Share with your friends










Submit

Analytics Magazine

Profit Center: What is analytics?

March/April 2011

CLICK HERE TO GO TO THE DIGITAL VERSION OF THIS ARTICLE

E. Andrew BoydBy E. Andrew Boyd

Definitions are useful to the extent they serve a purpose. So, is defining “analytics” important?

Yes and no. It’s not likely that we’ll ever arrive at a conclusive definition of analytics, but discussing what is and isn’t within its realm provides cohesive boundaries; boundaries that can help analytics emerge as an academic discipline, a field of business or a career. We cogently talk about mathematics even though it covers many varied topics. Analytics hasn’t quite reached that point. Understanding its boundaries can help people considering analytics appreciate what they’re getting into. In particular, it can help companies wanting to pursue analytics understand what will work best in their business. This is especially important given that the growth of analytics is leading consultants and software vendors, many of whom don’t fully grasp what analytics can offer, to jump into the fray.

There’s general agreement that analytics involves the analysis of data to better solve business problems. That’s a powerful starting point, since it acknowledges the analysis of data as the foundation of analytics. But what, exactly, is meant by analysis?

One definition, proposed by software vendor and solutions provider SAS, involves eight different levels. These levels aren’t set in stone, nor are they universally agreed upon (consultants and vendors frequently devise their own method of defining analytics to accentuate their competencies). But they do provide a good basis for discussion:

1. Standard reports
2. Ad hoc reports
3. Query/drill down
4. Alerts
5. Statistical analysis
6. Forecasting/extrapolation
7. Predictive modeling
8. Optimization

Even more fundamental than the eight levels are the two broad categories into which each falls. The first four levels involve reports, while the last four involve the use of mathematics. In the former case, decision-making is left to a decision-maker. In the latter, mathematical results can either be used to support a decision-maker or to automate decision-making. For example, is a decision-maker presented with the expected demand for airline tickets at different price points and expected to choose the price? Or is a price calculated and set automatically?

Business intelligence (as opposed to business analytics or just analytics) has been used variously to refer to reports or both reports and mathematics together. In either case the term analytics is often reserved for the category that makes use of mathematics. As a generic moniker, business intelligence and analytics are often used interchangeably to refer to both categories. Analytics is sometimes used to refer to both the reports and mathematics categories, with the mathematics category – or some subset of it – referred to as predictive analytics. It’s no wonder people are confused.

For the record, I prefer to reserve the term “analytics” for modes of mathematical analysis. This isn’t to diminish reporting. When good reports are coupled with good business practices, the results can be of incredible value. And the effort required to create good reports – most notably, getting poor data cleaned up – is a necessary prerequisite for applying techniques in the mathematics category fruitfully.

Whatever the name, appreciating the distinction between the use of reports and the use of mathematics is important. Reports and reporting tools are the domain of software engineers. Mathematics is the domain of mathematicians (or more precisely, individuals trained in mathematics relevant to business decision-making). Business leaders looking to introduce analytics into their organizations need to be cognizant of the expertise of the consultants and vendors they work with. Without bona fide credentials in relevant mathematics, such as operations research or statistics, a company can’t deliver the powerful mathematical tools available for data analysis. Software for mathematical analysis is also quite different from software for managing and presenting descriptive data. And with rare exception, software vendors excel at one or the other but not both.

Over time, the boundaries delineating analytics will become better defined. And they should be – for the health of the discipline and those who want to employ it.

Andrew Boyd served as executive and chief scientist at an analytics firm for many years. He can be reached at e.a.boyd@earthlink.net.

CLICK HERE TO GO TO THE DIGITAL VERSION OF THIS ARTICLE

Related Posts

  • 45
    The information explosion has led organizations to leverage data to improve the overall decision-making process. Organizations are looking to deploy data-driven strategies across their business processes and functions, such as marketing, risk, supply chain and finance. It’s critical now more than ever to have the right people, processes, methodologies, platforms…
    Tags: analytics, business, problems
  • 45
    Features New paradigm: Service as a Software Leveraging the interconnectedness of business problems to accelerate better decision-making. By Deepinder Dhingra Journey from CSP to DSP Text mining will play a pivotal role in the transition from communications service providers to digital service providers. By Somnath De, Saibal Samaddar and Upasana…
    Tags: business, analytics, software, problems
  • 44
    From reporting traffic jams using the Waze app to a colony of ants working together to achieve extraordinary feats, examples of crowdsourcing and collective intelligence are all around us. As the problems that we face grow in complexity, the speed and reach of communications and data flow are vastly improving…
    Tags: analytics, problems, business, mathematics
  • 41
    As the Big Data Analytics space continues to evolve, one of the breakthrough technologies that businesses will be talking about in the coming years is prescriptive analytics. The promise of prescriptive analytics is certainly alluring: it enables decision-makers to not only look into the future of their mission critical processes…
    Tags: analytics, software, business
  • 40
    IBM recently announced a significant expansion of its capabilities around business analytics with plans to open a network of Analytics Solution Centers around the world, beginning with five in the second quarter of 2009.
    Tags: analytics, business, consultants


Headlines

Fighting terrorists online: Identifying extremists before they post content

New research has found a way to identify extremists, such as those associated with the terrorist group ISIS, by monitoring their social media accounts, and can identify them even before they post threatening content. The research, “Finding Extremists in Online Social Networks,” which was recently published in the INFORMS journal Operations Research, was conducted by Tauhid Zaman of the MIT, Lt. Col. Christopher E. Marks of the U.S. Army and Jytte Klausen of Brandeis University. Read more →

Syrian conflict yields model for attrition dynamics in multilateral war

Based on their study of the Syrian Civil War that’s been raging since 2011, three researchers created a predictive model for multilateral war called the Lanchester multiduel. Unless there is a player so strong it can guarantee a win regardless of what others do, the likely outcome of multilateral war is a gradual stalemate that culminates in the mutual annihilation of all players, according to the model. Read more →

SAS, Samford University team up to generate sports analytics talent

Sports teams try to squeeze out every last bit of talent to gain a competitive advantage on the field. That’s also true in college athletic departments and professional team offices, where entire departments devoted to analyzing data hunt for sports analytics experts that can give them an edge in a game, in the stands and beyond. To create this talent, analytics company SAS will collaborate with the Samford University Center for Sports Analytics to support teaching, learning and research in all areas where analytics affects sports, including fan engagement, sponsorship, player tracking, sports medicine, sports media and operations. Read more →

UPCOMING ANALYTICS EVENTS

INFORMS-SPONSORED EVENTS

INFORMS Annual Meeting
Nov. 4-7, 2018, Phoenix

Winter Simulation Conference
Dec. 9-12, 2018, Gothenburg, Sweden

OTHER EVENTS

Making Data Science Pay
Oct. 29 -30, 12 p.m.-5 p.m.


Applied AI & Machine Learning | Comprehensive
Starts Oct. 29, 2018 (live online)


The Analytics Clinic
Citizen Data Scientists | Why Not DIY AI?
Nov. 8, 2018, 11 a.m. – 12:30 p.m.


Advancing the Analytics-Driven Organization
Jan. 28–31, 2019, 1 p.m.– 5 p.m. (live online)


CAP® EXAM SCHEDULE

CAP® Exam computer-based testing sites are available in 700 locations worldwide. Take the exam close to home and on your schedule:


 
For more information, go to 
https://www.certifiedanalytics.org.