becoming more necessary across industries. Common associations of data analytics with marketing and internet commerce are a shortsighted mistake.
Broad diversity of businesses and industries can gain competitive advantages from data analysis insights, which is now more accessible than ever before. Companies can better understand their customer’s profiles, habits, and interests. This vital data can be used to inform decisions that maximize profits and customize user or customer experiences to increase efficiency and loyalty.
Implementing data analytics for business
A few core tenets will assist in optimizing the results a business produces from its data analysis. Figuring out what data to collect is a first step for many companies. Data can be derived from social media, GPS, and other like technology, transaction information, and various other sources.
Evaluating the accuracy and pertinence of data is also critical. Data can be collected and analyzed, but this does not guarantee its accuracy or applicability to a business’s goals or strategy. Assessing how the data was collected can be a practical first step in checking for flaws, inaccuracies, or relevance.
Finally, data should be conceptualized for actionable steps. A business’s data analytics should present the vast and obscure data sets into informational representations that are accessibly understood. These representations must then be applied to actions that can elevate chances for success. A company may want to increase security, drive traffic to its website, refine customer service, or directly build revenue.
Learning to assess and implement data analytics can require significant effort. But expertly trained and highly resourced support is available to assist with these complex and critical endeavors.
The benefits of data analytics are now widely accessible and vital to businesses of all sizes. A company or enterprise stands to reduce costs, improve productivity, increase security, and ensure critical data is available and accurately analyzed.
Implementing and maintaining data analytics tools for your business can be complicated and require support. Specialists at Network Coverage can assist in this essential and ongoing process.
For experienced advice and support on designing and implementing effective BI systems, you can explore expert technology solutions for business strategy by setting up a consultation with Network Coverage.