What are the 4 types of business analytics?
Business analytics is used to process a vast amount of data and to make it easier it involves various stages.
Based on the stage of the analysis or the requirement of the workflow, there are four main types of analytics which are described below:
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1. Descriptive Analytics
Descriptive analytics is the simplest form of analytics. The mammoth size of the data to be analyzed poses a problem for an analyst which is solved by distributing the data into small chunks of data. Thus the use of this type of analytics is to summarize the data and try to understand it.
Advanced analytics can be basically termed as the usage of descriptive statistics on preexisting data as around 80 percent of business analytics is said to be the descriptions involving the aggregation of past performances.
To make raw data more understandable and insightful to the investors and managers, descriptive analytics are employed, which makes it easier for the company to identify its weaknesses and strengths to strategize accordingly.
2. Diagnostic Analytics
Characterized by methods such as data mining, data discovery, and correlation, the determination of the cause of happenings in the past is Diagnostic Analytics.
It helps the analyst to take a more profound look at the past data to figure out the cause of outcomes which helps in figuring out the factors involved which led to the aforementioned outcome.
For example - to figure out why the sales of business took a dip or increased in a certain year the data of the year can be analyzed to gain insights. Principle components analysis, conjoint analysis, attribute importance, and sensitivity analysis are a few techniques that use diagnostic analytics.
3. Predictive Analytics
The predictive analytics is used to predict future outcomes or results. This type of analytics can figure out all of the probabilities of the outcome by going through the data.
Predictive analytics is employed to devise models that can use the existing data to predict future occurrences or simply, forecast future data.
For example- sentiment analysis is the process of collecting information from various media platforms about the opinions of a person which can be further used to predict the sentiment of the person towards a specific subject as being negative, neutral or positive.
4. Prescriptive Analytics
Prescriptive analytics uses all 3 other analytics to not only predict the future outcomes, but also how different courses of action can be taken to achieve a particular outcome.
Therefore, it can be termed as a feedback system that helps to learn the relation between a course of action and its outcome.
For example - when using an online cab service, the app uses the GPS in your phone to connect you to the driver that is closest to you from all the drivers near you, thus employing the use of prescriptive analyses to optimize for the lowest arrival time.
Conclusion:
The 4 different types of analytics can be used together by businesses to boost their growth and understand their business better. All of these analytics types can be used sequentially or a company can directly employ the use of prescriptive analytics.
Excelr, a training firm based in Thane provides many courses in such upcoming methodologies to use technology in our favor. One of the courses offered by them is Business Analytics Certification which thoroughly covers everything about data science.
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