TYPES OF BUSINESS ANALYTICS:

TOOLS, EXAMPLES,

Ashok Patade
◦ Starbucks, Accenture, Amazon, Splunk, Google, Uber, IBM, and many popular
companies use business analytics to personalize product recommendations, land
logistical business decisions and better understand markets, customers, and business
processes. Not just big brands, nearly 70% of small businesses spend more than $10,000
annually on various business analytics.
What is Business Analytics?
◦ Business Analytics is the process of using statistical methods, skills, technologies, and
practices to analyze historical data and gain new insight to improve strategic
decision-making. This subset of data management solutions employs business
intelligence and several methodologies such as data mining, statistical analysis, and
predictive analytics.
◦ Various business analytics types help analyze and transform data into useful
information, identifying and anticipating the current trends and outcomes for
smarter, data-driven business decisions.
Types of Business Analytics
◦ The four most popular types of business analytics are descriptive, diagnostic, predictive,
and prescriptive. The fifth– cognitive analytics is a new type that employs AI, ML, and
deep learning. Whilst each of these business analytics types is effective when used
individually, they become extremely powerful when employed together.
1. Descriptive Analytics
◦ Descriptive Analytics is used to analyse historical data to determine the response of a unit over a set of
given variables. It tracks key performance indicators (KPIs) for a better understanding of the present
state of a business.

◦ It involves the following five steps:

◦ Deciding which business metrics will effectively evaluate performance against objectives
◦ Identifying required data as per the current business state
◦ Collecting and preparing data using various processes like depublication, transformation, and
cleansing.
◦ Analyzing data for patterns to measure performance
◦ Presenting data in charts and graphs to make it understandable for non-analytics experts
◦ Examples of Descriptive Analytics
◦ Summarizing past events, exchange of data, and social media usage
◦ Reporting general trends
2. Diagnostic Analytics
◦ Diagnostic Analytics is one of those business analytics types that help understand why things
happened in the past. Using drill-downs, data mining, data discovery, and correlations, you
can comprehend the driving factors.

◦ This advanced analytics method is usually employed as a preceding step of Descriptive

Analytics to find the reasoning behind certain results in finance, marketing, cybersecurity, and
more.

◦ Examples of Diagnostic Analytics

◦ Examining market demand
◦ Identifying technical issues
◦ Explaining customer behavior
◦ Improving organization culture
3. Predictive Analytics
◦ Predictive Analytics considers historical data trends for determining the probability of particular
future outcomes. It uses several techniques like data mining, machine learning algorithms, and
statistical modeling to forecast the likelihood of events.

◦ Predictive analytics helps improve business areas, including customer service, efficiency, fraud
detection and prevention, and risk management. It allows you to grow the most profitable
customers, improve the operations of businesses, and determine customer responses and
cross-sell opportunities.

◦ Examples of Predictive Analytics

◦ Predicting customer preferences
◦ Detection of employee intentions
◦ Recommending products
◦ Predicting staff and resources
4. Prescriptive Analytics
◦ Prescriptive analytics generates recommendations to handle similar future situations relying on
past performances. It employs several tools, statistics, and ML algorithms for the available
internal data and external data.

◦ It gives you insights into what may happen, when, and why.

◦ Examples of Prescriptive Analytics

◦ Tracking fluctuating manufacturing prices
◦ Improving equipment management
◦ Suggest the best course of action
◦ Price modeling
◦ Evaluating rates of readmission
◦ Identifying testing
5. Cognitive Analytics
◦ Combining Artificial Intelligence and Data Analytics, Cognitive Analytics is one of the
newest types of business analytics. It looks at the available data in the knowledge base
and discovers the best solutions for the questions posed.

◦ Cognitive analytics covers multiple analytical techniques to analyze large data sets
and monitor customer behavior patterns and emerging trends.

◦ Examples of Cognitive Analytics

◦ Tapping unstructured data sources such as images, text documents, emails, and social
posts.
Types of Data Analysis Techniques
◦ Data analysis techniques have significantly evolved, providing a comprehensive toolkit
for understanding, interpreting, and predicting data patterns. These methods are
crucial in extracting actionable insights from data, enabling organizations to make
informed decisions.

◦ Type-of-Data-Analytics
◦ Data Analysis Techniques

◦ This article will cover major Types of Data Analysis Techniques, each tailored to specific
goals and data types.
Descriptive Data Analysis
◦ Descriptive analysis is considered the beginning point for the analytic journey and often strives
to answer questions related to what happened. This technique follows ordering factors,
manipulating and interpreting varied data from diverse sources, and then turning it into
valuable insights.
◦ In addition, conducting this analysis is imperative as it allows individuals to showcase insights in
a streamlined method. This technique does not allow you to estimate future outcomes - such
as identifying specific reasoning for a particular factor. It will keep your data streamlined and
simplify to conduct a thorough evaluation for further circumstances.
◦ Examples of Descriptive Data Analysis :
◦ Sales Performance: A retail company might use descriptive statistics to understand the
average sales volume per store or to find which products are the best sellers.
◦ Customer Satisfaction Surveys: Analyzing survey data to find the most common responses or
average scores
Qualitative Data Analysis
◦ Qualitative data analysis techniques cannot be measured directly, and hence, this technique is utilized
when an organization needs to make decisions based on subjective interpretation. For
instance, qualitative data can involve evaluating customer feedback, the impact of survey questions,
the effectiveness of social media posts, analyzing specific changes or features of a product, and more.
◦ The focus of this technique should be identifying meaningful insights or answers from unstructured data
such as transcripts, vocal feedback, and more. Additionally, qualitative analysis aids in organizing data
into themes or categories, which can be further automated. Quantitative data analysis refers to
measurable information, which includes specific numbers and quantities. For instance, sales figures,
email campaigns based on click-through rates, website visitors, employee performance percentage,
or percentage for revenue generated, and more.
◦ Examples of Qualitative Data Analysis:
◦ Market Analysis: A business might analyze why a product’s sales spiked in a particular quarter by
looking at marketing activities, price changes, and market trends.
◦ Medical Diagnosis: Clinicians use diagnostic analysis to understand the cause of symptoms based on
lab results and patient data.
Predictive Data Analysis
◦ Predictive data analysis enables us to look into the future by answering questions—what will happen?
Individuals need to utilize the results of descriptive data analysis, exploratory and diagnostic analysis
techniques, and combine machine learning and artificial intelligence. Using this method, you can get
an overview of future trends and identify potential issues and loopholes in your dataset.

◦ In addition, you can discover and develop initiatives to enhance varied operation processes and your
competitive edge with insightful data. With easy-to-understand insights, businesses can tap into trends,
common patterns, or reasons for a specific event, making initiatives or decisions for further strategies
easier.

◦ Examples of Predictive Data Analysis:

◦ Credit Scoring: Financial institutions use predictive models to assess a customer's likelihood of defaulting
on a loan.
◦ Weather Forecasting: Meteorologists use predictive models to forecast weather conditions based on
historical weather data.
Diagnostic Data Analysis
◦ When you know why something happened, it is easy to identify the "How" for that
specific aspect. For instance, with diagnostic analysis, you can identify why your sales
results are declining and eventually explore the exact factors that led to this loss.
◦ In addition, this technique offers actionable answers to your specific questions. It is also
the most commonly preferred method in research for varied domains.
◦ Example of Diagnostic Data Analysis:
◦ Inventory Analysis: Checking if lower sales correlate with stock outs or overstock
situations.
◦ Promotion Effectiveness: Analyzing the impact of different promotional campaigns to
see which failed to attract customers.
Regression Analysis
◦ This method utilizes historical data to understand the impact on the dependent variable's value when
one or more independent variables tend to change or remain the same. In addition, determining each
variable's relationship and past development or initiative enables you to predict potential outcomes in
the future. And the technique gives you the right path to make informed decisions effectively.

◦ Let's assume you conducted a Regression Analysis for your sales report in 2022, and the results
represented variables like customer services, sales channels, marketing campaigns, and more that
affected the overall results. Then, you can conduct another regression analysis to check if the variables
changed over time or if new variables are impacting your sales result in 2023. By following this method,
your sales can increase with improved product quality or services

◦ Example of Regression Analysis:

◦ Market Trend Assessment: Evaluating how changes in the economic environment (e.g., interest rates)
affect property prices.
◦ Predictive Pricing: Using historical data to predict future price trends based on current market
dynamics.
Cohort Analysis
◦ Cohort analysis includes historical data to analyze and compare specific segments in user
behavior and groups a few aspects with other similar elements. This technique can provide an
idea of your customer's and target audience's evolving needs.

◦ In addition, you can utilize Cohort analysis to determine a marketing campaign's impact on
certain audience groups. For instance, you can implement the features of the Cohort analysis
technique to evaluate two types of email campaigns—commonly termed A/B Testing over
time—and understand which variation turned out to be responsive and impactful in terms of
performance.

◦ Example of Cohort Analysis:

◦ Customer Retention: Measuring how long newly acquired customers continue to make
purchases compared to those not enrolled in the loyalty program.
◦ Program Impact: Determining if and how the loyalty program influences buying patterns and
average spend per purchase.
Factor Analysis
◦ Factor data analysis defines the variations with observed related variables based on lower
unobserved variables termed factors. In short, it helps in extracting independent variables,
which is considered ideal for optimizing specific segments.

◦ For instance, if you have a product and collect customer feedback for varied purposes, this
analysis technique aids in focusing on specific factors like current trends, layout, product
performance, potential errors, and more. The factors can vary depending on what you want
to monitor and focus on. Lastly, factor analysis simplifies summarizing related factors in similar
groups.

◦ Example of Factor Analysis :

◦ Service Improvement: Identifying key factors such as wait time, staff behavior, and treatment
outcome that impact patient satisfaction.
◦ Resource Allocation: Using these insights to improve areas that significantly affect patient
satisfaction.
Time Series Analysis
◦ A time series analysis technique checks data points over a certain timeframe. You can utilize
this method to monitor data within a certain time frame on a loop; however, this technique
isn't ideal for collecting data only in a specific time interval.

◦ Sounds confusing? This technique is ideal for determining whether the variable changed amid
the evaluation interval, how each variable is dependent, and how the result was achieved for
a specific aspect. Additionally, you can rely on time series analysis to determine market trends
and patterns over time. You can also use this method to forecast future events based on
certain data insights.

◦ Example of Time Series Analysis :

◦ Demand Forecasting: Estimating sales volume for the next season based on historical sales
data during similar periods.
◦ Resource Planning: Adjusting production schedules and inventory levels to meet anticipated
demand.
Cluster Analysis
◦ Cluster analysis describes data and identifies common patterns. It is often used when data
needs more evident labels or insights or has ambiguous categories. This process includes
recognizing similar observations and grouping those aspects to create clusters, which means
assigning names and categorizing groups.

◦ In addition, this technique aids in identifying similarities and disparities in databases and
presenting them in a visually organized method to seamlessly compare factors. Box plot
visualization is mainly preferred to showcase data clusters.

◦ Example of Cluster Analysis:

◦ Market Segmentation: Dividing customers into groups that exhibit similar behaviors and
preferences for more targeted marketing.
◦ Campaign Customization: Designing unique marketing strategies for each cluster to maximize
engagement and conversions.
Conclusion
◦ Each method offers unique benefits and is suited to different types of data challenges.
Understanding and applying the right data analysis techniques can significantly impact
an organization's strategy and decision-making processes, leading to more targeted,
efficient, and effective outcomes.
What Is Descriptive Analytics?
◦ Descriptive analytics is a branch of data analytics that focuses on summarizing and
interpreting historical data to gain insights and understand patterns, trends, and
relationships within the data. It involves using various statistical and visualization
techniques to describe and present data meaningfully.

◦ The primary objective of descriptive analytics is to provide a clear and concise

understanding of what has happened in the past. This helps organizations and
individuals answer questions such as ‘What happened?’, ‘When did it happen?’, and
‘How did it happen?’. In other words, descriptive analytics mines historical data to
unveil actionable information for decision-making and anomaly detection purposes.
Algorithms used for descriptive
analytics
◦ Several algorithms are commonly used for descriptive analytics, such as:

◦ Clustering algorithms: Clustering algorithms such as k-means and hierarchical clustering are used to
group similar data points based on their characteristics. Clustering helps segment data into meaningful
groups and identify inherent patterns.
◦ Association rules: Association rule mining algorithms such as Apriori and FP-Growth are used to discover
interesting relationships and associations between different variables or items in a dataset. This is
particularly useful in market basket analysis and recommendation systems.
◦ Time series analysis: Time series algorithms such as autoregressive integrated moving average (ARIMA)
and exponential smoothing models are applied to analyze data collected over regular time intervals.
These algorithms help understand patterns, trends, and seasonality in time-dependent data.
◦ Text mining and natural language processing (NLP): Text mining and NLP algorithms are employed to
analyze unstructured text data such as customer reviews, social media posts, and survey responses.
Techniques such as sentiment analysis, topic modeling, and named entity recognition allow for
extracting valuable insights from text data.
Algorithms used for descriptive
analytics cont…
◦ Decision trees: Decision tree algorithms such as ID3, C4.5, and CART are used to create
hierarchical structures that represent decision rules based on input variables. Decision
trees are useful to classify and identify important features within the data.
◦ Geographic information systems (GIS): GIS algorithms are used to analyze and visualize
spatial data. These algorithms help map data to geographic locations, perform spatial
analysis, and identify patterns or trends specific to certain locations.
◦ Regression analysis: Regression algorithms such as linear regression, logistic regression,
and polynomial regression are employed to model the relationship between
dependent and independent variables. Regression analysis helps understand the
impact of one or more variables on an outcome of interest.
◦ Data mining techniques: Various data mining techniques, such as anomaly detection,
pattern recognition, and outlier analysis, are used in descriptive analytics to identify
unusual or significant patterns in data.
Descriptive Analytics Process
◦ 1. Data collection
◦ The first step in the descriptive analytics process is to gather relevant data from various sources. This data could be sourced
from databases, spreadsheets, surveys, or other structured or unstructured data repositories. The data collected should be
comprehensive and representative of the subject being analyzed. It is important to ensure the accuracy and integrity of the
data during the collection process.

◦ For example, let’s say you work for an ecommerce company and want to analyze customer purchasing behavior. You
collect data such as customer IDs, purchase dates, products purchased, quantities, prices, and customer demographics.

◦ 2. Cleaning and preparation

◦ Data collection sets the stage but must be followed by thorough data cleansing and preparation to ensure accurate and
reliable analysis. This step involves identifying and resolving issues such as missing values, inconsistencies, duplicates, and
outliers. Data cleaning ensures the data is high quality, reliable, and ready for further analysis. Data preparation can also
involve transforming the data into a consistent format and encoding categorical variables for analysis.

◦ Continuing with the ecommerce example, during the data cleaning process, you might identify missing values in the price
column or duplicate records. You would need to remove or handle these issues to ensure data integrity.
Descriptive Analytics Process Cont…
◦ 3. Exploration
◦ In this step, data analysts explore the data to understand its characteristics better and identify initial patterns or trends. This can be achieved
through various techniques such as summary statistics, data visualization, and exploratory data analysis. Summary statistics, including
measures such as mean, median, mode, and standard deviation, provide an overview of the data’s central tendencies and dispersion.
Data visualization techniques such as charts, graphs, and histograms help visualize the distribution and relationships within the data, making
it easier to identify patterns or anomalies.

◦ Using the ecommerce data, you can calculate summary statistics such as average purchase quantity, total sales revenue, and customer
demographics’ distribution. Additionally, you can create visualizations such as scatter plots or bar charts to visualize the relationship
between variables such as price and quantity sold.

◦ 4. Segmentation
◦ Data segmentation involves dividing the dataset into meaningful subsets based on specific criteria. This segmentation can be done based
on variables such as demographics, geographic location, time periods, or product categories. Segmenting the data allows for a more
focused analysis and helps uncover insights specific to each segment. For example, segmenting customer data by age group can provide
insights into different customer segments’ preferences and buying behavior.

◦ Continuing with the ecommerce example above, you can segment the data based on customer demographics, creating subsets for
different age groups or geographical regions. This segmentation would enable you to analyze purchasing patterns, identify preferences,
and tailor marketing strategies for each segment.
Descriptive Analytics Process Cont…
◦ 5. Summary and key performance indicators (KPIs)
◦ Descriptive analytics aims to summarize data to provide key insights. This involves calculating summary measures such as averages, totals,
percentages, or ratios relevant to the subject being analyzed. Key performance indicators (KPIs) are specific metrics that help evaluate the
performance of a business process, product, or service. KPIs provide actionable information and serve as benchmarks to assess progress or
performance against specific goals or objectives.

◦ Using the ecommerce data, you can calculate KPIs such as average order value, conversion rate, or customer retention rate. These KPIs
provide insights into the overall performance of the ecommerce business and help track progress toward specific objectives.

◦ 6. Historical trend analysis

◦ Descriptive analytics includes analyzing historical trends to understand how variables or metrics have changed over time. This analysis
reveals patterns, seasonality, or long-term trends. For example, analyzing sales data over several years can reveal sales peaks during certain
seasons or identify declining trends in specific product categories. Historical trend analysis helps identify patterns that can enhance
decision-making, forecast future performance, and identify areas of improvement.

◦ Still going with the ecommerce example, you can analyze historical sales data over the past few years to identify seasonal patterns such as
increased sales during the holiday season or fluctuations in demand for specific product categories over time
Descriptive Analytics Process Cont…
◦ 7. Data reporting and visualization
◦ The insights and findings derived from the descriptive analytics process must be communicated effectively. This is typically done through
reports or visual dashboards. Reports summarize the analysis and findings, including summary statistics, visualizations, and narrative
descriptions. Reporting and visualization aid in effective communication and help stakeholders interpret and act upon the insights derived
from the data.

◦ For the ecommerce example, you can create a report with visualizations such as line charts showing sales trends over time, a pie chart
illustrating sales distribution across different product categories, and a table summarizing the key findings and KPIs.

◦ 8. Continuous monitoring and iteration

◦ Descriptive analytics is not a one-time process. It requires continuous data monitoring and regular updates to stay informed about evolving
patterns and trends. As new data becomes available, the analysis must be updated to capture the most recent information. Continuous
monitoring allows for ongoing assessment, evaluation, and adaptation of strategies based on changing data insights.

◦ In the ecommerce context, you would continuously monitor sales data, update the analysis periodically, and track changes in purchasing
behavior, market trends, or customer preferences. This ongoing monitoring and iteration ensures that the insights and decision-making
remain relevant and aligned with the evolving business environment.
Examples of Descriptive Analytics
◦ Data analytics has recently gained significant popularity for several reasons, including
the exponential growth of data, technological advancements, and the need for
competitive advantage. With descriptive analytics falling under the broader umbrella
of data analytics, industries across sectors are adopting it in different ways to improve
their operations and drive decision-making.

◦ According to a February 2023 report by Global Market Estimates, IBM, Microsoft, Zoho
Corporation Pvt. Ltd., and Oracle are prominent players in the data analytics market.
While Asia Pacific is the fastest-growing regional market, North America is expected to
hold the leading market share from 2023 to 2028.
1. Sales performance analysis
◦ By analyzing historical sales data, you can identify top-selling products, evaluate the
performance of different sales channels, and understand the impact of pricing
strategies. This information would help you optimize your sales efforts, identify
underperforming products or regions, and make data-driven decisions to improve
overall sales performance.

◦ Let’s say you run an online business. By analyzing sales data, you discover that a
specific product category has experienced a significant drop in sales over the past few
months. With this insight, you can investigate the possible causes, such as changing
customer preferences or increased competition, and develop strategies to address the
issue. You can then consider adjusting your product pricing, launching targeted
marketing campaigns, or expanding product offerings in other related categories.
2. Customer segmentation
◦ Descriptive analytics can help you segment your customer base based on various
criteria, such as demographics, purchase behavior, and engagement levels. By
understanding different customer segments, you can tailor your marketing strategies,
personalize communication, and provide customized offerings to enhance customer
satisfaction and loyalty.

◦ Let’s say you operate a subscription-based streaming service. By analyzing customer

data, you discover that you have two distinct customer segments: avid movie watchers
and TV series enthusiasts. Armed with this insight, you can create targeted marketing
campaigns for each segment, recommending movies to avid movie watchers and
promoting TV series to series enthusiasts. This personalized approach improves customer
engagement and retention and drives revenue growth.
3. Website analytics
◦ Analyzing website data allows you to understand user behavior, optimize website
design, and improve conversion rates. By examining metrics such as page views,
bounce rates, and conversion rates, you can identify areas for improvement and make
data-driven decisions to enhance the overall user experience.

◦ For example, consider that you manage an e-store of sports goods. By analyzing
website analytics, you find the checkout process has a high abandonment rate. This
indicates a potential issue with the user experience during checkout. Using descriptive
analytics, you can pinpoint the specific steps where users drop off and identify
potential friction points. With this information, you can optimize the checkout process,
simplify form fields, and provide clear calls-to-action, ultimately improving the
conversion rate and driving sales growth.
4. Operational efficiency analysis
◦ Descriptive analytics helps you identify inefficiencies and streamline operational
processes. By analyzing key performance indicators, process times, and resource
utilization, you can pinpoint areas of improvement and optimize resource allocation to
enhance productivity and reduce costs.

◦ Let’s say you run a manufacturing facility. By analyzing production data, you identify a
particular production line that consistently falls behind schedule. Descriptive analytics
can help you identify the root cause of the delay, whether it’s related to equipment
maintenance, staffing issues, or process inefficiencies. With this insight, you can take
corrective measures such as investing in preventive maintenance, reallocating
resources, or reengineering the production process to improve efficiency and meet
production targets.
5. Financial analysis
◦ Descriptive analytics can be used to analyze financial data and gain insights into
revenue, expenses, and profitability. By examining financial statements, cash flow data,
and cost structures, you can identify trends, assess financial health, and make informed
decisions regarding budgeting, pricing, and cost management.

◦ For instance, suppose you manage a retail business with multiple store locations. By
analyzing financial data, you find that certain stores consistently underperform in terms
of profitability. Descriptive analytics can help you identify factors contributing to lower
profitability, such as higher operating costs or lower sales volumes. With this information,
you can take corrective actions such as renegotiating lease agreements and adjusting
staffing levels.
What is Predictive Analytics?
◦ Predictive analytics utilizes statistical modeling, data mining methods, and machine
learning to forecast future outcomes by analyzing historical and real-time data. These
forecasts play a crucial role in helping you improve efficiency, mitigate risk, and identify
opportunities.
Predictive Analytics Examples
◦ Predictive analysis techniques find application across a diverse spectrum of industries
and job roles. Below are eight real world examples of predictive analytics in various
sectors.
Insurance
◦ Insurance providers can use predictive analytics to offer more tailored and competitive
policies while ensuring the stability and profitability of their portfolios. This meticulous
approach to risk assessment ultimately benefits both the insurer and the policyholder by
fostering a more balanced and sustainable insurance environment. For instance,
insurance companies utilize advanced analytical models to meticulously scrutinize
policy applications. By evaluating the characteristics and profiles of policyholders with
similar coverage, insurers can accurately estimate the likelihood of potential future
claims. This process empowers them to make data-driven decisions regarding
coverage terms, premiums, and risk management strategies.
Financial Services
◦ Predictive analytics is integral in shaping strategic choices, bolstering trust, and
enhancing the stability and profitability of financial institutions. It anticipates loan
default probabilities, ensuring a balanced lending portfolio by considering factors like
credit history and market conditions. Additionally, it plays a crucial role in fraud
detection, swiftly identifying and mitigating suspicious activities. In securities trading, it
forecasts price movements by analyzing historical data and market trends. This
empowers investors to make informed decisions, optimizing returns.
Retailers and CPG Companies
◦ Retailers and consumer packaged goods (CPG) companies leverage predictive
analytics to enhance their marketing ROI, strengthen customer relationships, and
maintain a competitive edge in this dynamic landscape. Retailers and CPG companies
delve into the data of past promotional campaigns, using data visualization to examine
their effectiveness. By scrutinizing factors like customer behavior, purchasing patterns,
and response rates, they gain invaluable insights. These insights are then employed to
forecast the success of future offers and promotions. This data-driven approach allows
businesses to allocate resources efficiently, focusing on strategies that are statistically
more likely to yield positive results.
Healthcare
◦ Healthcare companies harness the power of data analytics to delve into historical
patient records and patterns. Predictive analytics enhances patient outcomes, reduces
healthcare costs, and fosters a more efficient and responsive healthcare system. By
analyzing factors like medical history, demographic information, and previous
admission data, they develop sophisticated models to forecast patient admissions and
readmissions. This proactive approach empowers healthcare providers to allocate
resources efficiently, ensuring that the right level of care is available when needed. It
also enables the implementation of targeted interventions and personalized care plans
to mitigate factors that may lead to readmissions.
Energy and utilities
◦ Predictive analytics empowers energy and utilities companies to make informed,
risk-reducing decisions, ultimately enhancing the reliability and safety of their
operations. By analyzing historical equipment failures, companies preempt potential
risks, enabling timely maintenance and replacement. This proactive approach
minimizes accidents and creates a secure work environment. Additionally, predictive
analytics forecasts future energy demands through an examination of past
consumption patterns and consideration of various influencing factors. This allows for
efficient resource allocation, guaranteeing a consistent energy supply.
Life Sciences
◦ Life sciences organizations provide some of the best predictive analytics examples,
enhancing patient-centric care and optimizing treatment strategies. Organizations
delve into patient data to create comprehensive personas, allowing for a deeper
understanding of patient behaviors, preferences, and needs. By analyzing factors like
demographics, medical history, and lifestyle, life sciences companies can tailor
treatment plans to individual patient profiles, ultimately improving adherence rates.
Moreover, predictive analytics enables the prediction of nonadherence to treatment
plans. By considering various influencing factors such as patient history, socio-economic
conditions, and treatment complexity, organizations can identify individuals who may
be at higher risk of noncompliance. This proactive approach allows for targeted
interventions, personalized support, and ultimately, improved patient outcomes.
Manufacturing and Supply Chain
◦ Predictive analytics empowers manufacturing and supply chain operations to operate
with greater precision, ultimately improving customer satisfaction and reducing costs.is
instrumental in revolutionizing manufacturing and supply chain operations. By delving
into historical data and considering various variables like market trends, seasonality,
and consumer behavior, companies can accurately forecast demand. This proactive
approach enables them to optimize inventory management, ensuring that products
are readily available to meet customer needs while minimizing excess stock.
Additionally, predictive analytics plays a crucial role in identifying factors that may lead
to production failures. By analyzing data related to machinery performance,
environmental conditions, and maintenance schedules, companies can implement
preventive measures to reduce downtime and enhance overall production efficiency.
The Public Sector
◦ Predictive analytics empowers the public sector to plan and implement infrastructure
projects that align with the evolving needs and dynamics of the community, fostering
sustainable growth and improving quality of life. By scrutinizing extensive datasets on
population demographics, growth patterns, and urban migration, government entities
gain crucial insights. These insights are then leveraged to make informed decisions
regarding infrastructure investments and various public works projects. For instance,
predicting population shifts allows for strategic allocation of resources towards the
construction of housing, transportation networks, and essential amenities. Moreover,
anticipating future demands for services like healthcare, education, and utilities ensures
that public resources are utilized efficiently and effectively.
Predictive Analytics Use Cases
◦ Predictive analytics finds versatile applications across various industries, revolutionizing
decision-making processes. From enhancing customer experiences to optimizing
operational efficiency, it plays a pivotal role in areas such as inventory management,
fraud detection, healthcare diagnosis, and more. Here, we'll explore twelve diverse use
cases, showcasing its transformative impact in different domains.
Predictive Analytics Use Cases
Cont…
Predictive Analytics Use Cases
Cont…
Predictive Analytics Use Cases
Cont…
Prescriptive Analytics Guide: Use
Cases & Examples
◦ Business analytics can be categorized as descriptive, predictive, or prescriptive.
Descriptive analytics is the process of using historical business data to understand why
certain events happened and summarizing the information into an easily consumable
format. Predictive analytics uses data to make forecasts and predictions about what
will happen in the future. Prescriptive analytics uses statistical models and machine
learning algorithms to determine possibilities and recommend actions. These models
and algorithms can find patterns in big data that human analysts may miss.

◦ While descriptive analytics focuses primarily on what has already happened in the past
and predictive analytics tries to find correlations to make forward-looking projections,
prescriptive analytics looks to determine the why — effectively estimating causality
between events.
How prescriptive analytics works
◦ Prescriptive analytics relies on artificial intelligence, and specifically the subfield of machine learning,
which encomposes algorithms and models that allow computers to make decisions based on statistical
data relationships and patterns.

◦ For example, the Bayes classifier is a common machine learning algorithm that uses a statistical model
called Bayes' Theorem to compute the conditional probability of an event happening. Another
common (nonstatistical) machine learning algorithm is ID3, which creates a decision tree that
structures a graph of possible outcomes from a dataset. In both the statistical and nonstatistical
algorithms, the goal is to create a model from past data that can accept new inputs and predict their
outcomes.

◦ Data scientists must experiment with machine learning algorithms and features) to create a
prescriptive analytics system, because different algorithms make different assumptions about the
structure and completeness of data. For example, a linear regression assumes that the prediction
variable can be modeled as a weighted sum of the descriptive features. However, not all data is
linearly related and therefore the linear regression can't be applied to every data science problem.
Examples of prescriptive analytics
◦ Businesses use prescriptive analytics to solve all sorts of real-world problems. Analysts in different industries can use
it to improve their processes:

◦ Marketing and sales

◦ Marketing and sales agencies have access to large amounts of customer data that can help them to determine
optimal marketing strategies, such as what types of products pair well together and how to price products.
Prescriptive analytics allows marketers and sales staff to become more precise with their campaigns and
customer outreach, as they no longer have to act simply on intuition and experience.

◦ Transportation industry
◦ Cost-effective delivery is essential for success and profitability in the package delivery and transportation
industry. Minimizing energy usage through better route planning and solving logistical issues such as incorrect
shipping locations can save time and money.

◦ Shippers produce massive amounts of data. Rather than employing armies of analysts and dispatchers to decide
how to best operate, these businesses can automate and build prescriptive models to provide
recommendations.
Financial markets
◦ Quantitative researchers and traders use statistical modeling to try to maximize returns.
Financial firms can use similar techniques to manage risk and profitability.

◦ For example, financial firms can build algorithms to churn through historical trading
data to measure risks of trades. The resulting analytics can help them decide how to
size positions, how to hedge them, or whether to place trades at all.

◦ Additionally, these firms can use models to reduce transaction costs by figuring out how
and when to best place their trades.
Making prescriptive analytics work
for you
◦ Prescriptive analytics can be invaluable for optimizing operations, growing sales, and
managing risk. To operate effectively, however, the models and algorithms need a solid
data pipeline to ensure that the data being fed into the models is up to date and
accurate.
Data Mining vs. Statistics vs. Machine
Learning
◦ Data Mining, Statistics and Machine Learning are interesting data driven disciplines that help
organizations make better decisions and positively affect the growth of any business.

◦ According to Wasserman, a professor in both Department of Statistics and Machine Learning

at Carnegie Mellon, what is the difference between data mining, statistics and machine
learning?

◦ “The short answer is: None. They are … concerned with the same question: how do we learn
from data?”

◦ Considering Wasserman’s answer, the three disciplines are considerably the same but with
minor differences, rather they can be referred to as identical twins which make use of different
words and terminology and follow different notations.
Data Mining
◦ Data mining is a very first step of Data Science product. Data mining is a field where we try to identify patterns in data and come up with
initial insights.

◦ E.g., you got the data and you identified missing values then you saw that missing values are mostly coming from recordings taken
manually.

◦ Few people mistake Data mining with data extraction. Data mining comes into play once you have collected data.

◦ Companies use powerful data mining techniques coupled with advanced tools to extract valuable information out of large amount of
data.

◦ E.g., Walmart collects point of sales data from their 3,000+ stores across the world and stores it into their Data Warehouse. Walmart suppliers
have access to this database and they identify the buying patterns among Walmart customers and use this to maintain their inventory in
future. Walmart data warehouse processes more than a million such queries every year.
◦ Data mining uses power of machine learning, statistics and database techniques to mine large databases and come up with patterns.
◦ Mostly data mining uses cluster analysis, anomaly detection, association rule mining etc. to find out patterns in data.
◦ In short Data Mining is finding out hidden and interesting patterns stored in large data warehouses using the power of statistics, artificial
intelligence, machine learning and database management techniques.
Statistics
◦ Statistics is the base of all Data Mining and Machine learning algorithms.

◦ Statistics is the study of collecting, analyzing and studying data and come up with inferences and
prediction about future.

◦ Major task of a statistician is to estimate population from sample metrics. Statistics also deal with
designing surveys and experiments in order to get quality data which can further be used to make
estimation about the population. If we have to formally list down the task of statistics, it will be as follows

◦ Designing surveys and experiments

◦ Summarizing and understanding data
◦ Estimating population behavior
◦ Prediction or estimation of future
Machine Learning
◦ Machine learning is a part of data science which majorly focuses on writing algorithms
in a way such that machines (Computers) are able to learn on their own and use the
learnings to tell about new dataset whenever it comes in. Machine learning uses power
of statistics and learns from the training dataset. For example, we use regressions,
classifications etc. to learn from training data and use those learnings to estimate test
dataset
Data Mining vs. Statistics - Similarities
and Differences Unleashed
◦ The objective of Data Mining and Statistics is to perform data analysis but both are
different tools. Data mining process involved modelling, predicting and optimizing a
dataset while Statistics describes how efficient a dataset is –more or less.
Data Mining vs Statistics
Data Mining vs Statistics
Data Mining Statistics

Explorative – Dig out the data first,

Confirmative – Provide theory first and
discover novel patterns and then make
then test it using various statistical tools.
theories.

Statistical methods applied on Clean

Involves Data Cleaning
Data

Usually involves working with large Usually involves working with small
datasets. datasets.

Makes generous use of heuristics think There is no scope for heuristics think.

Deductive (Does not involve making any

Inductive process
predictions)

Numeric and Non-Numeric Data Numeric Data

Less concerned about data collection. More concerned about data collection.

Some of the popular data mining

methods include –Estimation, Some of the popular statistical methods
Classification, Neural Networks, include –Inferential and Descriptive
Clustering, Association, and Statistics.
Visualization.
Thank you!!!