Hindsight: Descriptive Analytics
Discovery: Diagnostic Analytics
Why Did It Happen?
Foresight: Predictive Analytics
What Is Likely to Happen?
Business Decisions: Prescriptive Analytics
What Should I Do About It?
Analytics is the scientific process of harnessing analytic techniques and technologies to transform raw data into useful information for better business decisions.
How are data analysts different from business analysts? Data analysts ask, “what happened?” and then use data warehousing and data marts, text mining, spatial analysis, sentiment analysis and descriptive and inferential data to investigate. Business analysts ask, “why did it happen?” and “how can we make a better business decision?” They answer these questions using:
Descriptive analytics aims to answer the question “What happened?” This represents the early stage of a business analytics project that summarizes historical data and identifies possible relationships between customers and products or other relevant variables.
Diagnostic analytics aims to answer the question “Why did it happen?” It allows the analyst to drill down and explore data in an attempt to understand the causes of different events.
Predictive analytics aims to answer the question “What is likely to happen next?” The concern is modeling past data to make predictions about future outcomes, trends, and probabilities.
Prescriptive analytics aims to answer the question “What should we do?” It goes beyond predicting future outcomes to identify actions that leverage opportunities or mitigate risk for businesses.