Today "Analytics" has become the keyword for all digital enterprises. The buzz around Analytics is growing rapidly; to be more precise it is rather growing exponentially. So, what exactly does analytics mean? Few say analytics is all about deriving meaningful patterns from data.
Few others say it is the process of converting the data collected from the business process into meaningful information to make better business decisions. So, is analytics the process of converting data into business insights? Actually, Analytics is much more than that. Initially, there was a misconception- I would rather put it as a perceptual difference – that analytics is all about the use of statistical tools on data to obtain business insights. Analytics was purely viewed from a statistical perspective. No one can be blamed for this. In fact, no one had a clear understanding then. Over the years, the perspective has changed. Now analytics is viewed as a part of business itself. It is used to arrive at valuable business insights by using statistical tools. So, knowledge of statistics is a must for analytics. Moreover, sophisticated statistical packages make life easier for an analyst. So, Analytics is a blend of business, statistics and technology.
Components of Analytics
The reason why I state Analytics is a blend of these three components is
- The ultimate aim of doing an analysis is to derive business insights. Without understanding the business, one would never understand the actual problem. So, business/domain knowledge is a vital part of analytics.
- Once the problem is identified, one should know what technique is to be used. So, statistical knowledge is again an essential part of analytics.
- Finally, the tool to be used should be identified. One should identify the tool which would give the optimal result and for this, knowledge on technological advancements is also essential.
This is analytics. But what can analytics do? What is the purpose of using analytics? Analytics adds value to the business. Analytics has evolved over the years. Initially, it was used to monitor the business – how much is the sales, what is the percentage increase in profit etc. Then, analytics was used in recording the past data (what happened). After that, it was used to analyse why it happened. Obviously, in the next stage it was used to predict what will happen in the future – Predictive Analytics. And now analytics is used to prevent something which is likely to happen – Preventive Analytics.
Evolution of Analytics
From this it could be observed that the value which analytics adds to the business has increased significantly over the years, and so has the complexity of the process. The reason for the immense popularity of Analytics in recent past is the value addition it provides to the business. As a result, now Analytics is used in almost all industries ranging from Healthcare, Retail, Banking and Financial Services etc.