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What Is Advanced Analytics? A Comprehensive IntroductionReading time 7 minutes
When you start a new business, you take actions based either on the reference of a similar business or on your hunch. But as a business grows, references from similar businesses become useless when you outgrow them. And it’s too risky to make decisions on a hunch. When your business has run for some time, you get a lot of data that you can analyze and that can be useful in deciding what to do next.
So in this blog, I’ll be talking about advanced analytics and how it’s useful for your business. And then I’ll cover a few techniques for advanced analytics.
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What Is Advanced Analytics?
In short, advanced analytics is a collection of techniques and tools that make use of existing data to help decide future actions. Advanced analytics mainly focuses on predicting future events based on certain actions. Advanced analytics is really helpful when you’re planning to implement a new business activity. You can use advanced analytics to get an idea of the impact your activity would make.
Let me explain advanced analytics with the help of an example. If you use social media apps and shopping apps on your phone, then you’ll clearly relate to this example. I’m sure there are a lot of times when you look for a certain item on a shopping app. And after you’re done browsing for your item, when you open a social media app, you see an advertisement for the same item that you were looking for. This is one example of how advanced analytics helps the organization market its product.
These apps basically make use of the data you generate to decide what content has to be shown to you. Now that you know what advanced analytics is, let’s look at the benefits of using advanced analytics.
Benefits of Advanced Analytics
There are a lot of advantages to using advanced analytics for a business. Irrespective of what business you have, advanced analytics is beneficial for it. This is mainly because advanced analytics is not limited to practice in a particular domain, but the understanding of the business as a whole and making it better. Let’s look at a few of these benefits.
Make Accurate Decisions
Advanced analytics uses valuable data to create valuable data. Advanced analytics generates data based on strong logic and reliable information. Having a strong business intelligence represents your business information well. It also provides the data of the past and the present. This helps you make accurate decisions for your business in the future.
Understand Your Business Better
Advanced analytics helps you gain deep insights into the business. It helps you understand the factors that help in improving the business as well as understanding the factors that are negligible. Advanced analytics includes strong reporting and analytics with like the kind you can create with Plutora—providing features like real-time reporting, powerful insights, etc. This helps you understand which part of the business to focus more on to make it better. Value Streams, mapping, and waste management are a few examples of how understanding your business helps you make your business better.
You can use advanced analytics to identify risks to a business based on available data. This helps you understand the metrics that affect the risk and identify the root cause. Then you can work on designing a business model to reduce the risk. Along with this, advanced analytics also helps you in governance, which saves you regulatory and compliance risks.
Focus on Building Strategies
The two main stages in building a new strategy are understanding the business based on available data and coming up with ideas to improve the business. When you use advanced analytics, it takes care of analyzing data for you. This gives you more time to focus on the strategy to make the business better. For example, having a Total Cost of Ownership (TCO) dashboard can help you compare the amount spend during different periods and then build an efficient strategy for financial planning.
Now that you’ve seen the major benefits, let’s look at the most popular techniques used in advanced analytics.
Advanced Analytics Techniques
Advanced analytics has a list of techniques such as visualization, machine learning, sentiment analysis, pattern matching, etc. In this post, I’ll cover the most popular advanced analytics techniques:
- Data mining
- Predictive analysis
- Prescriptive analysis
- Big data analytics
When you’re running a business, you have to deal with large amounts of data. Some of this data is useful, and some isn’t. To improve your business, you have to make use of relevant data. And to do this, you’ll have to extract useful data from the pile of raw data.
Data mining is the process of extracting useful data from a pile of raw data. Once the useful data is extracted, you’ll use it for further analysis. Data mining is mainly used to find out patterns and relationships in existing data. In business, you get data and store it in different forms. You can use data mining to extract different kinds of data sets as transactional data, streaming data, heterogeneous data, etc.
Business organizations mainly use data mining to understand their customers better and build effective strategies to improve their business. Data mining helps you in understanding your business needs better and making better business decisions.
Predictive analysis is a technique of advanced analytics that’s used to make accurate predictions. This technique makes use of machine learning algorithms to make predictions. It uses current and past data to find out relationships and patterns between factors. And then the algorithm works on building a prediction model that would help improve the business.
You can use predictive analysis for risk management as well as for deciding strategies to be implemented to make the business better. When you have a large amount of data, predictive analysis will be very helpful for you. Because the more data you have the more accurate the prediction will be.
But you can’t rely on the predictive analysis model to be 100% accurate. This is because there are a lot of factors that affect business that the predictive analysis model might not consider. Some of these factors include natural disasters, changes in demand for a service, etc.
You cannot expect predictive analysis to tell you what exactly will happen in the future. But you can get an idea of what might happen if you make certain decisions.
Prescriptive analysis is a technique that suggests the best way to implement a business decision. When you decide on implementing a decision for your business, there can be more than one possible way to do it. It’d be difficult for you to manually decide which is the best course of action. This is when prescriptive analysis comes to the rescue.
Prescriptive analysis will help you in figuring out the best way to achieve your business goals. And it does that by using the current and past data. Prescriptive analysis finds out different possible outcomes before the decision is made. And it then recommends the best way of implementing a business decision.
Big Data Analytics
Big data analytics is a process of examining an enormous amount of data to extract useful information. The main advantage of big data is that it can be used on both structured and unstructured data. Big data analytics is very helpful in cases where the data generated isn’t in a proper format.
If your business generates large amounts of data on a regular basis and you have to make regular business decisions, big data analytics is the best technique for you. Big data analytics will help you increase revenues, decrease business strategy cost, and keep up with your competitors.
Advanced analytics is one of the most trending techniques in the IT industry today. It’s very important for you to use advanced analytics to make better and more accurate business decisions. Understanding customer needs, identifying the risk factors, and predicting the effects of decisions play a very important role in business improvement. To learn more about how you can deliver better-quality products to your customers, take a look at the Plutora platform.