Data Analytics: What It Is, How It's Used, and 4 Basic

Techniques
What Is Data Analytics?
Data analytics is the science of analyzing raw data to make conclusions about that information.
Many of the techniques and processes of data analytics have been automated into mechanical
processes and algorithms that work over raw data for human consumption.

KEY TAKEAWAYS

• Data analytics is the science of analyzing raw data to make conclusions about that
information.
• Data analytics help a business optimize its performance, perform more efficiently,
maximize profit, or make more strategically-guided decisions.
• The techniques and processes of data analytics have been automated into mechanical
processes and algorithms that work over raw data for human consumption.
• Various approaches to data analytics include looking at what happened (descriptive
analytics), why something happened (diagnostic analytics), what is going to happen
(predictive analytics), or what should be done next (prescriptive analytics).
• Data analytics relies on a variety of software tools ranging from spreadsheets, data
visualization, and reporting tools, data mining programs, or open-source languages for
the greatest data manipulation.

Understanding Data Analytics

Data analytics is a broad term that encompasses many diverse types of data analysis. Any type
of information can be subjected to data analytics techniques to get insight that can be used to
improve things. Data analytics techniques can reveal trends and metrics that would otherwise
be lost in the mass of information. This information can then be used to optimize processes to
increase the overall efficiency of a business or system.

For example, manufacturing companies often record the runtime, downtime, and work queue
for various machines and then analyze the data to better plan the workloads so the machines
operate closer to peak capacity.

Data analytics can do much more than point out bottlenecks in production. Gaming companies
use data analytics to set reward schedules for players that keep the majority of players active
in the game. Content companies use many of the same data analytics to keep you clicking,
watching, or re-organizing content to get another view or another click.

Data analytics is important because it helps businesses optimize their performances.

Implementing it into the business model means companies can help reduce costs by
identifying more efficient ways of doing business and by storing large amounts of data. A
company can also use data analytics to make better business decisions and help analyze
customer trends and satisfaction, which can lead to new—and better—products and services.

Some of the early days of modern data analytics are due to SQL. Created in 1979, this
computing language allows relational databases to be queried and resulting data sets to be
more easily analyzed.1 SQL is still widely used today.

Data Analysis Steps

The process involved in data analysis involves several different steps:
 1. The first step is to determine the data requirements or how the data is grouped. Data
may be separated by age, demographic, income, or gender. Data values may be
numerical or be divided by category.
2. The second step in data analytics is the process of collecting it. This can be done
through a variety of sources such as computers, online sources, cameras,
environmental sources, or through personnel.
3. Once the data is collected, it must be organized so it can be analyzed. This may take
place on a spreadsheet or other form of software that can take statistical data.
4. The data is then cleaned up before analysis. This means it is scrubbed and checked to
ensure there is no duplication or error, and that it is not incomplete. This step helps
correct any errors before it goes on to a data analyst to be analyzed.

Types of Data Analytics

Data analytics is broken down into four basic types.

1. Descriptive analytics: This describes what has happened over a given period of time.
Have the number of views gone up? Are sales stronger this month than last?
2. Diagnostic analytics: This focuses more on why something happened. This involves
more diverse data inputs and a bit of hypothesizing. Did the weather affect beer sales?
Did that latest marketing campaign impact sales?
3. Predictive analytics: This moves to what is likely going to happen in the near term.
What happened to sales the last time we had a hot summer? How many weather
models predict a hot summer this year?
4. Prescriptive analytics: This suggests a course of action. If the likelihood of a hot
summer is measured as an average of these five weather models is above 58%, we
should add an evening shift to the brewery and rent an additional tank to increase
output.

Data analytics underpins many quality control systems in the financial world, including the
ever-popular Six Sigma program. If you aren’t properly measuring something—whether it's
your weight or the number of defects per million in a production line—it is nearly impossible
to optimize it.

Some of the sectors that have adopted the use of data analytics include the travel and
hospitality industry, where turnarounds can be quick. This industry can collect customer data
and figure out where the problems, if any, lie and how to fix them.

Healthcare combines the use of high volumes of structured and unstructured data and uses
data analytics to make quick decisions. Similarly, the retail industry uses copious amounts of
data to meet the ever-changing demands of shoppers. The information retailers collect and
analyze can help them identify trends, recommend products, and increase profits.

As of December 2021, the average total for a data analyst in the United States was just over
$93,000.2
Data Analytics Techniques
There are several different analytical methods and techniques data analysts can use to process
data and extract information. Some of the most popular methods are listed below.

• Regression analysis entails analyzing the relationship between dependent variables to

determine how a change in one may affect the change in another.
• Factor analysis entails taking a large data set and shrinking it to a smaller data set. The
goal of this maneuver is to attempt to discover hidden trends that would otherwise
have been more difficult to see.
• Cohort analysis is the process of breaking a data set into groups of similar data, often
broken into a customer demographic. This allows data analysts and other users of data
analytics to further dive into the numbers relating to a specific subset of data.
 • Monte Carlo simulations model the probability of different outcomes happening.
Often used for risk mitigation and loss prevention, these simulations incorporate
multiple values and variables and often have greater forecasting capabilities than other
data analytics approaches.
• Time series analysis tracks data over time and solidifies the relationship between the
value of a data point and the occurrence of the data point. This data analysis technique
is usually used to spot cyclical trends or to project financial forecasts.

Data Analytics Tools

In addition to a broad range of mathematical and statistical approaches to crunching numbers,
data analytics has rapidly evolved in technological capabilities. Today, data analysts have a
broad range of software tools to help acquire data, store information, process data, and report
findings.

Data analytics has always had loose ties to spreadsheets and Microsoft Excel. Now, data
analysts also often interact with raw programming languages to transform and manipulate
databases. Open-source languages such as Python are often utilized. More specific tools for
data analytics like R can be used for statistical analysis or graphical modeling.

Data analysts also have help when reporting or communicating findings. Both Tableau and
Power BI are data visualization and analysis tools to compile information, perform data
analytics, and distribute results via dashboards and reports.

Other tools are also emerging to assist data analysts. SAS is an analytics platform that can
assist with data mining, while Apache Spark is an open-source platform useful for processing
large sets of data. Data analysts now have a broad range of technological capabilities to
further enhance the value they deliver to their company.

Why Is Data Analytics Important?

Data analytics is important because it helps businesses optimize their performances.
Implementing it into the business model means companies can help reduce costs by
identifying more efficient ways of doing business. A company can also use data analytics to
make better business decisions and help analyze customer trends and satisfaction, which can
lead to new—and better—products and services.

What Are the 4 Types of Data Analytics?

Data analytics is broken down into four basic types. Descriptive analytics describes what has
happened over a given period. Diagnostic analytics focuses more on why something happened.
Predictive analytics moves to what is likely going to happen in the near term. Finally,
prescriptive analytics suggests a course of action.

Who Is Using Data Analytics?

Data analytics has been adopted by several sectors, such as the travel and hospitality industry,
where turnarounds can be quick. This industry can collect customer data and figure out where
the problems, if any, lie and how to fix them. Healthcare is another sector that combines the
use of high volumes of structured and unstructured data and data analytics can help in making
quick decisions. Similarly, the retail industry uses copious amounts of data to meet the ever-
changing demands of shoppers.

The Bottom Line

In a world increasingly becoming reliant on information and gathering statistics, data analytics
helps individuals and organizations make sure of their data. Using a variety of tools and
techniques, a set of raw numbers can be transformed into informative, educational insights
that drive decision-making and thoughtful management.
DATA ANALYSIS & PRESENTATION
PLANNING FOR DATA ANALYSIS
Data Analysis
• The purpose
• To answer the research questions and to help determine the trends and
relationships among the variables.
Steps in Data Analysis
Before Data Collection, the researcher should accomplish the following:
• Determine the method of data analysis
• Determine how to process the data
• Consult a statistician
• Prepare dummy tables 
After Data Collection:
• Process the data
• Prepare tables and graphs
• Analyze and interpret findings
• Consult again the statistician
• Prepare for editing
• Prepare for presentation
Classification of Descriptive Analysis Kinds of Data Analysis
1. Descriptive Analysis
2. Inferential Analysis

1. Descriptive Analysis
refers to the description of the data from a particular sample;
hence the conclusion must refer only to the sample.
In other words, these summarize the data and describe sample characteristics.
Descriptive Statistics
are numerical values obtained from the sample that gives meaning to the data collected.

Big data analytics examines large amounts of data to uncover hidden patterns, correlations
and other insights. With today’s technology, it’s possible to analyze your data and get
answers from it almost immediately – an effort that’s slower and less efficient with more
traditional business intelligence solutions.

History and evolution of big data analytics

The concept of big data has been around for years; most organizations now understand that if
they capture all the data that streams into their businesses (potentially in real time), they can
apply analytics and get significant value from it. This is particularly true when using
sophisticated techniques like artificial intelligence. But even in the 1950s, decades before
anyone uttered the term “big data,” businesses were using basic analytics (essentially, numbers
in a spreadsheet that were manually examined) to uncover insights and trends.

Some of the best benefits of big data analytics are speed and efficiency. Just a few years ago,
businesses gathered information, ran analytics and unearthed information that could be used
for future decisions. Today, businesses can collect data in real time and analyze big data to
make immediate, better-informed decisions. The ability to work faster – and stay agile – gives
organizations a competitive edge they didn’t have before.
Why is big data analytics important?

Big data analytics helps organizations harness their data and use it to identify new
opportunities. That, in turn, leads to smarter business moves, more efficient operations, higher
profits and happier customers. Businesses that use big data with advanced analytics gain value
in many ways, such as:

1. Reducing cost. Big data technologies like cloud-based analytics can significantly reduce
costs when it comes to storing large amounts of data (for example, a data lake). Plus, big
data analytics helps organizations find more efficient ways of doing business.
2. Making faster, better decisions. The speed of in-memory analytics – combined with the
ability to analyze new sources of data, such as streaming data from IoT – helps
businesses analyze information immediately and make fast, informed decisions.
3. Developing and marketing new products and services. Being able to gauge customer
needs and customer satisfaction through analytics empowers businesses to give
customers what they want, when they want it. With big data analytics, more companies
have an opportunity to develop innovative new products to meet customers’ changing
needs.

Big data analytics in today’s world

Most organizations have big data. And many understand the need to harness that data and
extract value from it. But how? These resources cover the latest thinking on the intersection of
big data and analytics.

How it works and key technologies

There’s no single technology that encompasses big data analytics. Of course, there’s advanced
analytics that can be applied to big data, but in reality several types of technology work
together to help you get the most value from your information. Here are the biggest players:

Cloud computing. A subscription-based delivery model, cloud computing provides the

scalability, fast delivery and IT efficiencies required for effective big data analytics. Because it
removes many physical and financial barriers to aligning IT needs with evolving business goals,
it is appealing to organizations of all sizes.
Data management. Data needs to be high quality and well-governed before it can be reliably
analyzed. With data constantly flowing in and out of an organization, it's important to establish
repeatable processes to build and maintain standards for data quality. Once data is reliable,
organizations should establish a master data management program that gets the entire
enterprise on the same page.

Data mining. Data mining technology helps you examine large amounts of data to discover
patterns in the data – and this information can be used for further analysis to help answer
complex business questions. With data mining software, you can sift through all the chaotic and
repetitive noise in data, pinpoint what's relevant, use that information to assess likely
outcomes, and then accelerate the pace of making informed decisions.

Data storage, including the data lake and data warehouse. It's vital to be able to store vast
amounts of structured and unstructured data – so business users and data scientists can access
and use the data as needed. A data lake rapidly ingests large amounts of raw data in its native
format. It’s ideal for storing unstructured big data like social media content, images, voice and
streaming data. A data warehouse stores large amounts of structured data in a central
database. The two storage methods are complementary; many organizations use both.

Hadoop. This open-source software framework facilitates storing large amounts of data and
allows running parallel applications on commodity hardware clusters. It has become a key
technology for doing business due to the constant increase of data volumes and varieties, and
its distributed computing model processes big data fast. An additional benefit is that Hadoop's
open-source framework is free and uses commodity hardware to store and process large
quantities of data.

In-memory analytics. By analyzing data from system memory (instead of from your hard disk
drive), you can derive immediate insights from your data and act on them quickly. This
technology is able to remove data prep and analytical processing latencies to test new
scenarios and create models; it's not only an easy way for organizations to stay agile and make
better business decisions, it also enables them to run iterative and interactive analytics
scenarios.

Machine learning. Machine learning, a specific subset of AI that trains a machine how to learn,
makes it possible to quickly and automatically produce models that can analyze bigger, more
complex data and deliver faster, more accurate results – even on a very large scale. And by
building precise models, an organization has a better chance of identifying profitable
opportunities – or avoiding unknown risks.

Predictive analytics. Predictive analytics technology uses data, statistical algorithms and
machine-learning techniques to identify the likelihood of future outcomes based on historical
data. It's all about providing the best assessment of what will happen in the future, so
organizations can feel more confident that they're making the best possible business decision.
Some of the most common applications of predictive analytics include fraud detection, risk,
operations and marketing.

Text mining. With text mining technology, you can analyze text data from the web, comment
fields, books and other text-based sources to uncover insights you hadn't noticed before. Text
mining uses machine learning or natural language processing technology to comb through
documents – emails, blogs, Twitter feeds, surveys, competitive intelligence and more – to help
you analyze large amounts of information and discover new topics and term relationships.