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What is analytics?

Zach Gemignani

A reader wrote to us today:

I seem to have spent the last few days (not including the week-end I must add) trying to get to grips with ’Analytics’. If [my boss] comes in wanting a 5 word anaswer to his question “what exactly is an analytic?” I think I’d still be at a loss as to how to define it.

It’s a great question. Analytics (along with its sister/twin term Business Intelligence) gets thrown around without much clarity as to its meaning. You might think with the word in our name, that we’d have long ago nailed down a definition. Not so. (Although we do have a good understanding of what “Juice” means?)

Below is my take on a “map” of the analytics world.

Map of analytics

I used a couple of dimensions to help frame all the parts and pieces:

  • Purpose. A concept of “exploration vs. control” highlights the difference between analysis and reporting. Analysis is about digging deep into data to discover relationships, find causation, and describe phenomena. Reporting, in contrast, is used to track performance and identify variation from goals.

  • Timing. Most analytics is backward looking — in an attempt to understand what has happened, and therefore be equipped to make better decisions in the future. Alternatively, analytics can focus explicitly on predicting future performance or, in the a few cases, provide information to support decisions in real-time.

I’d really appreciate any comments on this map — whether I’ve missed/misgrouped/misrepresented concepts or alternative dimensions to describe the space. The more clarity we can provide in describing “what is analytics” the more palatable the concept will be.

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  • http://www.iift.edu DEVI THIRUPATHI

    Very good “map” of the analytical world. I am interested to associate the
    phases of various analytical steps as shown in the map here to the
    software tools that are available.

    Analytic Process –> Software Tool

    Is there any resource or web site that provides this.

    Thanks and Regards
    Devi

  • Zach

    Great question. I haven’t run across a good resource that lays out software tools by analytical process. We have used or checked out a bunch of different tools through the course of our work (e.g. Excel, Access, SAS, JMP, Tableau, GIS tools a-plenty, Business Objects, Cognos). Many of them can be stretched to cover different parts of this analytics landscape; few of them are very well targeted to solve a specific piece of the picture. Shoot me an e-mail if you have particular areas where you cannot find an appropriate tool.

  • KP

    There is another classification to look at the analytical space

    A classical 2X2 matrix with dimensions

    Prescriptive vs Descriptive
    Orgnl internal vs external

    This kind of ties in with your dimensions

  • Anand

    Very good presentation. I feel that the Target analysis and Top down analysis seems perfectly assigned to Exploration, but modelling/forecasting & scenario analysis/simulations should be shown under forecasting and not under exploration as these use the data which has been already explored.

  • Balaji Arun

    Can somone suggest books on Analytics ? (preferably covering the basics of analytics)

  • Zach

    I haven’t come across a book that I’d consider required reading for analytics, but here are a few that may be on point:

    * I’ve read some good stuff about this book: Hard Facts, Dangerous Half-Truths And Total Nonsense: Profiting From Evidence-Based Management

    * General guidance on thinking analytically: The Thinker’s Toolkit : 14 Powerful Techniques for Problem Solving

    * From our friend Stephen Few: Show Me the Numbers : Designing Tables and Graphs to Enlighten

    * Finally, you may just want to get more adept with Excel using a book like this: Data Analysis and Decision Making with Microsoft Excel

  • http://www.trendmicro.com Anthony Arrott

    I would add two books to the list for Balaji Arun:

    for clarity of thinking:
    Gerd Gigerenzer’s
    “Calculated Risks – How to know when numbers deceive you”

    for practical applications:
    Bill Jelen’s
    “Guerilla Data Analysis Using Microsoft Excel”

  • http://www.iift.edu Devi Thriupathi

    Dear Mr. Zach,

    In continuation to your email reply on analytic process –> software tool. You have mentioned that there are different tools ranging from Excel, Access, SAS….., B.O., Cognos. Please mentioned the tools against the following applications:
    Sales Forecasting
    Account Management
    Activity Based Costing
    Capacity Planning
    Inventory Management
    Marketing

    May I have your email address.

    Thanks

    Devi

  • Zach

    My e-mail address: zach.gemignani@juiceanalytics.com

    I wish there was an easy answer to your question about matching software tools to business applications…I don’t think there is. Many of those items in your list require first a “business process” software application, then an associated reporting capability.

    In many cases, you are talking about modeling activities. I haven’t seen a better package for general purpose modeling than Excel.

    When it comes to analyzing a database of customer interactions (like with Account management), we are intrigued by Tableau.

  • http://www.dnbtechnology.com sudharshan sundarrajan

    A pretty good diagram. I would like to add a new dimension(or maybe an implied one!) to the purpose. We normally classify analytics into ‘Market analytics’ and ‘Risk analytics’ in our organisation. Intelligent ‘Market analytics’ aids brilliantly in marketing and pro-active customer care. ‘Risk analytics’ deals with identifying potential risks, their ‘riskiness’ over a period of time, risk mitigation strategies and their effectivess etc. ‘Risk anlaytics’ is slowly moving a lot of business decisions in a lot of organisations from being affected by judgemental bias.

  • Mohan

    I am not against analysis as a tool but there is far too much of analysis thinking that it will solve all buisness problems. Many a managers feel that real life business needs “Synthesis” more than analysis. All the parameteres of buisness environment can’t be quantified and many important ones are soft ones or intangibles difficult to quantify. I prescribe more to Alexander Christopher’s philosophy where more important than analysis is synthesis of which un-fortunately there is very little talk and even lesser training of managers. Our Management Institute has gone to the extent of even introducing a full fledged MBA i.e. Masters in Business Analysis. I am afraid too much of analysis may lead to paralysis. In the end no mathematical model can replace human decision making for which as yet no effective replacement has been found.

  • Deven

    Hi Mohan,
    Masters in Business Analysis sounds interesting. Can you please share more details of your Management institute?

  • Harry

    Would you consider Predictive Analytics to cover any of the “risk analytics” that Sudharshan is talking about? Does it cover more than just the market side ?

  • Sateesh tadur

    going by the terminology used in the Business analytics are there any statistical techniques thar used in the commercial context. I would like to know specific multivariate techniques applied in this area.