DATA ANALYTICS

Evolution of Data analytics

Data analysis is rooted in statistics, which has a pretty long

history. It is said that the beginning of statistics was marked in ancient Egypt as it
took a periodic census for building pyramids. Throughout history, statistics has played
an important role for governments all across the world, for the creation of censuses,
which were used for various governmental planning activities (including, of course,
taxation). With the data collected, we can move on to the next step, which is the
analysis of that data. Data analysis is a process that begins with retrieving data from
various sources and then analyzing it with the goal of discovering beneficial
information. For example, the analysis of population growth by district can help
governments determine the number of hospitals that would be needed in a given area.

 Data analysis and computing:

The invention of computers and the subsequent advances in
computing technology dramatically enhanced what we can do with data analysis.
Before computers, the 1880 Census in the US took over 7 years to process the
collected data and to arrive at a final report. In order to shorten the time it takes for
creating the Census, in 1890, Herman Hollerith invented the "Tabulating Machine".
This machine was capable of systematically processing data recorded on punch cards.
Thanks to the Tabulating Machine, the 1890 census finished in only 18 months and on
a much smaller budget.

 Relational Databases:
After the von Neumann architecture was invented, the data had
been regarded and processed as data to be processed for data analysis. The turning
point was the appearance of RDB (relational database) in the 1980s which allowed
users to write Sequel (SQL) to retrieve data from a database. For users, the advantage
of RDB and SQL is to be able to analyze their data on demand. It made the process to
get data easy and helped to spread database use. As you see, the combination of
easier/cheaper data collection with cheaper/faster data storage/retrieval technology
has pushed the boundaries of what we can do with data.

 Data Warehouse and Business Intelligence:

From around the late 1980s, the amount of data collected
continued to increase significantly, thanks to the ever decreasing costs for hard disk
drives. That’s when William H. Inmon proposed a "data warehouse", which is a
system optimized for reporting and data analysis. The difference from usual relational
databases is that data warehouses are usually optimized for response time to queries.
Many times data is stored with a timestamp and operations such as DELETEs and
UPDATEs are used much less frequently. For example, if a business wanted to
compare sales trends for each month, all sales transactions can be stored with
timestamps within a data warehouse, and queried based on this timestamp. Also the
term "BI (Business Intelligence)" was proposed by Howard Dresner at Gartner in
1989. BI supports better business decision making through searching, collecting and
analyzing accumulated data in business. The birth of the concept was only natural,
given the quality of technologies like databases and data warehouses available to
support it. Especially big companies embraced BI by analyzing customer data
systematically when making business decisions.

1
 DATA ANALYTICS
 Data Mining:
Data mining, which appeared around the 1990s, is the computational
process to discover patterns in large datasets. By analyzing data in a different way
from usual methods, unexpected but beneficial results could be expected. The
development of data mining was made possible thanks to database and data
warehouse technologies, which enable companies to store more data and still analyze
it in a reasonable manner. A general business trend emerged, where companies started
to “predict” customers' potential needs based on analysis of historical purchasing
patterns.

 Google Web Search:

The next big change was the internet. For the demand of searching a
particular website on the web, Larry Page and Sergey Brin developed the Google
search engine which processes and analyzes big data in distributed computers.
Surprisingly the Google engine responds with the result which you mostly likely
wanted to see in just a few seconds. The key points of this system are that it was
"automated", "scalable" and "high performance". A white paper on MapReduce in
2004 greatly inspired engineers, pulling in an influx of talent to the challenge of
handling big data. In the late 2000s, many open source software projects like Apache
Hadoop and Apache Cassandra were created to take on this challenge.

 Big Data Analysis On Cloud:(Eg:Google photos)

In the early 2010s, Amazon Redshift, which is a cloud-based data
warehouse, and Google BigQuery, which processes a query in thousands of Google
servers, were released. Both came with a remarkable fall in cost and lowered the
hurdle to process big data. Nowadays, every company is able to get an infrastructure
for big data analysis within a reasonable budget. Even startups, which traditionally did
not have a budget to conduct such analysis, are now able to repeat PDCA cycles
rapidly by using big data tools such as Amazon Redshift.

 Conclusion:
As we’ve seen, data analysis and computer technology have been
developing and affecting each other, ever since the advent of computing. As the
collected data size gets larger, new methods of data analysis have been introduced in
each stage, out of necessity. As data collection and computing gets even cheaper, we
should continue to see breakthroughs in the area of big data.

Who is Data Analyst:Data analysts gather data using specialist tools to

generate information that helps others make decisions. They will respond to questions
about data and look for trends, patterns and anomalies within it. Typical duties
include: using specialist tools to extract the data needed.

Who is Data scientist: A data scientist typically has a more in-depth

knowledge of machine learning algorithms, predictive modeling, and programming
languages.

2
 DATA ANALYTICS
Data analytics Overview

 What is Data analytics:

Data analytics takes raw data and turns it into useful information. It uses
various tools and methods to discover patterns and solve problems with data. Data
analytics helps businesses make better decisions and grow.
Companies around the globe generate vast volumes of data daily, in the form of
log files, web servers, transactional data, and various customer-related data. In
addition to this, social media websites also generate enormous amounts of data.
Companies ideally need to use all of their generated data to derive value out of it
and make impactful business decisions. Data analytics is used to drive this purpose.

 Why Data Analytics?

Ex: Problems faced by Flip kart
Forecast demand for each SKU(Stock keeping Unit)
 SKU forecasting predicts the demand for specific products in a company's
inventory. The process analyzes data, such as past sales and consumer trends,
to help businesses predict future product demand and keep optimum
amounts of stock on hand without overpaying for storage space.
 Predict customer cancellations and returns.
 Predict customer contacts at the customer service.
 Predict what a customer is likely to purchase in future?
 How to optimize the delivery system?

 Ways to use Data analytics:

1. Improved Decision Making: Data Analytics eliminates guesswork and manual

tasks. Be it choosing the right content, planning marketing campaigns, or
developing products. Organizations can use the insights they gain from data
analytics to make informed decisions. Thus, leading to better outcomes and
customer satisfaction.

2. Better Customer Service: Data analytics allows you to tailor customer service
according to their needs. It also provides personalization and builds stronger
relationships with customers. Analyzed data can reveal information about
customers’ interests, concerns, and more. It helps you give better
recommendations for products and services.

3. Efficient Operations: With the help of data analytics, you can streamline your
processes, save money, and boost production. With an improved understanding of
what your audience wants, you spend lesser time creating ads and content that
aren’t in line with your audience’s interests.

4. Effective Marketing: Data analytics gives you valuable insights into how your
campaigns are performing. This helps in fine-tuning them for optimal outcomes.
Additionally, you can also find potential customers who are most likely to
interact with a campaign and convert into leads.

3
 DATA ANALYTICS
 Steps involved in Data analytics:

There are a few steps that are involved in the data analytics lifecycle. Let’s have a
look at it with the help of an analogy.
Imagine you are running an e-commerce business and your company has nearly a
million in customer base. Your aim is to figure out certain problems related to your
business, and subsequently come up with data-driven solutions to grow your business.

Below are the steps that you can take to solve your problems.

Data Analytics process steps

Let's illustrate these steps with an example related to an e-commerce company, like
Flipkart:

Step 1: Understand the Problem

Imagine you are a data analyst at an e-commerce company, and your primary goal is
to improve the delivery system. The company faces challenges such as delayed
deliveries, high delivery costs, and customer complaints. Your objective is to optimize
the delivery process.

Step 2: Data Collection

You start by collecting relevant data. This includes historical delivery records,
customer addresses, delivery routes, vehicle types, delivery times, and costs
associated with each delivery. The data might span several years and include
thousands of delivery instances.

Step 3: Data Cleaning

Once you have the data, you discover that it's messy. Some records have missing
delivery times, incorrect addresses, and redundant information. You clean the data by
removing or fixing these issues, ensuring that the dataset is ready for analysis.

Step 4: Data Exploration and Analysis

With clean data, you perform exploratory data analysis (EDA). You use data
visualization tools to create charts and graphs showing delivery patterns. You might
discover trends like:
- Most deliveries are delayed in a specific area.
- Certain vehicle types are more efficient than others.
- Delivery times vary based on the time of day or day of the week.
4
 DATA ANALYTICS

You also use predictive modeling to develop algorithms that can optimize delivery
routes and times. For instance, you use machine learning to predict which routes are
likely to experience delays based on historical data and external factors like traffic
and weather.

Results from the Analysis

Based on your analysis, you obtain valuable insights:
- You can identify when a customer is likely to purchase their next product, allowing
you to schedule deliveries more effectively.
- You understand how long it takes to deliver products to different areas, helping you
set more accurate delivery time estimates.
- You gain insights into the types of products customers often return, enabling you to
refine the product catalog and reduce returns.
- By optimizing delivery routes, you reduce delivery costs and improve on-time
delivery rates.
- You find the shortest and most efficient routes for deliveries, saving on fuel and
time.

Step 5: Interpret the Results

You interpret the results to make data-driven decisions. You propose changes to the
delivery system, such as using different vehicle types for specific routes, adjusting
delivery schedules, and focusing on reducing delays in high-risk areas. By
implementing these changes, you aim to improve customer satisfaction, reduce costs,
and ultimately increase the efficiency of the company's delivery system.

In this example, the steps of the analytics process help address a specific problem in
the e-commerce business by leveraging historical data, data cleaning, and
sophisticated analysis techniques to make data-driven decisions that optimize the
delivery system. These steps can be applied to various aspects of e-commerce
operations to drive improvements and achieve business goals.

 Data Analytics Tools:

Let’s see the tools involved in data analytics, to perform the above steps.
Now we will discuss 7 data analytics tools, including a couple of programming
languages that can help you perform analytics better.
1. Python: Python is an object-oriented open-source programming language. It
supports a range of libraries for data manipulation(make easy to read),data
visualization, and data modeling(collect,update and store the data).
2. R: R is an open-source programming language majorly used for numerical and
statistical analysis. It provides a range of libraries for data analysis and visualization.
3. Tableau: It is a simplified data visualization and analytics tool. This helps you
create a variety of visualizations to present the data interactively, build reports, and
dashboards to showcase insights and trends.
4. Power BI: Power BI is a business intelligence tool that has an easy ‘drag and drop
functionality. It supports multiple data sources with features that visually appeal to
data. Power BI supports features that help you ask questions to your data and get
immediate insights.
5. QlikView: QlikView offers interactive analytics with in-memory storage
technology to analyze vast volumes of data and use data discoveries to support
decision making. It provides social data discovery and interactive guided analytics. It
can manipulate colossal data sets instantly with accuracy.

5
 DATA ANALYTICS
6. Apache Spark: Apache Spark is an open-source data analytics engine that
processes data in real-time and carries out sophisticated analytics using SQL queries
and machine learning algorithms.
7. SAS: SAS is a statistical analysis software that can help you perform analytics,
visualize data, write SQL queries, perform statistical analysis, and build machine
learning models to make future predictions.

 Data Analytics Applications:

Data analytics is used in almost every sector of business, let’s discuss a few of them:

1. Retail: Data analytics helps retailers understand their customer needs and buying
habits to predict trends, recommend new products, and boost their business. They
optimize the supply chain, and retail operations at every step of the customer journey.
2. Healthcare: Healthcare industries analyze patient data to provide lifesaving
diagnoses and treatment options. Data analytics help in discovering new drug
development methods as well.
3.Manufacturing: Using data analytics, manufacturing sectors can discover new
cost-saving opportunities. They can solve complex supply chain issues, labor
constraints, and equipment breakdowns.
4.Banking sector: Banking and financial institutions use analytics to find out
probable loan defaulters and customer churn out rate(knowing which customers are
likely to leave or unsubscribe from your service.). It also helps in detecting fraudulent
transactions immediately.
5. Logistics: Logistics companies use data analytics to develop new business models
and optimize routes. This, in turn,ensures that the delivery reaches on time in a cost-
efficient manner.

 Lifecycle of Data Analytics(Churn prediction)

The Data analytics lifecycle is designed for Big Data problems and data
science projects. The cycle is iterative to represent real project. To address the
distinct requirements for performing analysis on Big Data, step – by – step
methodology is needed to organize the activities and tasks involved with acquiring,
processing, analyzing, and repurposing data.

6
 DATA ANALYTICS

Phase 1: Discovery –

 The data science team learn and investigate the problem.

 Develop context and understanding.
 Come to know about data sources needed and available for the project.
 The team formulates initial hypothesis that can be later tested with data.
Phase 2: Data Preparation –

 Steps to explore, preprocess, and condition data prior to modeling and analysis.
 It requires the presence of an analytic sandbox, the team execute, load, and
transform, to get data into the sandbox.
 Data preparation tasks are likely to be performed multiple times and not in
predefined order.
Phase 3: Model Planning –

 Team explores data to learn about relationships between variables and

subsequently, selects key variables and the most suitable models.
 In this phase, data science team develop data sets for training, testing, and
production purposes.
 Team builds and executes models based on the work done in the model planning
phase.
Phase 4: Model Building –

 Team develops datasets for testing, training, and production purposes.

 Team also considers whether its existing tools will suffice for running the models
or if they need more robust environment for executing models.
Phase 5: Communication Results –

 After executing model team need to compare outcomes of modeling to criteria

established for success and failure.
 Team considers how best to articulate findings and outcomes to various team
members and stakeholders, taking into account warning, assumptions.
 Team should identify key findings, quantify business value, and develop
narrative to summarize and convey findings to stakeholders.
Phase 6: Operationalize –

 The team communicates benefits of project more broadly and sets up pilot project
to deploy work in controlled way before broadening the work to full enterprise of
users.
 This approach enables team to learn about performance and related constraints of
the model in production environment on small scale &nbsp, and make
adjustments before full deployment.
 The team delivers final reports, briefings, codes.
WHAT IS DATA ANALYTICS IN BUSINESS?
Data analytics is the practice of examining data to answer questions, identify
trends, and extract insights.
When data analytics is used in business, it’s often called business analytics.

You can use tools, frameworks, and software to analyze data, such as Microsoft Excel
and Power BI, Google Charts, Data Wrapper, Infogram, Tableau, and Zoho Analytics.

7
 DATA ANALYTICS
These can help you examine data from different angles and create visualizations that
illuminate the story you’re trying to tell.

WHO NEEDS DATA ANALYTICS?

Any business professional who makes decisions needs foundational data analytics
knowledge.
 Professionals who can benefit from data analytics skills include:
 Marketers, who utilize customer data, industry trends, and performance data from
past campaigns to plan marketing strategies
 Product managers, who analyze market, industry, and user data to improve their
companies’ products
 Finance professionals, who use historical performance data and industry trends to
forecast their companies’ financial trajectories(expenditures)
 Human resources and diversity, equity, and inclusion professionals, who gain
insights into employees’ opinions, motivations, and behaviors and pair it with
industry trend data to make meaningful changes within their organizations.

Types of Data analytics (Eg:Covid)

There are four major types of data analytics:

1. Descriptive (business intelligence and data mining)

2. Diagnostic analytics
3. Predictive (forecasting)
4. Prescriptive (optimization and simulation)

 How the Four Types of Analytics Work Together

 Organizations often combine descriptive analytics and other forms to arrive at a

bigger picture of the company's performance. Descriptive analytics summarizes
and interprets historical data, while other analytical papers examine the causes
behind trends and future outcomes. Besides the analysis humans drive, the

8
 DATA ANALYTICS
process likely utilizes machine learning to spot patterns and connections in data
automatically.
 Diagnostic analytics examines why things happened the way they did, diagnosing
a problem or root cause. It seeks to identify causes of trends and anomalies that
descriptive analytics may have previously spotted. Diagnostic analytics can do
this with data mining and correlation, among other methods.
 As the name suggests, predictive analytics uses historical data to make
predictions. It provides forecasts on probability and possible effects of particular
future outcomes. This enables the management of organizations to work with a
proactive, data-backed approach to their decision-making. A company can also
utilize predictive analytics to understand the possible impact of problems.
 And finally, prescriptive analytics makes use of results from descriptive,
diagnostic, and predictive analytics to arrive at suggestions for businesses to
ensure good potential outcomes.

1. Descriptive analytics:
Descriptive analytics is a statistical interpretation used to analyze historical
data to identify patterns and relationships. Descriptive analytics seeks to describe an
event, phenomenon, or outcome. It helps understand what has happened in the past
and provides businesses the perfect base to track trends.

Descriptive analytics is about finding meaning within data. Data needs context:
analytics provide the where and when turning figures into measurable patterns.
The practice of descriptive analytics produces business metrics, reports, and KPIs
(Key Performance Indicators) to help businesses track their performance and different
trends. As a result, companies understand what's happened thus far and, when
combined with the other types of business analytics, get an idea of why things
happened, what things may occur, and how to prepare for future events.
Here’s a descriptive analytics example — a very timely one in today’s digital
world — social media engagement. Descriptive analytics provides metrics that help
businesses figure out the return rate on different social media initiatives. These
initiatives include engagement rates, numbers of followers, whether they’re growing
or declining, and revenue generated via social media platforms.

 What Does Descriptive Analytics Tell Us

 The company’s current performance: Descriptive analytics helps businesses

keep track of critical metrics involving individuals, groups and teams, and the
company as a whole. For instance, descriptive analytics can show how a specific
sales rep is doing this quarter or which of the rep’s products sells the most.
9
 DATA ANALYTICS
 The business’s historical trends: Descriptive analytics gathers information over
long periods, and that accumulated information can be used to track the
company's progress by comparing the metrics for different periods. For example,
the corporate bean counters can track sales or expenses by comparing the results
of various quarters, calculating revenue growth by percentages, and rendering the
results on easy-to-read charts.
 The company’s strong and weak points: Descriptive analytics gives
professionals the tools to compare the performances of various business groups
using metrics like employee-generated revenue or expenses as a percentage of
revenue. It will also compare these results with known industry averages or
published results from other businesses. These comparisons help companies see
where they’re doing well and where they need to improve.

 How Does Descriptive Analytics Work?

Descriptive analytics breaks down into five steps, including:
1. State the Business Metrics
For starters, the business must identify the metrics that it wants to generate based
on the essential business goals of each group within the company or the company's
overall goals. For instance, a company emphasizing growth may emphasize
measuring quarterly revenue increases. At the same time, the company's accounts
receivable department might monitor great days' sales and other metrics that show
how much time it takes to collect money from their customers.
2. Identify the Data Required
Next, the company must find the data needed to generate the desired metrics. This
task is a potential challenge since the relevant data may be scattered across many files
and applications. However, companies that employ an Enterprise Resource Planning
(ERP) system may have an easier time because they will already have most or all the
needed data in their systems' databases. Furthermore, some metrics may also need
data from external sources, like e-commerce websites, industry benchmarking
databases, or social media platforms.
3. Extract and Prepare the Data
Extracting, combining, and preparing the relevant data for analysis is potentially
time-consuming if the needed analysis data originates from multiple sources.
However, this is a crucial step to ensure accuracy. Furthermore, this may involve data
cleansing to eliminate inconsistencies and mistakes in the data, a reasonable effort
considering the information coming from an eclectic group of sources and rendering
data into a suitable format for analysis tools. Advanced data analytics types use a
process known as data modeling, a framework residing within information systems to
help prepare, arrange, and organize the company's information. Data modeling defines
and formats complex data, turning it into a usable, actionable resource.
4. Analyze the Data
Companies have various tools at their disposal to apply descriptive analytics,
ranging from business intelligence (BI) software to spreadsheets such as ones found in
Excel. Descriptive analytics usually involves using fundamental mathematical
operations to one or more of the variables. For instance, a sales manager might like to
monitor the average sales revenue or the monthly revenue from either established or
recently acquired customers.
5. Present the Data
Once business analysts have gone through the necessary steps, all that's left is
presenting the data. First, however, the information must be presented so that
everyone can understand it, from stakeholders to finance specialists. Stakeholders
usually appreciate seeing the report in compelling visual forms, like bar charts, pie

10
 DATA ANALYTICS
charts, or line graphs. Visible data is easier to grasp. Finance specialists on the other
hand, may want the information presented through numbers and tables.

 How to Apply Descriptive Analytics to an Organization

Understanding the basics of descriptive analytics seems simple enough, but

applying it in real life can be challenging. There are several steps that an organization
needs to follow to apply descriptive analytics to their business.

 Identify Relevant Metrics

First, the organization needs to know the metrics to be created. These metrics
should reflect primary business goals for each sector of the company or from the
organization. Management may want to look at growth from a quarterly perspective
or may need to track outstanding payments to understand delays. Identifying various
data metrics is the first step. If this step is not completed with some consideration, the
outcomes will not be helpful. An organization needs to understand what is
measurable, how to collect the appropriate data, and if it is applicable. An example is
in the marketing and sales department; sales representatives will track revenue from
sales per month. An accountant will want to examine financial metrics like gross
profit margin.
 Identify Data to Support These Metrics
The next step is to find the data needed to support the required metrics. The data
can be found across several siloes and files for some organizations. Most of the data
required may already be within the company if an organization already functions with
enterprise resource planning (ERP) systems. Identify any external sources required,
particularly those related to industry benchmarks, non-company databases, e-
commerce sites, and the many social media sites.
 Data Extraction and Preparation
If an organization is working across multiple data sources, it will need to extract
data, merge it, and prepare it for analysis to ensure uniformity. This is a drawn-out
process but is critical for accuracy. Data cleansing is a part of removing redundancies
and mistakes and creating data in a format suitable for analysis.
 Data Analysis
There are several tools available to provide descriptive analytics. These can range
from basic spreadsheets to a wide range of more complex business intelligence (BI)
software. These can be cloud-based, on-site. These programs use various algorithms
to create accurate summaries and insights into the provided data.
 Data Presentation
The final aspect of descriptive analytics is presenting the data. This is usually
done using visualization techniques, with compelling and exciting forms of
presentation to make the data accessible for the user to understand. Options such as
bar charts, pie charts, and line graphs present information. While such a visually
appealing presentation is how some departments prefer their knowledge, financial
professionals may opt for data in tables and numbers. The end-user should be
accommodated.
 Descriptive Analysis Techniques
The techniques for descriptive analysis are the most common descriptive methods
of data analysis for qualitative data. Descriptive data analysis techniques are used to
describe the subjects of a study in detail, identifying patterns and trends, and
providing insights into how subjects behave.
Some of the most common descriptive analysis methods for descriptive analysis
statistics are:

11
 DATA ANALYTICS
 The frequency distribution is a method that provides an overview of all the
responses to a question.
 The bar chart is a visual representation that displays how responses vary on
different dimensions.
 The pie chart displays how responses vary on different dimensions.
 A scatterplot displays how two variables relate to each other.
 A histogram provides an overview of all the responses to a question, with each
response grouped into bins according to some criterion such as age or income
level.

 Types of Descriptive Analysis

There are four different types of descriptive analysis: measures of frequency,

central tendency, dispersion or variation, position, . These techniques work best when
only one variable is present.
1. Measures of Frequency
Understanding how frequently a specific event or response is likely to occur is
crucial for descriptive analysis. The main goal of frequency measurements is to create
something akin to a count or a percentage. For example: Think about a survey where
500 people are questioned about their favorite football team. A list of 500 responses
would be challenging to read and organize, but by counting the number of times a
specific football team was chosen, the data can be made much more understandable.
Measures: Count, Percent, Frequency

2. Measures of Central Tendency

Summary statistics that describe a data set by identifying its central position.
For example, if the numbers are 3, 11, 4, 6, 8, 9, and 6, the mean is 6.7

Measures:
Mean: The sum of all observations divided by the total number of observations
Median: The middle or central value in an ordered set
Mode: A commonly used measure of central tendency
3. Measures of Dispersion At times, understanding how data is distributed across a
range is crucial. Consider the average weight of a sample of two people to further
explain this. The average weight will be 60 kilograms if both people weigh 60
kilograms. The average weight is still 60 kg even if one person weighs 40 kg and the
other 80 kg. This type of distribution can be measured using dispersion metrics like
range or standard deviation.

Measures: Range, Variance, Standard Deviation

 For example, if the data set is {2,5,8,10,3}, the range is 10 – 2 = 8

12
 DATA ANALYTICS
 Variance is the average squared distance between the data points and the
mean.
 A standard deviation (or σ) is a measure of how dispersed the data is in
relation to the mean
4. Measures of Position
Identifying the position of a single value or its response in relation to others is
another aspect of descriptive analysis. In this field of expertise, metrics like
percentiles and quartiles are extremely helpful.
Measures:
 Quartiles: Split the data into four equal parts. The first quartile (Q1) is the
same as the 25th percentile, and the third quartile (Q3) is the same as the 75th
percentile.
 Percentiles: Divide the data into 100 equal regions. They describe the position
of a data point relative to the rest of the dataset using a percent.
(Eg:If a person scores 80th percentile,it means he is 80% better than the rest of
the people)
 Deciles: Split the data into ten equal parts.
 Standard scores: Also known as z-scores. A z-score is a statistical
measurement that describes how far a value is from the mean of a group of
values. It's also known as a standard score
.z = (x − μ)/ σ,Where x is the test value, μ is the mean, and σ is the standard
value
5. Contingency table
In statistics, a contingency table, also known as a two-way frequency table—is a
tabular representation with at least two rows and two columns that are used to present
categorical data as frequency counts. For instance, the contingency table below, which
has two rows and five columns, displays the findings of a random sample of 2200
adults categorized by gender and preferred method of eating Icy dessert.

Gender Cup cone Sundae Sandwich Other

Male 592 300 204 24 80

Female 410 335 180 20 55

 Benefits of Descriptive Data analytics

 Simple Analysis Descriptive analysis doesn't require great expertise or
experience in statistical methods or analytics.
 Many Tools Available Many apps make this function a plug-and-play form of
analysis.
 It Answers Most Common Business Performance Questions Most
stakeholders and salespeople want simple answers to basic questions such as
"How are we doing?" or "Why did sales drop?" Descriptive analytics provides the
data to effectively and efficiently answer those questions.

 Challenges to Descriptive Analytics

13
 DATA ANALYTICS
Like any other tool, descriptive analysis is not without problems. There are
three significant challenges for organizations wanting to use descriptive
analytics.
 It Is a Blunt Tool without Insight:The descriptive analysis examines the
relationship between a handful of variables, and that is all. It simply describes
what is happening. Organizations must ensure that users understand what
descriptive analytics will provide.
 It Tells an Organization What, Not Why:Descriptive analysis reports events as
they happened, not why they happened or what could happen next. The
organization will need to run the full analytics suite entirely to grasp a situation.
 Can Measure the Wrong Thing:If the incorrect metrics are used, the analysis is
useless. Organizations must analyze what they want to measure and why.
Thought must be put into this process and matched with the outcomes that current
data can provide.
 Poor Data Quality:While vast amounts of data can be collected, it will not
produce accurate results if it is not helpful or full of errors. After an organization
decides on the metrics it requires, the data must be checked to ensure it can
provide this information. Once it is ascertained that it will provide the relevant
information, the data must be thoroughly cleansed. Erroneous data, duplicates,
and missing data fields must be resolved.

 Descriptive Analytics in Future Data Analysis

Businesses are increasingly becoming data-driven, using results derived from

descriptive analytics for optimization or business practices, from sales and financials
to improving supply chains. In the future, the prediction is that data analytics will
break away from predictive analytics and move towards prescriptive analytics. The
ideal use of data analytics describes what has happened and accurately predicts what
is to come.
Take the example of a GPS navigational system. Descriptive analytics assess
previous delivery routes, the times taken, and fuel use. However, it makes no
predictions about the fastest course in the future, ways to improve speed, or how to
reduce fuel use.
For that, organizations need to use predictive analytics. Going a step further than
simple descriptive analytics, an organization will be provided with optimal delivery
directions. Using prescriptive analytics can help compare multiple travel routes and
suggest the best one possible for that driver, road, or time of day.
Descriptive analytics is a fundamental technique businesses use to comprehend
meaning in the massive amounts of historical data they collect. It is a technique that
helps monitor trends and performance while tracking key performance indicators and
any other metrics you have narrowed down. However, it is a simple tool and should
be viewed as a step in the process, not the ultimate goal. To reach the best outcomes,
organizations must use descriptive analytics alongside a predictive, diagnostic, and
prescriptive analysis to attain more profound insights, accurate predictions, and how
they can improve outcomes.

 Descriptive Analytics Tools

Some common Descriptive Analytics Tools are as follows:

 Excel: Microsoft Excel is a widely used tool that can be used for simple
descriptive analytics. It has powerful statistical and data visualization capabilities.

14
 DATA ANALYTICS
Pivot tables are a particularly useful feature for summarizing and analyzing large
data sets.
 Tableau: Tableau is a data visualization tool that is used to represent data in a
graphical or pictorial format. It can handle large data sets and allows for real-time
data analysis.
 Power BI: Power BI, another product from Microsoft, is a business analytics tool
that provides interactive visualizations with self-service business intelligence
capabilities.
 R and Python: Both are programming languages that have robust capabilities for
statistical analysis and data visualization. With packages like pandas, matplotlib,
seaborn in Python and ggplot2, dplyr in R, these languages are powerful tools for
descriptive analytics.

2. Diagnostic analytics
Diagnostic analytics is a form of data analytics that examines data or content to
answer the question, “Why did it happen?” It is characterized by techniques such as
drill-down, data discovery, data mining, and correlations. It’s used to identify
behaviors, trends, and patterns to figure out why certain outcomes have occurred. This
type of analysis is more advanced than descriptive analytics (which simply describes
what has happened) but not as advanced as predictive analytics (which makes
predictions about the future based on the data) or prescriptive analytics (which
suggests actions to benefit from predictions and optimize outcomes).

 Diagnostic Analytics Techniques

Diagnostic analytics encompasses various techniques used to understand why

something happened the way it did in the past. Here are a few techniques that are
commonly used in diagnostic analytics:
 Drill-Down Analysis This technique involves starting with a general question
and moving towards more specific pieces of information. By systematically
breaking down data, it helps to isolate the cause of a particular outcome.
 Data Discovery This involves mining different datasets to find patterns and
anomalies. This process often involves the use of data visualization tools, which
can highlight trends and outliers that may not be immediately apparent in raw
data.
 Data Mining This technique involves analyzing large volumes of data to
discover patterns and correlations that may not be immediately apparent. This
includes clustering and classification techniques to group similar data and
discover relationships.
 Correlation Analysis Correlation analysis identifies patterns between two or
more variables in a dataset to establish how strongly they are related. This could
help in identifying if a change in one variable could be causing a change in
another.
 Regression Analysis Regression analysis is a statistical method used to
understand the relationship between a dependent variable and one or more
independent variables. It is used to predict the value of the dependent variable
based on the values of the independent variables.
 Root Cause Analysis This is a problem-solving technique that helps to identify,
correct, and eliminate the root causes of problems or events. It is designed to find
the fundamental underlying issues.
 Time Series Analysis This technique involves analyzing a sequence of data
points ordered in time (typically at successive intervals) to identify trends, cycles,
and other patterns.
15
 DATA ANALYTICS
Example for the above techniques:
Certainly! Let's use a real-world example to explain how each of the diagnostic
analytics techniques can be applied:

**Scenario**: Imagine you work for a retail company, and you've noticed a
sudden and significant drop in online sales over the past quarter.

1. **Drill-Down Analysis**:
- Start with the general question: "Why did online sales drop last quarter?"
- Drill down by breaking sales data into specific categories like product types,
geographic regions, and time periods.
- Find that the drop in sales was most significant in the electronics category in
the Western region during a specific month.

2. **Data Discovery**:
- Use data visualization tools to explore the sales data.
- Discover a pattern: Sales dropped right after the company updated its website
and changed the checkout process, leading to increased cart abandonment.

3. **Data Mining**:
- Analyze large volumes of customer data, website interactions, and purchase
history.
- Discover a cluster of customers who abandoned their carts after the website
update and identify common characteristics or behaviors.

4. **Correlation Analysis**:
- Analyze the correlation between website page load times and cart
abandonment rates.
- Find that longer page load times are strongly correlated with higher cart
abandonment.

5. **Regression Analysis**:
- Conduct regression analysis to predict the impact of page load times
(independent variable) on sales (dependent variable).
- Determine that a 1-second increase in page load time results in a 5% decrease
in sales.

6. **Root Cause Analysis**:

- Use root cause analysis to delve deeper into the page load time issue.
- Identify that the slow page load times are due to increased traffic on the
website after a successful marketing campaign, and the server capacity was not
scaled accordingly.

7. **Time Series Analysis**:

- Analyze time series data of website traffic and sales over several months.
- Identify that the drop in sales coincided with a spike in traffic, but the
website's capacity couldn't handle the increased load.

By applying these diagnostic analytics techniques, you can determine that the
drop in online sales was primarily due to slower page load times caused by
increased traffic after a successful marketing campaign. This diagnosis enables
you to take corrective actions, such as upgrading server capacity, optimizing the

16
 DATA ANALYTICS
website, and better coordinating marketing efforts with IT resources, to prevent
similar issues in the future.

 How Does Diagnostic Analytics Work?

The methodology for diagnostic analytics typically involves several steps,
often similar to other data analytics processes. Here are the general steps involved:

 Define the Problem or Outcome: The first step is to clearly define the outcome
you are trying to understand. This could be a particular trend, a performance
metric, a business problem, or any other outcome that you have observed in your
descriptive analytics.
 Data Collection: Once you’ve defined the problem, the next step is to gather the
relevant data. This could involve compiling data from various sources, such as
databases, logs, surveys, etc.
 Data Cleaning and Preparation: After collecting the data, it’s important to
clean and prepare it for analysis. This involves removing or correcting errors,
handling missing values, and possibly transforming the data into a suitable
format.
 Data Analysis: The next step is to conduct the analysis. This typically involves
using statistical methods to identify patterns, correlations, or trends in the data.
The specific techniques used will depend on the problem and the data, but could
include methods like regression analysis, time-series analysis, correlation
analysis, etc.
 Interpret Results: After the analysis, the results need to be interpreted. This
involves understanding the relationships and patterns identified in the data and
drawing conclusions about the causes of the outcome you’re investigating.
 Communicate Findings: The last step is to communicate the findings. This
could involve creating a report or a presentation that clearly explains the results
of the analysis and the conclusions drawn.
 Take Action: Based on the insights from the diagnostic analytics, the appropriate
actions are taken to address the identified issues or to exploit the discovered
opportunities.

 When to use Diagnostic Analytics:

Diagnostic analytics can be helpful in a variety of situations, primarily when
you want to understand why a certain event happened or why a specific result was
achieved. Here are some examples of when to use diagnostic analytics:

 When there’s a significant change in key metrics: If your sales, customer

churn, web traffic, or other key metrics suddenly increase or decrease, diagnostic
analytics can help identify the causes of these changes.
 During performance reviews: Diagnostic analytics can help understand the
factors contributing to the performance of a team, a department, a campaign, or
an individual. It helps in identifying strengths, weaknesses, and areas for
improvement.
 To understand customer behavior: If customers are behaving in a way that is
not anticipated or desired (e.g., not completing purchases, not engaging with a
service, or providing negative feedback), diagnostic analytics can help identify
the reasons behind this behavior.
 To improve operational efficiency: If there are bottlenecks, inefficiencies, or
other problems in your operations, diagnostic analytics can help identify the root
causes of these issues.

17
 DATA ANALYTICS
 In risk management and fraud detection: Diagnostic analytics can help
identify patterns that might suggest fraudulent activity or highlight areas of risk
that need to be managed.
 In product development and innovation: If a product isn’t performing as well
as expected or if you’re trying to understand how a product can be improved,
diagnostic analytics can help identify factors that are impacting product
performance.

 Diagnostic Analytics Examples:

Some Diagnostic Analytics Examples in real life are as follows:

 Customer Churn Analysis: Telecom companies often use diagnostic

analytics to understand why customers leave (known as customer churn).
By analyzing data such as usage patterns, customer complaints, and
payment history, they can identify key factors contributing to customer
churn. For instance, they might find that customers are more likely to
leave after experiencing poor customer service, or that churn is more
likely among customers using certain service plans. This information can
then be used to improve customer retention strategies.
 Supply Chain Management: Businesses with complex supply chains
often use diagnostic analytics to optimize their operations. For instance, if
a company frequently experiences delays in a particular stage of the
supply chain, diagnostic analytics can help identify the root cause. They
might find, for instance, that delays are more common when certain
suppliers are involved, or during certain times of year. This information
can then be used to address the root causes and improve efficiency.
 Sales Performance Analysis: Businesses often use diagnostic analytics
to understand trends in their sales data. If a company observes a decline in
sales, diagnostic analytics can help identify the factors causing this
decline. They might find, for example, that sales have declined among a
certain demographic, or that the decline coincides with changes to a
product or pricing strategy. This can then inform decisions on how to
boost sales.
 Cybersecurity Systems: In the world of cybersecurity, real-time
diagnostic analytics can be used to detect and respond to threats as they
occur. For instance, if a system detects an unusual amount of login
attempts, real-time diagnostic analytics can be used to determine the cause
– possibly a brute force attack. Measures can then be taken immediately to
secure the system, such as blocking the IP address or implementing
stricter access controls.
 Healthcare Monitoring Systems: In healthcare, real-time diagnostic
analytics can be used to monitor the condition of patients. For example,
wearable devices can collect a range of data points such as heart rate,
blood pressure, and oxygen levels. If these indicators deviate from the
normal range, real-time diagnostic analytics can help identify the cause –
for instance, an irregular heart rate might be due to physical stress or a
medical condition. Immediate action can then be taken to address the
issue.

18
 DATA ANALYTICS

 Diagnostic Analytics Tools

 Tableau: A popular data visualization tool that allows users to create a
wide range of different visualizations to represent data and drill down into
data for in-depth analysis.
 Microsoft Power BI: A business analytics tool suite that provides
interactive visualizations with self-service business intelligence
capabilities, enabling end users to create reports and dashboards by
themselves, without having to depend on any information technology staff
or database administrator.
 Python and R Programming Languages: These languages, when
combined with packages like pandas, NumPy, Matplotlib (for Python),
and dplyr, ggplot2 (for R), offer powerful platforms for performing
diagnostic analytics.

 Applications of Diagnostic Analytics:

Diagnostic analytics can be applied in a wide range of fields, providing
insight into past performance and helping to inform future decision-making.
Here are some specific applications:
 Marketing: Diagnostic analytics can help identify which marketing strategies
and channels are most effective and why. By analyzing past campaigns,
marketers can identify the most successful tactics and understand the factors
that contributed to their success.
 Finance: In finance, diagnostic analytics can be used to understand the factors
driving financial performance. For instance, if revenues or profits have
changed significantly, diagnostic analytics can help identify the underlying
causes.
 Operations: Businesses can use diagnostic analytics to optimize their
operations. For example, if a company is experiencing production delays,
diagnostic analytics can help identify the root causes and inform strategies to
increase efficiency.
 Healthcare: In healthcare, diagnostic analytics can be used to understand the
factors contributing to patient outcomes. For instance, by analyzing patient
data, healthcare providers can identify the most significant risk factors for
certain conditions and develop targeted treatment strategies.
 Retail: Retailers can use diagnostic analytics to understand customer behavior
and optimize their sales strategies. For example, by analyzing sales data,
retailers can identify which products are selling well and why.
 Cybersecurity: Diagnostic analytics can be used to understand the factors
contributing to security incidents and develop strategies to mitigate these risks.
For example, if a company experiences a data breach, diagnostic analytics can
help identify the cause and inform strategies to prevent future breaches.
 Supply Chain: Diagnostic analytics can help in identifying bottlenecks or
inefficiencies in the supply chain. By analyzing shipment, inventory, and
logistics data, businesses can better understand where and why delays or
losses are happening and make necessary improvements.

 Advantages of Diagnostic Analytics:

 Better Understanding of Past Performance: Diagnostic analytics allows
businesses to dig into their historical data and understand the reasons behind
19
 DATA ANALYTICS
their successes or failures. It helps to highlight what worked well and what
didn’t, thereby providing context for past performance.
 Enhanced Decision-Making: By understanding why certain outcomes
occurred, organizations can make more informed decisions in the future. It
allows businesses to base their strategies on data-driven insights.
 Identification of Trends and Patterns: Diagnostic analytics can uncover
patterns, trends, and relationships in the data that might not be immediately
apparent. This can lead to new insights that can be leveraged to improve
business strategies.
 Risk Identification and Mitigation: By examining the causes of past events,
diagnostic analytics can help identify potential risks and inform strategies to
mitigate them. For example, it can help in identifying the factors leading to
customer churn or operational inefficiencies.
 Improved Customer Understanding: Diagnostic analytics can provide a
deeper understanding of customer behavior by highlighting the factors that
influence purchasing decisions, engagement, and loyalty. This can help
organizations to improve their customer experience and build stronger
relationships with their customers.
 Operational Efficiency: By uncovering the root causes of problems or
inefficiencies, diagnostic analytics can guide operational improvements,
potentially leading to cost savings and performance enhancements.
 Supports Other Analytic Forms: Diagnostic analytics provides the basis for
more advanced forms of analytics. The insights from diagnostic analytics are
often used to inform predictive analytics (what is likely to happen in the
future) and prescriptive analytics (how we can make it happen).

 Disadvantages of Diagnostic Analytics:

 Depends on Quality of Data: Like all types of analytics, diagnostic analytics

is only as good as the data it’s based on. If the data is incomplete, inaccurate,
or biased, the conclusions drawn from it may also be faulty.
 Does Not Predict Future Events: Diagnostic analytics focuses on
understanding why something happened, but it does not predict future events
or outcomes. It needs to be combined with predictive and prescriptive
analytics for a comprehensive analytics strategy.
 Can Be Time-Consuming: Depending on the complexity of the data and the
questions being asked, diagnostic analytics can be a time-consuming process.
It often involves digging into large volumes of data to identify patterns and
relationships.
 Requires Expertise: Diagnostic analytics often involves complex statistical
analysis and data mining techniques. This requires a certain level of expertise,
which may be a barrier for some organizations.
 Potential for Misinterpretation: There’s always a risk of misinterpretation
when dealing with complex data. If the diagnostic analysis is not conducted
properly, it could lead to incorrect conclusions and poor business decisions.
 Cannot Identify All Causes: Even with advanced tools and techniques, it’s
not always possible to identify all the factors that contributed to a particular
outcome. Some factors may be hidden or simply not included in the available
data.

20
 DATA ANALYTICS

3.Predictive analytics:

Predictive analytics is a branch of advanced analytics that makes predictions

about future outcomes using historical data combined with statistical modeling, data
mining techniques and machine learning. Companies employ predictive analytics to
find patterns in this data to identify risks and opportunities. Predictive analytics is
often associated with big data and data science.
Today, companies today are inundated with data from log files to images and
video, and all of this data resides in disparate data repositories across an organization.
To gain insights from this data, data scientists use deep learning and machine learning
algorithms to find patterns and make predictions about future events. Some of these
statistical techniques include logistic and linear regression models, neural
networks and decision trees. Some of these modeling techniques use initial predictive
learnings to make additional predictive insights.

 Predictive analysis usecases:(Applications)

Predictive analytics can be deployed in across various industries for different
business problems. Below are a few industry use cases to illustrate how predictive
analytics can inform decision-making within real-world situations.

 Banking: Credit Risk Assessment:

Predictive analytics is used to assess the creditworthiness of loan
applicants. By analyzing historical data and various factors such as
credit scores, income, employment history, and past financial behavior,
banks can predict the likelihood of a borrower defaulting on a loan.
This helps in making more informed lending decisions.
 Healthcare: Predictive analytics in health care is used to detect and manage
the care of chronically ill patients, as well as to track specific infections such
as sepsis.Geisinger health used predictive analytics to mine health records to
learn more about how sepsis is diagnosed and treated. Geisinger created a
predictive model based on health records for more than 10,000 patients who
had been diagnosed with sepsis in the past. The model yielded impressive
results, correctly predicting patients with a high rate of survival.
 Human resources (HR): HR teams use predictive analytics and employee
survey metrics to match prospective job applicants, reduce employee turnover
and increase employee engagement. This combination of quantitative and
qualitative data allows businesses to reduce their recruiting costs and increase
employee satisfaction, which is particularly useful when labor markets are
volatile.
 Marketing and sales: While marketing and sales teams are very familiar with
business intelligence reports to understand historical sales performance,
predictive analytics enables companies to be more proactive in the way that
they engage with their clients across the customer lifecycle. For example,
churn predictions can enable sales teams to identify dissatisfied clients sooner,
enabling them to initiate conversations to promote retention. Marketing teams
can leverage predictive data analysis for cross-sell strategies, and this
commonly manifests itself through a recommendation engine on a brand’s
website.
 Supply chain: Businesses commonly use predictive analytics to manage
product inventory and set pricing strategies. This type of predictive analysis
21
 DATA ANALYTICS
helps companies meet customer demand without overstocking warehouses. It
also enables companies to assess the cost and return on their products over
time. If one part of a given product becomes more expensive to import,
companies can project the long-term impact on revenue if they do or do not
pass on additional costs to their customer base.

 Predictive analytics techniques:

Predictive analytics incorporates a variety of data analysis approaches, including
data mining, machine learning, and others. The following are the techniques used in
predictive analytics:
 Decision Trees
A decision tree is an analytics methodology based on Machine Learning that
uses data mining algorithms to forecast the potential risks and benefits of
undertaking certain options. It is a visual chart that resembles an upside-down
tree that depicts the prospective result of a decision. When used for analytics, it
can solve all forms of classification problems and answer difficult issues.
 Neural Networks
Neural networks are biologically inspired data processing systems that use
historical and present data to forecast future values. Their architecture allows
them to identify complicated connections buried in data in a way that replicates
the pattern detecting systems of the human brain.
They are widely used for image recognition and patient diagnosis and comprise
many layers that accept data (input layer), compute predictions (hidden layer),
and provide output (output layer) in the form of a single prediction.
 Text Analytics
Text Analytics is used when a company wants to anticipate a numerical
number. It is built on approaches from statistics, machine learning, and
linguistics. It assists in predicting the themes of a document and analyzes words
used in the supplied form.Eg:-Sentiment analysis based on customer reviews
 Regression Model
A regression method is crucial for the organization when it comes to
estimating a numerical number, such as how long it will take a target audience to
return to an airline reservation before purchasing, or how much money someone
would spend on vehicle payments over a specific length of time.

 Steps in Predictive analytics :

 Define your project’s objectives. What is the desired outcome? What

problem are you trying to solve? The first step is to define your project’s
objectives, deliverables, scope, and data required.
 Collect your data. Gather all the data you need in one place. Include different
types of current and historical data from a variety of sources – from
transactional systems and sensors to call centre logs – for more in-depth
results.
 Clean and prepare your data. Clean, prepare, and integrate your data to get
it ready for analysis. Remove outliers and identifying missing information to
improve the quality of your predictive data set.
 Build and test your model. Build your predictive model, train it on your data
set, and test it to ensure its accuracy. It may take multiple iterations to generate
an error-free model.

22
 DATA ANALYTICS
 Deploy your model. Deploy your predictive model and put it to work on new
data. Get results and reports – and automate decision-making based on the
output.
 Monitor and refine your model. Regularly monitor your model to review its
performance and ensure it’s providing the expected results. Refine and
optimise your model as needed.

 Predictive analytics tools:

 SAS Advanced Analytics
one of the most prominent tools for statistical and data analysis. It
is the world's fastest and most dominant software suite for data
management, data mining, report writing, statistical analysis, business
modeling, application development, and data warehousing.
 IBM SPSS
IBM SPSS Statistics is a statistical software suite developed by IBM for
data management, advanced analytics, multivariate analysis, business
intelligence, and criminal investigation. It's also known as SPSS (Statistical
Package for the Social Sciences).
SPSS Statistics is used in education, market research, healthcare, government, and
retail throughout the entire analytics process, from planning and data collection to
analysis, reporting, and deployment.
SPSS Statistics has a user-friendly interface and a robust set of features that lets your
organization quickly extract actionable insights from your data. Advanced statistical
procedures help ensure high accuracy and quality decision making

 Benefits of Predictive analytics:

1. Improve production efficiency

The benefits of predictive analytics for the production or manufacturing sector are
particularly prevalent. Using predictive analytics, companies can effectively forecast
inventory and required production rates. Additionally, using past data team can
estimate and prevent potential production failures.
Predictive analytics can optimize predictive maintenance schedules and reduce
equipment downtime. Businesses can also utilize forecasting to address supply chain
disruptions and avoid costly setbacks.
2. Gain an advantage over competitors
Predictive analytics gives businesses insight into their existing database; tapping into
the available customer data helps you understand why you are losing customers to
your competitors. It can also help identify unique selling points to acquire qualified
leads.
Predictive analytics helps in delivering enhanced customer experience. Businesses can
analyze customer data, preferences, and behavior to personalize their value
proposition. This personalized approach can help companies to differentiate
themselves from competitors and build stronger customer relationships.
3. Reduce risk
Risk identification and reduction teams regularly use predictive analytics. The
banking, financial services and insurance sector use predictive analytics to help screen
individuals and businesses. It helps form a more reliable interpretation of that person,
business or incident and can be used to make effective decisions.
Furthermore, businesses can use predictive analytics to develop risk mitigation
strategies. It can create scenario simulations for businesses to identify the most
effective approach.
23
 DATA ANALYTICS
4. Detect fraud
One of the most beneficial uses of predictive analysis is fraud detection. The process
is particularly attuned to fraud detection and prevention. It happens by recognizing
behavioral patterns. It can track changes in this behavior on a site or network. Hence,
spotting anomalies that may indicate threat or fraud, which can then be highlighted
and prevented.
Predictive analytics can operate in real-time, allowing businesses to detect and
respond to fraud as it happens. Predictive analytics assigns risk scores or probabilities
to transactions or activities based on historical patterns. These scores indicate the
likelihood of fraudulent behavior.
5. Better sales and marketing efforts
Predictive analytics' core purpose is sifting through data and providing informed
predictions on what to expect. It can look at consumer data for specific campaigns and
tell you what's working and what isn't. It can prepare an action plan to identify cross-
sell and upsell opportunities.
Predictive analytics can analyze customer data to identify distinct segments based on
behavior, demographics, preferences, or purchasing patterns. By understanding these
segments, salespeople can plan targeted activities tailored to each segment's specific
needs and preferences.
It can also estimate the potential value of each customer over their entire relationship
with the business. It helps analyze past purchase data, average order value, frequency
of purchases, and customer behavior. Subsequently, companies can prioritize
marketing efforts on customers with higher Customer Lifetime Value (CLV).

4.Prescriptive analytics:
Prescriptive Analytics is the area of Business Analytics dedicated to
searching out the best solution for day-to-day occurring problems. It is directly
related to the other two comparable processes, i.e. Descriptive and Predictive
Analytics. Prescriptive Analytics can be defined as a type of data analytics that uses
algorithms and analysis of raw data to achieve better and more effective decisions
for a long and short span of time. It suggests strategy over possible scenarios,
accumulated statistics, and past/present databases collected through the consumer
community.

 Example:
Google’s Self-driving car, Waymo is a preferred example showing
prescriptive analytics. It showcases millions of calculations on every trip.
The car makes its own decision to turn in whichever direction, to
slow/speed up and even when and where to change lanes- these acts are
every day like any human being’s decision-making process while driving a
car.

 Steps in prescriptive data analytics:

 Data Collection:
o Gather relevant data from various sources, including structured
and unstructured data. This data can come from databases, logs,
sensors, social media, and more.
 Data Preprocessing:
o Clean, validate, and transform the data to ensure its quality and
consistency. This may involve handling missing values, outliers,
and data normalization.
24
 DATA ANALYTICS
 Data Integration:
o Integrate data from multiple sources, ensuring it's in a usable
format for analysis.
 Data Analysis:
o Utilize statistical and machine learning techniques to analyze the
data. This can involve both descriptive and predictive analytics to
understand historical trends and predict future outcomes.
 Model Development:
o Create mathematical and computational models that can
simulate different scenarios or solutions. These models will serve
as the foundation for generating recommendations.
 Implementation:
o Deploy the prescriptive analytics solution in the real-world
environment. This may involve integrating the
recommendations into operational processes and systems.
 Monitoring and Feedback:
o Continuously monitor the performance of the prescriptive
analytics system and collect feedback. Adjust the models and
recommendations as needed to improve accuracy and
relevance.
 Maintenance and Iteration:
o Keep the prescriptive analytics system up to date with changing
data, business requirements, and external factors. Iterate on the
models and recommendations to ensure they remain effective
over time.

 Prescriptive Analytics for Hospitals and Clinics:

Prescriptive analytics can be used by hospitals and clinics to improve the
outcomes for patients. It puts health care data in context to evaluate the cost-
effectiveness of various procedures and treatments and to evaluate official clinical
methods.
It can also be used to analyze which hospital patients have the highest risk of re-
admission so that health care providers can do more, via patient education and doctor
follow-up to stave off constant returns to the hospital or emergency room.

 Prescriptive Analytics in Marketing:

Just like banking, data analytics is very critical in the marketing sector.
Marketers can use prescriptive analytics to stay ahead of consumer trends. Using past
trends and past performance can give internal and external marketing departments a
competitive edge.
By employing prescriptive analytics, marketers can come up with effective
campaigns that target specific customers at specific times like, say, advertising for a
certain demographic during the Superbowl. Corporations can also identify how to
engage different customers and how to effectively price and discount their products
and services.

25
 DATA ANALYTICS

 Applications of prescriptive analytics:

 Healthcare and Patient Treatment:In healthcare, prescriptive analytics
can assist in treatment planning, optimizing resource allocation, and
patient scheduling to improve patient care and reduce operational
costs.
 Manufacturing and Operations:Prescriptive analytics is applied to
production scheduling, quality control, equipment maintenance, and
process optimization to improve efficiency and reduce downtime
 Marketing and Customer Engagement:Marketers use prescriptive
analytics to tailor marketing campaigns, pricing strategies, and
customer segmentation to increase sales and customer satisfaction
 Risk Management:In the financial industry and beyond, prescriptive
analytics can help assess and mitigate risks by recommending actions
to reduce potential losses and improve risk-adjusted returns.
 Transportation and Logistics:In the transportation industry,
prescriptive analytics can be used for route optimization, vehicle
maintenance scheduling, and load planning to reduce transportation
costs and improve delivery times

 Advantages of Prescriptive Analytics:

 Effortlessly map Business analysis to declare out steps necessary to avoid
failure and achieve success.
 An accurate and Comprehensive form of data aggregation and analysis also
reduces human error and bias.
 Helping in decision-making threads related to problems rather than jumping
to unreliable conclusions based on instincts.
 Removing immediate uncertainties helps in the prevention of fraud, limits
risk, increases efficiency, and creates logical customers.

 Descriptive vs. Predictive vs. Prescriptive Analytics:

Predictive Prescriptive
Descriptive Analysis
Analysis Analysis

What’s going to
Summary What happened? What should happen?
happen?

Function It uses data mining and data It looks at It takes the conclusions

26
 DATA ANALYTICS

historical data gleaned from

and analyzes past descriptive and
aggregation(raw data) to
data trends to predictive analysis and
discover historical data.
predict what recommends the best
could happen. future course of action.

It offers critical insights

It’s easy to employ in daily
It’s a valuable into making the best,
Pros operations. Little experience
forecasting tool. most informed
is needed.
decisions.

It needs lots of
It requires a lot of past
It offers a limited view, and historical data to
data and often cannot
Cons doesn't go beyond the data’s work. It will
account for all possible
surface. never be 100%
variables.
accurate.

 Importance and Benefits of Data Analytics

 Data is an unorganized and raw collection of facts that has massive
importance for a company.
 In the modern world, every company wants to collect and analyze data to
know their past mistakes.
 It might help them to build a better future. Sometimes these companies find
it challenging to use analytics tools.
 The demand for data analysts and their related roles comes into the picture.
You might understand that industries require data analytics skills.
 Data Analytics always helps companies to get an insight into how to
develop the business.
 There are several types of tools you will require to interpret the data.
 Companies use data analytics tools to understand customer behavior and
increase productivity.
 It might help them to store information about the latest trends in the market.
 The company uses tools related to business intelligence and data
management to identify the changing functions.
 The main three things will give good insight, immediate action, and
information system. A good insight will help you to understand the
business context.

27
 DATA ANALYTICS
 The information will help to access the organization’s storage and
information system.
 You will be able to take immediate action based on valuable information.
 The companies are trends to focus on experiments with analytical
languages and tools to develop new ideas.
 Benefits:
 Improved Decision Making
Foremost among the top data analytics benefits is better decision-making. It
offers insightful, data-driven information that aids organizations in
understanding their customers, operations, and markets. They can spot
patterns, trends, and correlations. Moreover, they use this knowledge to make
well-informed choices supported by data and metrics rather than mere
guesswork. Businesses can boost productivity, cut costs, find new
opportunities, and reduce risks by optimizing their strategies and making more
informed decisions. Because they are based on actual data and analytics, data
analytics also enables organizations to make more transparent and dependable
decisions.
 Increased Efficiency and Productivity
Data analytics enables organizations to increase efficiency and productivity by
automating and streamlining processes, maximizing resource allocation, and
minimizing manual labor. Businesses can streamline their workflows by
locating bottlenecks and getting rid of duplication. Additionally, data analytics
assists businesses in identifying areas where productivity can be increased,
such as waste reduction, better inventory control, and supply chain
optimization.
 Enhanced Customer Experience
By giving organizations useful insights into customer behavior, preferences,
and needs, data analytics enables businesses to identify areas where they can
improve their customer experience–such as lowering wait times, enhancing
customer service, or streamlining user interfaces. Data analytics thus helps
businesses tailor their offerings to meet consumers’ unique needs, thus forging
closer ties with them and fostering greater customer loyalty.
 Improved Risk Management
Businesses can find patterns and correlations in data from various sources that
point to potential risks. Data analytics can, for instance, assist companies in
identifying potential fraud, online threats, or operational risks. Businesses can
also take preventative action to mitigate potential risks by monitoring data in
real-time. By utilizing data analytics to enhance risk management, they can
lessen the possibility of monetary losses, reputational damage, and other
negative outcomes.
 Competitive Advantage
Businesses can gain a competitive edge using data analytics to make more
informed, data-driven decisions. Analyzing data from various sources allows
businesses to understand market trends, consumer behavior, and competitor
activities. Businesses can use this information to improve their strategies, spot
new opportunities, and set themselves apart from the competition. Data
analytics can, for instance, aid companies in identifying underserved market
segments, anticipating client needs, and enhancing product offerings. Simply
put, businesses can increase their market share, spur revenue growth, and
fortify their brand by utilizing data analytics to gain a competitive advantage.

28
 DATA ANALYTICS
 Applications of data analytics in business
Data analytics plays a crucial role in modern business operations by
providing valuable insights and enabling data-driven decision-making. Here
are some key applications of data analytics in business:

1. Customer Analytics:
- Customer Segmentation: Analyzing customer data to group them based
on demographics, behavior, or preferences, helping businesses tailor their
marketing strategies.
- Churn Prediction: Identifying customers at risk of leaving and
implementing retention strategies.
- Cross-selling and Upselling: Recommending additional products or
services to existing customers based on their past behavior and preferences.

2. Marketing and Sales:

- Campaign Effectiveness: Evaluating the performance of marketing
campaigns to allocate resources more effectively.
- Price Optimization: Analyzing pricing data to determine optimal pricing
strategies for products and services.
- Sales Forecasting: Predicting future sales to optimize inventory and
production.

3. Operational Analytics:
- Supply Chain Optimization: Analyzing supply chain data to reduce costs,
optimize inventory, and improve delivery times.
- Quality Control: Using data to monitor and improve product quality,
reducing defects and waste.
- Resource Allocation: Allocating resources efficiently based on data
insights, optimizing workforce scheduling and resource usage.

4. Financial Analytics:
- Fraud Detection: Identifying unusual financial transactions or patterns to
detect and prevent fraud.
- Risk Management: Assessing and managing financial risks through data-
driven analysis.
- Financial Forecasting: Predicting future financial performance and
making investment decisions.

5. Human Resources:
- Employee Performance: Evaluating employee performance and
identifying areas for improvement.
- Talent Acquisition: Using data to make informed hiring decisions and
reduce employee turnover.
- Workforce Planning: Predicting workforce needs and optimizing staffing
levels.

6. Product Development:
- Product Analytics: Analyzing user data and feedback to enhance existing
products and develop new ones.
-Market Research: Using data to understand market trends and consumer
preferences.
- A/B Testing: Experimenting with product changes and analyzing data to
determine which version is more effective.
29
 DATA ANALYTICS

7. Customer Service:
- Sentiment Analysis: Analyzing customer feedback and social media data
to gauge customer sentiment and address issues promptly.
- Chatbots and Virtual Assistants: Using data-driven AI solutions to
improve customer support and automate responses.

8. Risk Assessment and Compliance:

- Regulatory Compliance: Ensuring compliance with industry regulations
and standards through data monitoring.
- Credit Scoring: Assessing creditworthiness of customers or clients based
on historical data.

9. Energy and Utilities:

- Energy Consumption Optimization: Analyzing energy data to reduce
consumption and improve sustainability.
- Predictive Maintenance: Using data to predict equipment failures and
schedule maintenance proactively.

10. Healthcare Analytics:

- Patient Care Optimization: Analyzing patient data for better treatment
decisions and resource allocation.
- Disease Outbreak Tracking: Monitoring and predicting disease
outbreaks using health data.

In summary, data analytics is a versatile tool that can be applied to nearly

every aspect of business operations, helping organizations make more
informed decisions, improve efficiency, reduce costs, and gain a competitive
edge in the market.

30