The Most Important 3 Types of Analytics in Business You Should Learn

Over time, businesses have gotten more and more dependent on information systems. New and advanced systems are being introduced for better decision-making. The concept of information systems is so widespread that you rarely find any business that isn’t using it.

Studies show that more than 75% of businesses use these 3 types of analytics methods. Even businesses in their start-up or growth phase use analytical methods to evaluate their business aspects critically.

Business analytics techniques help us to use researched data and manipulate it in a meaningful form. It helps us to understand and get more insight into the business. It helps us evaluate our customers’ choices, market, and operation tactics.

In this article, we will learn about the 3 types of analytics that help in evaluating and improving business practices. But first, let’s understand the concept of Analytics.

What is Business Analytics?

Business analytics is the process of converting raw data into a more organized form to provide insights about the business. This new manipulated data is used for improving the decision-making process. It uses various data presentation techniques, such as data visualization tools, data mining, modeling, etc.

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Types of Business Analytics

3 types of analytics are used for decision-making in business. They are – Descriptive, Predictive, and Prescriptive analytics. These 3 types of analytics answer the question of What has happened in business? Based on past performance and data, what could happen in business? And What should happen in business?

Let us study these 3 types of analytics in detail.

Descriptive Analysis

Descriptive analysis is the most basic form of business analytics. It is used to track trends and operational performance. In the descriptive analysis, we study and highlight past patterns and existing data to understand what’s happened in the business.

Compared to the other two analytical techniques, descriptive analysis does not predict the future; rather, it is concerned with what has happened in the past. Descriptive analysis is done based on data mining and aggregating of data.

Descriptive analysis is used to make business reports, KPIs, and reports which help us track the performance and trends of the business. These reports help us study what has happened in business and why it happened, and ultimately also help us understand how the business can be improved.

Predictive Analysis 

Next of the 3 types of analytics is predictive analysis. Predictive analysis is a more advanced and complex form of business analytics. This method uses past trends and performances to predict future events.

Predictive analysis uses data mining and statistical modeling techniques to predict future outcomes. The predicted outcomes become the basis for current operation change. If the predicted outcome is positive, the businesses use more force on existing practices. If the predicted outcome is bad, the business uses corrective measures to change the outcome.

Prescriptive Analysis

The last of the 3 types of analytics is the Prescriptive analysis. The prescriptive analysis takes one step further than both – descriptive and predictive. It uses the data of both analyses and provides a corrective measure. It provides alternatives about what should be practiced to avoid unwanted outcomes.

The prescriptive analysis offers something more than just data. It analyses past performance and trends, estimates future outcomes, and provides recommendations to improve those future outcomes.

This helps businesses in decision-making to save time and effort and provide optimal solutions. With the alternatives provided by prescriptive analysis, the business can study how effective its current practices are and how to improve them.

Diagnostic Analysis 

Aside from the main 3 types of analytics, there is one newly discovered method called diagnostic analysis. This method answers the question of why certain events occurred at business practices. And this method uses tools such as data mining, drill down, correlations, and data discovery.

Diagnostic analysis helps businesses to understand the core of the problem. This helps the business study what went wrong and use corrective measures. Diagnostic analysis can also be sued for analyzing competitors.

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FAQs

Closing Statement 

With the increasing use of information systems for business analysis, we must be aware of the business analytics techniques that can aid our businesses. And knowing these 3 types of analytics and the newly emerged diagnostic analysis can help us choose the analytical technique we should use.

These analytical techniques can be the core of your business’s decision-making process. Analytical techniques can provide the cause and solutions for your business practices.

I hope this article regarding the 3 types of analytics is informative. If you have any doubts or suggestions, describe them in the comment box.

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