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What is Data Analytics? Analyzing and Managing Data for Decisions

Updated: Jan 14

Data analytics is a multifaceted field that involves the examination and interpretation of vast sets of information to uncover patterns, draw conclusions, and make informed decisions. At its core, data analytics leverages various techniques and tools to analyze and manage data to extract valuable insights.

Table of Contents:

Source of Data

Data Collection

Data Quality and Integrity


Data Analytics

What is Data Analytics?

Data analytics refers to the process of inspecting, cleaning, transforming, and modeling data to uncover meaningful information, draw conclusions, and support decision-making. It encompasses a range of techniques, from simple statistical analysis to complex machine learning algorithms, with the overarching goal of extracting valuable knowledge from data.

Importance of Data Analytics in Decision-Making

In the contemporary landscape, businesses, organizations, and individuals are inundated with vast amounts of data. The ability to harness this data and derive actionable insights from it has become critical in making informed decisions. Data analytics plays a pivotal role in providing valuable information that aids in strategic planning, operational optimization, and overall performance improvement. From identifying market trends to enhancing customer experiences, the impact of data analytics is ubiquitous across various domains.

Understanding Data

Understanding data involves the ability to comprehend and interpret information in various formats, and recognize the characteristics and structure of the data. Understanding data also involves recognizing the sources, patterns, and relationships within the data, which is crucial for effective analysis and decision-making.

It encompasses the awareness of different types of data, such as

  1. Structured

  2. Unstructured

  3. Semi-structured data

Structured Data:

  • Definition: Highly organized data following a predefined format.

  • Examples: Spreadsheets, SQL databases.

  • Characteristics: Organized in tables, rows, and columns, facilitating easy storage and retrieval.

Unstructured Data:

  • Definition: Lacks a predefined data model and is often text-heavy.

  • Examples: Emails, social media posts, multimedia content.

  • Characteristics: No strict organization, challenging to analyze using traditional methods.

Semi-structured Data:

  • Definition: Falls between structured and unstructured data, with some level of organization.

  • Examples: XML and JSON files.

  • Characteristics: Contains tags for some organizations, providing flexibility.

Source of Data

A source of data refers to the origin or location from which data is obtained. It could be

  1. Internal (generated and owned by the organization)

  2. External (coming from outside the organization)

Internal Data:

  • Definition: Data generated and owned by an organization.

  • Examples: Transaction records, customer data, employee information.

  • Importance: Offers insights into the organization's daily operations, performance, and internal processes.

External Data:

  • Definition: Data from sources outside the organization.

  • Examples: Market research reports, social media data, and public datasets.

  • Importance: Enriches internal datasets, provides context for decision-making, and helps in understanding market trends.

Data Collection

Data collection is the systematic process of gathering and capturing data from various sources using specific methods and techniques.

Methods of data collection can vary and include:

  1. Surveys and questionnaires

  2. Sensor data (capturing real-time information from physical devices)

  3. Web scraping (extracting data from websites)

The goal of data collection is to acquire relevant and reliable information that can be used for analysis and decision-making.

Surveys and Questionnaires:

  • Method: Structured approach to gathering information directly from individuals or groups.

  • Application: Collects specific data related to opinions, preferences, and experiences.

  • Outcome: Provides quantitative or qualitative data for analysis based on research objectives.

Sensor Data:

  • Method: Real-time data collection using sensors in various industries.

  • Application: Monitors and optimizes processes, predicts equipment failures, and gathers insights into environmental conditions.

  • Outcome: Enables data-driven decision-making in real-time.

Web Scraping:

  • Method: Extracting data from websites.

  • Application: Collects information not available through traditional means, such as prices, product reviews, or news articles.

  • Outcome: Provides a diverse range of data for analysis from publicly available online sources.

Data Quality and Integrity

Data quality and integrity refer to the accuracy, consistency, and reliability of data throughout its lifecycle.

Data Cleaning:

  • Process: Identifying and rectifying errors, inconsistencies, and inaccuracies in collected data.

  • Importance: Enhances the reliability and accuracy of the dataset.

  • Methods: Imputation, outlier detection, and other techniques to ensure high-quality data.

Data Integrity:

  • Concept: Ensuring the accuracy and consistency of data throughout its lifecycle.

  • Importance: Builds trust in the data and ensures that decisions are based on reliable and unaltered information.

  • Measures: Implementing safeguards against data corruption, unauthorized alterations, and maintaining a secure data environment.

Data Analytics Process

The data analytics process is a systematic approach to extracting meaningful insights from raw data. It involves several stages, each contributing to the overall understanding and utilization of data.

Let's explore each phase in detail:

Data Exploration

Data Cleaning and Preprocessing:

  • Ensure the data is accurate, consistent, and free from errors for reliable analysis.

  • This involves tasks such as handling missing values, dealing with outliers, standardizing data formats, and addressing any inconsistencies. The goal is to prepare the dataset for further analysis without introducing biases or inaccuracies.

Exploratory Data Analysis (EDA):

  • Gain initial insights into the data, identify patterns, and formulate hypotheses for further investigation.

  • EDA involves the use of statistical graphics, summary statistics, and visualization techniques to understand the distribution of variables, detect anomalies, and explore potential relationships between different features. It helps analysts form a foundation for more in-depth analysis.

Data Modeling

Model Selection:

  • Choose an appropriate analytical model that aligns with the nature of the data and the goals of the analysis.

  • Analysts evaluate various models based on the type of problem being addressed (classification, regression, clustering, etc.). Model selection considers factors like the complexity of the model, interpretability, and the accuracy of predictions. Common models include linear regression, decision trees, support vector machines, and neural networks.

Training and Testing:

  • Develop a model that generalizes well to new, unseen data.

  • The selected model is trained using a subset of the data, known as the training set. The performance of the model is then evaluated on a separate subset called the testing set. This step helps assess how well the model is likely to perform on new, unseen data, ensuring that the model is not overfitting to the training data.

Data Evaluation

Performance Metrics:

  •  Assess the effectiveness of the model based on predefined criteria.

  • Metrics vary depending on the nature of the analysis. For classification problems, metrics may include accuracy, precision, recall, and F1 score. Regression problems may use metrics such as mean absolute error (MAE) or mean squared error (MSE). The choice of metrics depends on the specific goals and requirements of the analysis.

Iterative Refinement:

  •  Improve the model's performance by making necessary adjustments.

  • Based on the performance metrics, analysts iteratively refine the model. This may involve fine-tuning parameters, considering feature engineering, or even selecting a different model. The iterative refinement process continues until the model achieves the desired level of performance or meets specific business objectives.

Data Analytics vs Data Analysis


Data Analytics

Data Analysis


Examining, cleansing, transforming, and modeling data to derive conclusions.

A subset of data analytics focused on the examination and interpretation of data.


The broader scope includes tools and techniques for data analysis.

A narrower focus involves examining and interpreting data to conclude.


Data analytics includes data analysis.

Data analysis is a component of data analytics.


Reports and visualizations.

Insights and conclusions drawn from examining and interpreting data.


Describes current or historical states of reality.

Focuses on the current or historical state of data, providing immediate insights.

Use Case

Used to understand what an organization's data looks like.

Primarily concerned with understanding and interpreting data to make informed decisions.

While data analytics and data analysis are often used interchangeably, they differ in terms of scope, outputs, and timescale. Data analytics encompasses a broader range, involving tools and techniques for data analysis. On the other hand, data analysis is a more focused process, specifically centered around examining and interpreting data to conclude.

Data Analytics vs. Data Science

Data analytics and data science are closely related, with data analytics being a component of data science. Data analytics is used to understand an organization's data, producing reports and visualizations. Data science, however, takes the output of analytics to study and solve problems, often involving predictions and future-oriented insights.

Data Analytics vs Business Analytics


Data Analytics

Business Analytics


Involves examining, cleansing, transforming, and modeling data to derive conclusions.

A subset of data analytics that focuses on driving better business decisions using various techniques.


Broader scope includes various analytical techniques applied across different domains.

Narrower focus, specifically tailored to drive business decision-making through data analysis.


Encompasses a range of techniques, including data exploration, machine learning, and pattern recognition.

Utilizes data analytics techniques such as data mining, statistical analysis, and predictive modeling for business-specific insights.


Analyzing data to derive insights and make informed decisions in various fields.

Primarily aims at improving business decision-making by using analytical tools and models.

Data analytics and business analytics share common ground, with business analytics being a specific subset of data analytics tailored for business decision-making.

In data analytics, the scope is broader, encompassing various analytical techniques applied across different domains. On the other hand, business analytics has a narrower focus, specifically directed towards using data analytics techniques (such as data mining, statistical analysis, and predictive modeling) to drive better business decisions.

Types of Data Analytics

Data analytics encompasses a spectrum of techniques aimed at extracting valuable insights from data. There are four primary types of data analytics, each serving a distinct purpose in understanding and utilizing data effectively.

Descriptive Analytics:

  • Objective: To understand what has happened and what is happening right now.

  • Method: Utilizes historical and current data from various sources to describe the present state.

  • Techniques: Identifying trends and patterns in data.

  • Application: In business analytics, descriptive analytics often falls under the domain of business intelligence (BI). It provides a snapshot of the current situation, enabling organizations to understand their past and present performance.

Diagnostic Analytics:

  • Objective: To uncover the reasons or factors behind past performance.

  • Method: Analyzes data, often generated through descriptive analytics, to identify the causes of specific outcomes.

  • Techniques: Root cause analysis and exploration of relationships within the data.

  • Application: Diagnostic analytics helps answer the question, "Why did it happen?" It delves deeper into the data to provide insights into the factors influencing historical performance.

Predictive Analytics:

  • Objective: To forecast what is likely to happen in the future.

  • Method: Applies techniques such as statistical modeling, forecasting, and machine learning to data obtained from descriptive and diagnostic analytics.

  • Techniques: Statistical modeling, machine learning algorithms, and forecasting methods.

  • Application: Predictive analytics leverages historical data to make predictions about future outcomes. It is often considered a form of advanced analytics and plays a crucial role in decision-making by anticipating future trends and potential scenarios.

Prescriptive Analytics:

  • Objective: To recommend specific actions for desired outcomes.

  • Method: Involves the application of testing and various analytical techniques to propose solutions.

  • Techniques: Utilizes machine learning, business rules, and algorithms to recommend specific actions.

  • Application: Prescriptive analytics goes beyond predicting outcomes and provides actionable insights by recommending specific strategies or interventions. It helps answer the question, "What do we need to do?" and guides decision-makers in choosing the best course of action.

In summary, the four types of data analytics—descriptive, diagnostic, predictive, and prescriptive—form a continuum that enables organizations to move from understanding historical and current data to making informed decisions about the future. Each type plays a vital role in the analytics process, contributing to a comprehensive understanding of data and facilitating strategic decision-making.

Data Analytics Methods and Techniques

Data analysts employ a variety of methods and techniques to extract meaningful insights from datasets. According to Emily Stevens, managing editor at CareerFoundry, seven of the most popular data analytics methods include:

Regression Analysis:

  • Definition: A set of statistical processes used to estimate relationships between variables.

  • Application: Determines how changes in one or more variables might impact another.

  • Example: Analyzing how social media spending influences sales.

Monte Carlo Simulation:

  • Definition: A modeling technique for predicting outcomes in processes influenced by random variables.

  • Application: Commonly used for risk analysis where outcomes are hard to predict.

  • Example: Assessing the probability of different outcomes in financial scenarios.

Factor Analysis:

  • Definition: A statistical method to reduce a large dataset to a more manageable one, often revealing hidden patterns.

  • Application: Used in business settings, such as exploring factors influencing customer loyalty.

  • Example: Identifying key factors impacting customer satisfaction.

Cohort Analysis:

  • Definition: Breaks a dataset into groups (cohorts) with shared characteristics for analysis.

  • Application: Understanding and analyzing specific customer segments.

  • Example: Analyzing the behavior and preferences of customers who joined during a specific period.

Cluster Analysis:

  • Definition: A class of techniques classifying objects or cases (clusters) based on similarities.

  • Application: Revealing structures in data, often used in investigating associations in specific contexts.

  • Example: Insurance firms using cluster analysis to understand why certain locations are linked to particular insurance claims.

Time Series Analysis:

  • Definition: A statistical technique dealing with time series data, identifying trends and cycles over time.

  • Application: Used for economic and sales forecasting based on data collected at specific time intervals.

  • Example: Analyzing weekly sales numbers to identify patterns and trends.

Sentiment Analysis:

  • Definition: Utilizes tools like natural language processing to interpret and classify qualitative data based on expressed feelings.

  • Application: Understands customer sentiments towards a brand, product, or service.

  • Example: Analyzing customer reviews to gauge overall sentiment and feedback.

These data analytics methods and techniques cater to various analytical needs, from understanding relationships between variables to interpreting qualitative data and predicting future trends. Each method plays a crucial role in the broader field of data analytics, providing analysts with diverse tools for comprehensive insights.

Data Analytics Examples

Organizations spanning various industries are increasingly harnessing the power of data analytics to enhance operations, boost revenue, and drive digital transformations. Here are three compelling examples:

La-Z-Boy: Enhancing Operational Efficiency

  • International furniture retailer La-Z-Boy has implemented data analytics to optimize operations across multiple departments, including HR, finance, supply chain, and sales.

  • Application: Analytics plays a pivotal role in managing crucial aspects such as pricing, SKU (Stock Keeping Unit) performance, warranty tracking, shipping logistics, and forecasting inventory levels.

  • Outcome: By leveraging data analytics, La-Z-Boy has achieved operational improvements, enabling more informed decision-making and streamlined processes in various facets of the business.

Owens Corning: Streamlining Manufacturing Processes

  • Owens Corning, a leading manufacturer, has utilized its analytics center of excellence to employ predictive analytics in the testing of binders used in the production of glass fabrics for wind turbine blades.

  • Application: Predictive analytics has significantly streamlined the testing process, reducing the time required for testing new materials from 10 days to approximately two hours.

  • Outcome: Through data analytics, Owens Corning has achieved efficiency gains in the testing phase, facilitating quicker material development and enhancing overall manufacturing processes.

Kaiser Permanente: Improving Healthcare Operations

  • Kaiser Permanente, a prominent healthcare provider in the U.S., has undertaken a comprehensive overhaul of its data operations using a combination of analytics, machine learning, and AI since 2015.

  • Application: Analytics is employed to anticipate and address potential bottlenecks in its 39 hospitals and over 700 medical offices, allowing for enhanced patient care and operational efficiency.

  • Outcome: By leveraging data analytics, Kaiser Permanente has successfully reduced waiting times, improved resource allocation, and enhanced the overall quality of healthcare services, demonstrating the transformative impact of analytics in the healthcare sector.

These examples underscore the diverse applications and transformative impact of data analytics across industries, showcasing how organizations can derive tangible benefits by harnessing the insights derived from data-driven decision-making.


Data analytics is the key to unlocking valuable insights from vast datasets, guiding decisions across various sectors. From understanding current trends to predicting future outcomes, its impact is evident in examples like La-Z-Boy, Owens Corning, and Kaiser Permanente.

Data analytics is the compass guiding us through the complexities, empowering businesses, healthcare, and more to make informed choices. It's a transformative force shaping how we interpret and act upon the wealth of information available.


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