Overview of Data Analytics
In today’s digital age, data is all around us, and it is often said that data is the new currency. But what exactly is data analytics and how does it play an important role in our lives? Imagine it as a powerful tool that helps us unlock valuable insights hidden within the vast sea of data that surrounds us.
In its simplest form, data analytics involves looking at data to find answers to specific questions. Businesses use data analytics to help them figure out how to optimize their productivity, processes, performance, and profits.
“Data analytics involves preparing, cleansing, analyzing, and presenting data — it could be big data, streaming data, little/high variety data, etc. — in a way that answers the ‘big’ or ‘key’ questions asked by business stakeholders,” says Chris Mattmann, chief technology and innovation officer at NASA Jet Propulsion Laboratory and an adjunct research professor who teaches data science and big data at the University of Southern California.
So, what is big data analytics? The key difference is that data analytics primarily involves structured (quantitative) data, while big data analytics may use raw and unstructured (qualitative) data. This makes big data both larger and more complex to analyze.
History of Data Analytics
Data Analytics In 1962 John Tukey wrote a paper titled “The Future Of Data Analysis”, where he brought into question the relationship between statistics and analysis.
Data Analytics in 1970 -Edgar F. Codd presents his framework for relational databases.
Data Analytics In 1989-Howard Dresner at Gartner proposed the term “Business Intelligence.”
Data Analytics In 1990s-Data Mining was born following the success of the concept of data warehouses introduced by William H. Inman.
Data Analytics In 1991-Tim Bernes Lee set out the specifications for a worldwide, interconnected web of data accessible to anyone across the world, now the internet.
Data Analytics In 2004-A whitepaper on MapReduce from Google inspires open source software projects like Apache Hadoop and Apache Cassandra to deal with huge volumes of data through distributed computing.
Data Analytics In 2008-Jeff Hammerbacher and DJ Patil, then at Facebook and LinkedIn coined the term “data scientist” to describe their work and it then became a buzzword.
Data Analytics In 2013-IBM shows statistics that 90% of the world’s data was created in the preceding 2 years!
Why is Data Analysis Important?
Reduce Operational Costs:
- Data analysis shows you which areas in your business need more resources and money, and which areas are not producing and thus should be scaled back or eliminated outright.
You Will Know Your Target Customers Better:
- Data analysis tracks how well your products and campaigns are performing within your target demographic.
- Through data analysis, your business can get a better idea of your target audience’s spending habits, disposable income, and most likely areas of interest.
Better Problem-Solving Methods
- Informed decisions are more likely to be successful decisions. Data provides businesses with information. You can see where this progression is leading.
- Data analysis helps businesses make the right choices and avoid costly pitfalls.
Types of Data Analysis
Diagnostic Analysis –
- Diagnostic analysis answers the question, “Why did this happen?” Using insights gained from statistical analysis (more on that later!), analysts use diagnostic analysis to identify patterns in data.
- Ideally, the analysts find similar patterns that existed in the past, and consequently, use those solutions to resolve the present challenges.
- Descriptive analysis is the numerical way to get insights into the data. In the descriptive analysis, we get a summarized value of the numerical variables. Suppose you are analyzing the sales data of a car manufacturer.
- In the literature of descriptive analysis, you will seek questions like what is the mean, mode of the selling price of a car type, what was the revenue incurred by selling a particular type of car, etc.
- We can get the central tendency and the dispersion of the numerical variables of the data using this type of analysis.
- In most practical data science use cases, a descriptive analysis will help you to get high-level information on the data and get used to the data set. Important terminologies of the descriptive analysis are:
- Mean (average of all numbers in a list of numbers)
- Mode (most frequent number in a list of numbers)
- Median (middle value of a list of numbers)
- Standard deviation (amount of variation of a set of values from the mean value)
- Variance (square of standard deviation)
- Inter Quartile Range (values between 25 and 75 percentile of a list of numbers)
Predictive Analysis –
- Predictive analysis answers the question, “What is most likely to happen?” By using patterns found in older data as well as current events, analysts predict future events.
- While there’s no such thing as 100 percent accurate forecasting, the odds improve if the analysts have plenty of detailed information and the discipline to research it thoroughly.
Prescriptive Analysis –
- Mix all the insights gained from the other data analysis types, and you have prescriptive analysis.
- Sometimes, an issue can’t be solved solely with one analysis type, and instead requires multiple insights.
Statistical Analysis –
- Statistical analysis answers the question, “What happened?” This analysis covers data collection, analysis, modeling, interpretation, and presentation using dashboards.
Qualitative Data Analysis –
The qualitative data analysis method derives data via words, symbols, pictures, and observations. This method doesn’t use statistics. The most common qualitative methods include:
- Content Analysis, for analyzing behavioral and verbal data.
- Narrative Analysis, for working with data culled from interviews, diaries, and surveys.
- Quantitative Data Analysis: Statistical data analysis methods collect raw data and process it into numerical data. Quantitative analysis methods include:
- Hypothesis Testing is for assessing the truth of a given hypothesis or theory for a data set or demographic.
- Mean, or average determines a subject’s overall trend by dividing the sum of a list of numbers by the number of items on the list.
Applications of Data Analysis
Business Intelligence –
Data analytics is used to gain insights into business operations, customer behavior, and market trends. This information is used to make informed decisions about product development, marketing strategies, and resource allocation.
Data analytics is used to improve patient outcomes by analyzing medical data to identify patterns and trends. This information is used to develop personalized treatment plans, predict disease outbreaks, and optimize healthcare resource allocation.
Data analytics is used to detect fraud, manage risk, and forecast market trends. This information is used to make informed investment decisions and manage financial portfolios.
Data analytics is used to analyze customer behavior and preferences to develop targeted marketing campaigns. This information is used to optimize marketing strategies, increase customer engagement, and improve customer retention.
Data analytics is used to improve efficiency and reduce costs by analyzing production data to identify bottlenecks and inefficiencies. This information is used to optimize production processes and reduce waste.
Data analytics is used to analyze player performance and team statistics to gain a competitive advantage. This information is used to develop game strategies, recruit players, and make informed draft picks.
Social Media and Content Recommendations –
Recommender Systems: Suggesting products, movies, or content based on user preferences and behavior.
Sentiment Analysis: Analyzing public sentiment toward products or brands.
Everything You Should Know About A Career in Data Analytics
The world runs on technology, but it also runs on data. Data analysis is the key to making the right decisions in business and in life.
You use it to prove that with the right amount of nutrition, exercise, and commitment, you can reach your health goals. Amazon uses it to recommend products you’ll actually use. Google uses it to help you get to the office on time.
Since user information is all around us, it’s an ideal time to become a Data Analyst.
When we pay attention to the data, we’re able to make sound decisions that solve problems and enhance positive growth. Below, you can learn exactly what a Data Analyst does, and what the career trajectory looks like so you can decide if it’s right for you.
Advantages and Disadvantages of Data Analytics
Advantages of Data Analytics
- Cost Reduction: Data analysis can help identify inefficiencies and cost-saving opportunities, reducing operational costs and increasing profitability.
- Improved Customer Satisfaction: By analyzing customer data, organizations can identify trends and preferences and tailor their products and services to better meet customer needs, improving overall customer satisfaction.
- Improved Efficiency: By analyzing data, organizations can identify areas for improvement and optimize processes to improve efficiency and productivity.
- Data-Driven Decision-Making: Data analysis provides a basis for data-driven decision-making, helping organizations make informed decisions that are based on empirical evidence.
- Competitive Advantage: Data analysis can provide a competitive advantage by identifying trends and patterns that may not be immediately visible, enabling organizations to stay ahead of the curve.
Disadvantages of Data Analytics
- Limited Creativity: Data analysis can be limited in terms of creativity, as the focus is on data-driven decision-making rather than innovation and ideation.
- Time and Resource Intensive: Data analysis can be time and resource-intensive, requiring large amounts of data and specialized tools and software.
- Privacy Concerns: Data analysis may raise privacy concerns, particularly when sensitive personal information is being analyzed. Organizations need to be mindful of privacy regulations and ensure that they are handling data responsibly.
- Technical Expertise: Data analysis is a highly technical field, and professionals need to have a strong foundation in math, statistics, and programming to be successful.
- Data Quality Issues: Poor data quality can pose a significant challenge for data analysis, as inaccurate or incomplete data can lead to flawed analysis and incorrect conclusions.
Becoming a Data Analyst
To venture into data analytics, start with a solid foundation. Learn the basics of data collection, data cleaning, and basic statistical concepts. Familiarize yourself with tools like Python or R, as well as data visualization software.
Then, apply your knowledge through practical projects and continuous learning to become a skilled data analyst.
Career Roles in Data Analytics
Data Analyst: Data analysts are often the first step in the data analysis journey. They collect, clean, and analyze data to provide actionable insights. Their work aids decision-making, whether it’s optimizing business operations or improving customer experiences.
Business Analyst: Business analysts bridge the gap between data and business strategy. They work closely with stakeholders to identify business needs and translate them into data-driven solutions. They often play a key role in setting the direction of the company.
Data Scientist: Data scientists take data analysis to the next level. They use advanced statistical techniques, machine learning, and programming skills to develop predictive models and uncover complex insights. They are known for solving challenging problems and making predictions about future trends.
Machine Learning Engineer: If you are interested in artificial intelligence and machine learning, this role may be for you. Machine learning engineers create and deploy machine learning models that can make decisions and predictions autonomously. They work on applications such as recommendation systems, image recognition, and natural language processing.
Data Engineer: Data engineers are responsible for the architecture and infrastructure that makes data analytics possible. They design, build, and maintain data pipelines, databases, and storage systems. They ensure that data is accessible, accurate, and available for analysis.
Quantitative Analyst (Quant): Quants work primarily in finance and use data analytics to model financial instruments, assess risks, and make investment decisions. They use advanced mathematics and data analysis to inform trading strategies.
How to make a career in data analytics
Education: Start by getting a strong educational foundation. Many professionals in this field have degrees in fields such as computer science, statistics, mathematics, or data science.
Skill development: Brush up on your analytical skills, learn programming languages like Python or R, and become proficient in data visualization tools. Practical experience and hands-on projects are invaluable.
Certification: Consider obtaining certification in data analytics or related fields. Certifications can help demonstrate your expertise to potential employers.
Networking: Join data analytics communities, attend industry events, and connect with professionals in the field. Networking can lead to valuable opportunities and insights.
Continuous Learning: Data analytics is constantly evolving. Stay updated with the latest tools, technologies, and industry trends to stay competitive in your career.
The Power of Data Visualization
Data visualization is an integral part of data analytics. Visual representations of data make complex information more accessible and understandable.
Tools like charts, graphs, and dashboards can help convey your findings and insights effectively to others, whether they’re colleagues, clients, or stakeholders.
- What is data analysis? Answer: Data analysis is the process of inspecting, cleaning, transforming, and interpreting data to discover useful information, draw conclusions, and support decision-making.
- What are the steps in data analysis? Answer: The typical steps in data analysis include data collection, data cleaning, data exploration, data transformation, statistical analysis, data visualization, and drawing conclusions or making predictions.
- What is the difference between descriptive and inferential data analysis? Answer: Descriptive analysis summarizes and describes data, providing insights into patterns and trends. Inferential analysis, on the other hand, uses data to make inferences or predictions about a larger population based on a sample.
- What tools are commonly used for data analysis? Answer: Common data analysis tools include programming languages like Python and R, spreadsheet software like Excel, data visualization tools like Tableau, and statistical software like SPSS.
- What is the importance of data visualization in data analysis? Answer: Data visualization helps in presenting complex data in a visual format, making it easier to understand and interpret. It can reveal patterns, trends, and insights that might be difficult to discern from raw data.
The Data Analytics Process
Data analytics is a structured process that involves several steps. Here’s a simplified breakdown:
1. Define the Problem –
Begin by identifying the problem or question you want to address with data analytics. This step is crucial as it sets the direction for your analysis.
2. Data Collection –
Gather the data required to tackle the problem. The data can come from various sources, such as databases, spreadsheets, sensors, or external data feeds.
3. Data Cleaning and Preparation –
Raw data is often messy and may require cleaning, transformation, and structuring to make it suitable for analysis. This step involves dealing with missing values, outliers, and inconsistencies.
4. Exploratory Data Analysis (EDA) –
EDA involves exploring the data through summary statistics, visualizations, and data mining techniques. It’s a crucial step to understand the data and identify patterns.
5. Modeling and Analysis –
This is where the magic happens. Data analysts use various techniques to analyze the data. For example, they may employ regression analysis for prediction, clustering for segmentation, or decision trees for classification.
6. Validation and Testing –
It’s essential to assess the quality and validity of your analysis. Validation techniques help ensure that your findings are reliable and not simply due to chance.
7. Deployment –
Once you’ve derived valuable insights from your analysis, it’s time to put them to use. Implement the recommendations, strategies, or changes suggested by the analysis.
8. Monitoring and Iteration –
Data analytics is an ongoing process. It’s crucial to continually monitor the results and make adjustments as needed to adapt to changing circumstances.
Data analytics is your passport to uncovering the treasures hidden within data. It is a journey of exploration, problem-solving, and discovery that empowers individuals and organizations to make better decisions, drive innovation, and navigate the data-rich landscape of our digital world.
So, whether you are a curious learner, decision maker, or an aspiring data analyst, data analytics provides you with a powerful toolkit to navigate the data-driven era and uncover valuable insights.
As you venture into the world of data analytics, remember that it’s both a skill and an art. Dive into the techniques, get hands-on experience with real-world data, and apply your findings to practical situations. Embrace the power of data analytics, and join the ever-growing community of data-driven decision-makers.