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Descriptive Analytics

Descriptive analytics help answer the question "What happened?" by analyzing historical business data and metrics. The key functions of descriptive analytics include identifying important business metrics, cataloging relevant data sources, preparing the data for analysis, analyzing patterns in the data, and presenting results visually. Descriptive analytics establish a foundation for other types of analytics by determining baseline performance based on past data and establishing a common set of key performance indicators (KPIs) to measure and monitor business goals.

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Grace Yin
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72 views

Descriptive Analytics

Descriptive analytics help answer the question "What happened?" by analyzing historical business data and metrics. The key functions of descriptive analytics include identifying important business metrics, cataloging relevant data sources, preparing the data for analysis, analyzing patterns in the data, and presenting results visually. Descriptive analytics establish a foundation for other types of analytics by determining baseline performance based on past data and establishing a common set of key performance indicators (KPIs) to measure and monitor business goals.

Uploaded by

Grace Yin
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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Descriptive analytics 101: What happened?

May 10, 2018 0 24461 Reading


Time: 4 minutes
This piece on descriptive analytics is the second in a series of guest posts written
by Dan Vesset, Group Vice President of the Analytics and Information
Management market research and advisory practice at IDC.
Analytics solutions ultimately aim to provide better decision support — so that
humans can make better decisions augmented by relevant information. Decision
support capabilities can be segmented into five related categories, each of which
is deployed to answer different types of questions:
• Planning analytics: What is our plan?
• Descriptive analytics: What happened?
• Diagnostic analytics: Why did it happen?
• Predictive analytics: What will happen next?
• Prescriptive analytics: What should be done about it?
Descriptive analytics: What happened?

As discussed in the previous post, once you have identified your plan, then you
move onto figuring out what is happening in your business. That’s where
descriptive analytics comes in. Descriptive analytics help answer the question
‘What happened?’ in all its forms: What were our sales last quarter or last month
or yesterday? Which customers required the most customer service help? Which
product had the most defects? Questions like these form the foundation for your
entire analytics strategy. For now, regardless of the smarts built into the
technology, we still need people to ask those initial questions and to set the goals
and associated key performance indicators (KPIs) by which the enterprise will be
measured and managed.
Descriptive analytics have frequently been associated with data visualization via
reports, dashboards, and scorecards. Compelling visualizations and an intuitive
user interface that adapts to various types of decision makers can help drive
pervasive adoption of analytics technology. However, visualization on its own is
only one of several functions of descriptive analytics.
The functions delivered by descriptive analytics solutions fall broadly into five
categories:
• State business metrics: Determine which metrics are important for evaluating
performance against business goals. Some goal examples would be to increase
revenue, reduce costs, improve operational efficiency, and measure productivity.
Each goal must have associated KPIs to help monitor achievement.
• Identify data required: Business data is located in many different sources
within the enterprise, including systems of record, databases, desktops, and
shadow IT repositories. To measure accurately against KPIs, companies must
catalog and prepare the correct data sources to extract the needed data and
calculate metrics based on current state of the business.
• Extract and prepare data: Data must be prepared for analysis. Deduplication,
transformation, and cleansing are a few examples of the data preparation steps
that need to take place prior to analysis. Often, this is the most time-consuming
and labor-intensive step, requiring up to 80% of an analyst’s time,but it is critical
for ensuring accuracy.
• Analyze data: Data analysts can create models and run analyses such as
summary statistics, clustering, and regression analysis on the data to determine
patterns and measure performance. Key metrics are calculated and compared
with stated business goals to evaluate performance based on historical results.
Data scientists often use open source tools like R and Python to programmatically
analyze and visualize data.
• Present data: Results of the analytics are usually presented to stakeholders in
the form of charts and graphs. This is where the data visualization mentioned
earlier comes into play. BI tools give users the ability to present data visually in a
way that non-data analysts can understand. Many self-service data visualization
tools also enable business users to create their own visualizations and manipulate
the output.
It’s important to emphasize that the success of modern descriptive analytics
hinges on KPI governance. In today’s business environment of constant change,
enterprises must be able to establish and evaluate a portfolio of changing KPIs. In
a 2017 IDC study conducted with 120 chief analytics officers, we found that in the
past 12–24 months, 65% of them started tracking and measuring new KPIs on
behalf of their business constituents. This behavior is one of the most telling signs
of digital transformation because it showcases willingness to challenge the status
quo and to ask new questions. That said, it also raises the issues of tracking,
monitoring, and adjusting KPIs on an ongoing basis.
Governance is also the foundation of trust in data. Coming to agreement on the
meaning of data, and the subsequent need to train end users on what the data
represents are key to the diffusion of analytics solutions. Without governance,
there may not be consensus regarding what the data means, thus guaranteeing
analytics a marginal role in decision making.
We find that, when decision making is based on unarticulated data and metrics,
decisions are made in an environment of strategic ambiguity. Decision makers
understand each other less than they think they do. In data-intensive decision
making, coordination is accomplished through consistent interpretation of the
data. In our interviews with enterprises across different industries and countries,
data and KPI governance is one of the most frequently mentioned challenges of
analytics projects.
Although data science- and AI-enabled predictive and prescriptive analytics garner
most of today’s headlines, without solutions to answer “what happened?” it is
impossible to proceed to the next steps of identifying why something happened,
what might happen next, and what to do about it. All other analytics depend on
descriptive analytics to establish a common language grounded in business
metrics and a roadmap for applying the other types of analytics.
For IBM’s view on the Analytics Cycle, check out our smartpaper, “How Can You
Trust Your Data Without the Big Picture?”

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