To make your business competitive, you need the right talent and technology. Expertise in business analytics is essential if you want to use the information at your fingertips to help you make smarter business decisions. The four forms of analytics—descriptive, diagnostic, predictive, and prescriptive—help organizations get the most from their data. Whether you're looking into the basics of business intelligence or seeking advanced insights into financial analytics, this post offers a comprehensive overview of the types of analytics, their branches, and their role in data-driven decision-making.
Swimming in a Sea of Data
To be successful, modern businesses need to leverage data analytics. Analytics can be conducted in a multitude of ways to help businesses shed light on how they are performing and what improvements they can make for the future.1
Data analytics, by definition, is the science of analyzing raw data through extraction and categorization to identify trends, relationships, connections, and patterns, in order to make accurate conclusions.2,3
Data-Driven Decisions: Achieving Real-World Business Objectives
By historical context, data analytics has come a long way from its origins in ancient Sumeria. Three thousand years ago, the first databases were kept on clay tablets.4 Data keeping—and analyzing—has since moved from clay to digital databases. Buoyed by the rise of electronic computers in the 1940s and 1950s, analysts began using technology to make high-speed calculations.5 In the 1980s, as data storage became affordable, large data sets were able to be collected. By the 2010s, the term big data was commonplace and is now paving an important road to the future.
More Data Sources: Learn How to Manage Large Volumes of Data for Business Success
In today's data-intensive business world, data analytics has become an important tool for every industry, including the financial industry.
While computers perform much of the data analysis, there are a large number of applications aimed at facilitating user control. People still play an important role when it comes to analyzing data in this ever-evolving frontier.
Read on to learn how data analytics and big data are being leveraged in the modern financial and business sectors, what kind of lucrative career opportunities there are for those who have advanced data analytics and financial skills, and where these top analytics skills can be gained.
Big Data: What It Is and Why It's Important for Informed Decisions
Data analytics and its business applications have moved well beyond the limited canned reports and structured data capabilities of the 1960s.3 Today's business analytics tools deliver powerful insights gleaned from big data, “an architecture that allows the storage and retrieval of exponentially large amounts of unstructured data.”3
The process of big data involves data visualization of “complex, variously formatted data generated at high speed, that cannot be handled or processed by traditional systems.”6 Due to the sheer volume of data being created by smart devices across the globe on a daily basis, it is estimated the total volume of data will reach 175 ZettaBytes by 2025. For perspective, a zettabyte is expressed as 1,000,000,000,000,000,000,000 or 1021 bytes. This growth trajectory is exponential. Based on current trends, the amount of global data being collected is expected to double every two years.4
Data-Driven Actionable Insights: More Than Statistical Analysis
Such large amounts of data require the latest business analytics tools. There are a number of business analytics programs available to perform cutting-edge analyses, manage large data sets, and find compelling insights:
- Spark (Apache)
- SQL Server (Microsoft)
- R Programming3
How are business data analytics and big data used by companies?
While the amount of programs we have to conduct analytics with is impressive, what does the availability and variety of data mean for businesses which are looking for real-world applications and solutions?
In short, this means companies that can leverage their data properly now have limitless possibilities to improve their businesses and interact with customers at an optimal level. It also means they can conduct real Business Intelligence (BI). BI is the process of gathering all data generated by a business and boiling it down to easy-to-digest reports that management can understand and act on. With the right BI, companies can do everything from reducing costs to improving employee satisfaction.7
Data Science to Answer Questions: Gain Insights Using Customer Data and Key Performance Indicators
Businesses can use big data to go beyond canned reports and make emergent, transformative, and model-based reporting and analyses. Predictive forecasting is now also possible, based on our ability to collect vast amounts of data across multiple, disparate sources. Big data also allows companies to:
- Discover and pursue new business opportunities
- Drive innovation
- Increase revenue, customer lifetime value, and conversion rates
- Reduce churn and bounce rates
- Improve business processes; improve operational efficiency as well as cut costs
- Gain an advantage in the industry
- Be proactive about risk management
- Streamline production
- Improve customer experience
- Optimize pricing, billing, claims, returns, compensation
- Be proactive about maintenance
- Define their customers
- Develop new services and products,8,9
The Five V's of Data: Manage Data-Driven Decision-Making to Draw Valuable Conclusions
To be effective and find solutions to real-world business problems, big data should be able to manage the five Vs, or major characteristics of data:
- Volume: The huge amount of data being collected
- Variety: The heterogeneous information sources that can be structured, semi-structured, and unstructured
- Veracity: The inconsistencies and uncertainty in data that can be difficult to control
- Velocity: The rapid speed at which data is being collected
- Value: Data needs to be converted into something valuable to extrapolate useful information10
Advanced Analytics in Finance: Analyzing Data for Today's Evolving Financial Field
In finance, big data is used to track and monitor the financial markets and catch illegal practices. The finance industry also relies on analytics to:
- Combat money laundering
- Create accurate customer insights
- Mitigate fraud
- Uphold enterprise risk management3
All areas of business can benefit from well-run analytics, including healthcare, oil and gas, telecommunications, retail, manufacturing, and financial services.
What are the four types of business analytics?
The four subsets of data analytics are descriptive, diagnostic, prescriptive, and predictive. Businesses across all types of industries utilize these specialty areas in analytics to increase overall performance at all levels of operations. These four types of analytics all work together and can be used together to help improve business performance.
Descriptive analytics can show “what happened” and is the foundation of data insights. According to Investopedia, it is the interpretation of historical data to better understand changes that have occurred in a business. This type of analytics can be used to gain an overall picture of how a business is performing and is often used alongside predictive and prescriptive analytics. Common insights include year-over-year comparisons, the number of users, and revenue per subscriber.11
Diagnostic analytics addresses “why things happened.” Common diagnostic analytic techniques/insights include drill-down, data discovery, data mining, and correlations.12 Companies use this data to identify patterns of behavior and make deep connections within the data they have collected. In order to be effective, diagnostic data must be detailed and accurate.
Businesses use predictive analytics to “see the future” and predict “what is likely to happen.” Existing data, modeling techniques, and statistical modeling are leveraged to generate predictions about performance and future outcomes. Predictive models are especially useful for marketing and insurance companies which need to make decisions based on what could be coming up.
Common processes in predictive analytics include decision trees, neural networks, and regression models.13 Compared to descriptive and diagnostic analytics, which is fairly common in most businesses, predictive analytics is more intensive and many companies are not leveraging this type of analytics yet.
Prescriptive analytics, analytics driven by AI (Artificial Intelligence) systems, helps companies make decisions and determine “what they should do next.” This is the most in-demand type of analytics today, however, it is talent and resource-expensive: Few companies have the skilled employees and resources to conduct it.
This type of analytics is on the leading edge of the analytical landscape and requires sufficient investment and commitment across the entire organization that wishes to perform it. Big data players like Apple, Netflix, and Facebook are currently conducting prescriptive analytics successfully. AI itself falls within the category of prescriptive analytics. It requires tremendous data and continuously updated data to help it learn, refine its decisions, and then communicate and act on these decisions in a business setting.1
Data Analytics for Business Careers: Getting the Right Skills and Deep Knowledge to Analyze Data
Demand for employees who can conduct business data analytics in the financial business sector is on the rise. The U.S. Bureau of Labor Statistics (BLS) estimates financial analyst roles will grow 6% through 2030, with those in related positions earning an average salary of $81,410.14
- Financial Analyst
- Financial Manager
- Chief Financial Officer (CFO)
- Private Wealth Management
- Chief Analytics Officer (CAO)15
When it comes to learning the latest business analytics skills the financial business sector is looking for, advanced master's-level skills are recommended. SCU's Leavey School of Business has a financial master's curriculum that teaches the latest in business skills and strategies—including advanced analytics skills for business, the cornerstone of today's most forward-thinking organizations.
Dig Deeper With Each SCU Online Course and Core Courses
SCU's IDIS 3802 (MSIS 2407), Data Analytics With Python course teaches the programming skills that are essential for today's data scientists including open-source Python, Jupyter Notebook, NumPy, Pandas, Seaborn, scikit-learn, and Colab. Students of the online MS in Business Analytics program also learn about:
- Importing, cleaning, and transforming data
- Algorithmic thinking
- Data visualization, grouping, aggregation, reshaping
- Statistical modeling and time series
- Data exploration
- Communication of results
Additional courses in the program will help students become adept at navigating the heavily-quantitative realm at the intersection that finance, business, management, and analytics occupy today.
Master's of Business Analytics Programs Forge Strong Career Paths for Business Analysts
The world is changing fast. The future of business will be shaped by data and those who have a firm grasp on how to use it well in their company's favor.
We collect more information than ever before, yet most companies lack deep knowledge of these immense information systems and where they can lead them in the real world of business with informed decisions. All that changes now because we can access databases from anywhere through our smartphones. Data has become both essential and underserved: without knowing which statistics matter most.
Gain Real-World Experience and Draw Conclusions for a Competitive Advantage
A top-ranked Online Master of Science in Business Analytics is designed for those looking to become a leader at any point during their career path, no matter what organization they are working with. The program will help you develop the understanding and the skills that can be used by anyone from marketing specialists all the way up through top management positions within companies — by teaching everything needed about modern data analysis including statistics as well as optimization theory surrounding information technology concepts.
With a wide range of elective courses to choose from, you can narrow your focus and build on what's best for a business or analytics-driven path. With a cutting-edge curriculum designed by an advisory board whose members include industry leaders - this is sure to be some powerful learning.
Master Finance and Analytical Skills for a Career Boost
With its robust academics and Silicon Valley focus, SCU's online master's of finance and analytics prepares you to thrive in data careers that are in demand in corporate finance settings and investment-focused organizations.
SCU's Online MSFA is ranked the #12 Best Online MBA for Finance program according to U.S. News and World Report. SCU Leavey business school has been ranked #1 for Academic Experience and #1 for Career Outcomes by Poets&Quants.16
Strategic Decisions for Your Career: SCU Leavey School of Business Online Master's Degrees
An Online Master's in Business and Finance from Santa Clara University's Leavey School of Business is a great way to sharpen your analytics skills and build a powerful Silicon Valley Network. Learn more about our world-class business faculty, and consider how their connections and accomplishments can be vital building blocks for your career.
The Leavey School of Business, founded in 1923 and accredited by AACSB since 1931 has been training intelligent business leaders for nearly a century. It is one of the first schools to receive this recognition within America's higher education system; earning them respect across industries worldwide ever since.
For more information, schedule a call with an SCU admissions outreach advisor.
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- Retrieved on December 15, 2022, from geeksforgeeks.org/what-is-big-data/?ref=lbp
- Retrieved on December 15, 2022, from investopedia.com/terms/b/business-intelligence-bi.asp
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- Retrieved on December 15, 2022, from oracle.com/a/ocom/docs/top-22-use-cases-for-big-data.pdf
- Retrieved on December 15, 2022, from geeksforgeeks.org/5-vs-of-big-data/
- Retrieved on December 15, 2022, from investopedia.com/terms/d/descriptive-analytics.asp
- Retrieved on December 15, 2022, from gartner.com/en/information-technology/glossary/diagnostic-analytics
- Retrieved on December 15, 2022, from investopedia.com/terms/p/predictive-analytics.asp
- Retrieved on December 15, 2022, from www.bls.gov/ooh/business-and-financial/financial-analysts.htm
- Retrieved on December 15, 2022, from onlinedegrees.scu.edu/media/blog/what-are-the-career-prospects-for-a-masters-degree-in-finance-and-analytics
- Retrieved on December 15, 2022, from onlinedegrees.scu.edu/