Analytics is the discovery, interpretation, and communication of meaningful patterns in data.

Especially valuable in areas rich with recorded information, analytics relies on the simultaneous
application of statistics, computer programming and operations research to quantify performance.
Organizations may apply analytics to business data to describe, predict, and improve business
performance. Specifically, areas within analytics include predictive analytics, prescriptive
analytics, enterprise decision management, retail analytics, store assortment and stock-keeping
unit optimization, marketing optimization and marketing mix modeling, web analytics, sales force
sizing and optimization, price and promotion modeling, predictive science, credit risk analysis,
and fraud analytics. Since analytics can require extensive computation (see big data), the algorithms
and software used for analytics harness the most current methods in computer science, statistics,
and mathematics.[1]

Contents
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1Analytics vs. analysis

2Application of Analytics
o 2.1Marketing optimization
o 2.2People analytics
o 2.3Portfolio analytics
o 2.4Risk analytics
o 2.5Digital analytics
o 2.6Security analytics
o 2.7Software analytics
3Challenges
4Risks
5See also
6References
7External links

Analytics vs. analysis[edit]

Analytics is multidisciplinary. There is extensive use of mathematics and statistics, the use of
descriptive techniques and predictive models to gain valuable knowledge from datadata analysis.
The insights from data are used to recommend action or to guide decision making rooted in business
context. Thus, analytics is not so much concerned with individual analyses or analysis steps, but
with the entire methodology. There is a pronounced tendency to use the term analytics in business
settings e.g. text analytics vs. the more generic text mining to emphasize this broader
perspective.[citation needed]. There is an increasing use of the term advanced analytics,[citation needed] typically
used to describe the technical aspects of analytics, especially in the emerging fields such as the use
of machine learning techniques like neural networks to do predictive modeling.

Application of Analytics[edit]
Marketing optimization[edit]
Marketing has evolved from a creative process into a highly data-driven process. Marketing
organizations use analytics to determine the outcomes of campaigns or efforts and to guide
decisions for investment and consumer targeting. Demographic studies, customer segmentation,
conjoint analysis and other techniques allow marketers to use large amounts of consumer purchase,
survey and panel data to understand and communicate marketing strategy.
Web analytics allows marketers to collect session-level information about interactions on a website
using an operation called sessionization. Google Analytics is an example of a popular free analytics
tool that marketers use for this purpose. Those interactions provide web analytics information
systems with the information necessary to track the referrer, search keywords, identify IP address,
and track activities of the visitor. With this information, a marketer can improve marketing
campaigns, website creative content, and information architecture.
Analysis techniques frequently used in marketing include marketing mix modeling, pricing and
promotion analyses, sales force optimization and customer analytics e.g.: segmentation. Web
analytics and optimization of web sites and online campaigns now frequently work hand in hand with
the more traditional marketing analysis techniques. A focus on digital media has slightly changed the
vocabulary so that marketing mix modeling is commonly referred to as attribution modeling in the
digital or marketing mix modeling context.
These tools and techniques support both strategic marketing decisions (such as how much overall to
spend on marketing, how to allocate budgets across a portfolio of brands and the marketing mix)
and more tactical campaign support, in terms of targeting the best potential customer with the
optimal message in the most cost effective medium at the ideal time.

People analytics[edit]
This application of analytics helps companies manage human resources. The aim is to discern which
employees to hire, which to reward or promote, what responsibilities to assign, and similar human
resource problems.[2] For example, an analysis may find that individuals that fit a certain type of
profile are those most likely to succeed at a particular role, making them the best employees to hire.

Portfolio analytics[edit]
A common application of business analytics is portfolio analysis. In this, a bank or lending agency
has a collection of accounts of varying value and risk. The accounts may differ by the social status
(wealthy, middle-class, poor, etc.) of the holder, the geographical location, its net value, and many
other factors. The lender must balance the return on the loan with the risk of default for each loan.
The question is then how to evaluate the portfolio as a whole.
The least risk loan may be to the very wealthy, but there are a very limited number of wealthy
people. On the other hand, there are many poor that can be lent to, but at greater risk. Some
balance must be struck that maximizes return and minimizes risk. The analytics solution may
combine time series analysis with many other issues in order to make decisions on when to lend
money to these different borrower segments, or decisions on the interest rate charged to members
of a portfolio segment to cover any losses among members in that segment.

Risk analytics[edit]
Predictive models in the banking industry are developed to bring certainty across the risk scores for
individual customers. Credit scores are built to predict individuals delinquency behavior and widely
used to evaluate the credit worthiness of each applicant. Furthermore, risk analyses are carried out
in the scientific world and the insurance industry. It is also extensively used in financial institutions
like Online Payment Gateway companies to analyse if a transaction was genuine or fraud. For this
purpose they use the transaction history of the customer. This is more commonly used in Credit
Card purchase, when there is a sudden spike in the customer transaction volume the customer gets
a call of confirmation if the transaction was initiated by him/her. This helps in reducing loss due to
such circumstances.

Digital analytics[edit]
Digital analytics is a set of business and technical activities that define, create, collect, verify or
transform digital data into reporting, research, analyses, recommendations, optimizations,
predictions, and automations.[3] This also includes the SEO (Search Engine Optimization) where the
keyword search is tracked and that data is used for marketing purposes. Even banner ads and clicks
come under digital analytics. A growing number of brands and marketing firms rely on digital
analytics for their digital marketing assignments, where MROI (Marketing Return on Investment) is
an important key performance indicator (KPI).

Security analytics[edit]
Security analytics refers to information technology (IT) to gather and analyze security events to
understand and analyze events that pose the greatest risk.[4] Products in this area include security
information and event management and user behavior analytics.

Software analytics[edit]
Main article: Software analytics
Software analytics is the process of collecting information about the way a piece of software is used
and produced.

Challenges[edit]
In the industry of commercial analytics software, an emphasis has emerged on solving the
challenges of analyzing massive, complex data sets, often when such data is in a constant state of
change. Such data sets are commonly referred to as big data. Whereas once the problems posed by
big data were only found in the scientific community, today big data is a problem for many
businesses that operate transactional systems online and, as a result, amass large volumes of data
quickly.[5]
The analysis of unstructured data types is another challenge getting attention in the industry.
Unstructured data differs from structured data in that its format varies widely and cannot be stored in
traditional relational databases without significant effort at data transformation.[6] Sources of
unstructured data, such as email, the contents of word processor documents, PDFs, geospatial data,
etc., are rapidly becoming a relevant source of business intelligence for businesses, governments
and universities.[7] For example, in Britain the discovery that one company was illegally selling
fraudulent doctor's notes in order to assist people in defrauding employers and insurance
companies,[8] is an opportunity for insurance firms to increase the vigilance of their unstructured data
analysis. The McKinsey Global Institute estimates that big data analysis could save the American
health care system $300 billion per year and the European public sector 250 billion.[9]
These challenges are the current inspiration for much of the innovation in modern analytics
information systems, giving birth to relatively new machine analysis concepts such as complex event
processing, full text search and analysis, and even new ideas in presentation.[10] One such innovation
is the introduction of grid-like architecture in machine analysis, allowing increases in the speed of
massively parallel processing by distributing the workload to many computers all with equal access
to the complete data set.[11]
Analytics is increasingly used in education, particularly at the district and government office levels.
However, the complexity of student performance measures presents challenges when educators try
to understand and use analytics to discern patterns in student performance, predict graduation
likelihood, improve chances of student success, etc. For example, in a study involving districts
known for strong data use, 48% of teachers had difficulty posing questions prompted by data, 36%
did not comprehend given data, and 52% incorrectly interpreted data.[12] To combat this, some
analytics tools for educators adhere to an over-the-counter data format (embedding labels,
supplemental documentation, and a help system, and making key package/display and content
decisions) to improve educators understanding and use of the analytics being displayed.[13]
One more emerging challenge is dynamic regulatory needs. For example, in the banking industry,
Basel III and future capital adequacy needs are likely to make even smaller banks adopt internal risk
models. In such cases, cloud computing and open source R (programming language) can help
smaller banks to adopt risk analytics and support branch level monitoring by applying predictive
analytics.[citation needed]

Risks[edit]
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The main risk for the people is discrimination like price discrimination or statistical
discrimination. See Scientific American book review of "Weapons of math destruction"
There is also the risk that a developer could profit from the ideas or work done by users, like this
example: Users could write new ideas in a note taking app, which could then be sent as a custom
event, and the developers could profit from those ideas. This can happen because the ownership of
content is usually unclear in the law.[14]
If a user's identity is not protected, there are more risks; for example, the risk that private information
about users is made public on the internet.
In the extreme, there is the risk that governments could gather too much private information, now
that the governments are giving themselves more powers to access citizens' information.