The Ultimate Guide How 4 Types of Data Analysis Can Improve Decision Making
We all know the importance of data analytics in any organization and how different types of data analysis help the management of the business in its decision-making process. As the level of decision-making process escalates, application of data analytics is required in accordance with the level. From the simplest analysis to the more advanced and complex analysis of data, the organization is fed with solutions that will lead them to a better decision. Data analytics is the heart of any kind of decision. With the help of different types of data such as raw data and other advance data the organization can look into their past achievements or the loopholes they need to fix. Through different types of analysis, the management can measure the growth of the organization and look into the future. Analytics help decision makers to come to an estimate for the future. From what, why, and how to, different types of analytics give different insights to the management.
4 Types of Data Analysis to give your decision-making a boost
Let us check out the four different types of data analytics where each analytics plays its role and adds value in the decision-making process.
1. Descriptive Analytics
This type of analytics allows the management to survey past revenues. It enables the management to make decisions acquiring insights on the basis of data collected from variable sources. Descriptive Analytics rely on the type of data analysis that signals and helps the management to make decisions pertaining to the products and services offered. Typically, it answers the question of ‘What transpired’ in the organization.
2. Diagnostic Analytics
The type of analysis that answers the question of ‘why it transpired’ in an organization. Diagnostic Analysis presents the management with a detailed set of information measured from past events. This is one of the four different types of analytics that assist in the decision-making process by doing deep analysis on a hiccup, eventually giving insights
3. Predictive Analytics
Just how Descriptive analysis and Diagnostic analysis tell the management of what and why something transpired, Predictive analytics foresees the future. It involves a type of data analysis that takes a sneak peek at the future events that are likely to happen given, the current position of the organization. This type of analytics informs the decision makers ‘what can transpire’. As the name says, the predictive analysis predicts or forecasts, it is an advanced and complex type of analytics that incorporates the study of accurate optimized data. Predictive analysis is an estimate that relies on the accuracy of data. The quality of data obtained for the predictive analysis is also vital to foresee the future and help in decision making.
4. Prescriptive Analytics
This type of analytics tells the management what is to be done. It prescribes the management of the pill to weed out possible hitches in the organization and take decisions accordingly. While in the decision-making process, the organization that takes the help of this type of data analysis understands what action is to be taken to its advantage. Prescriptive Analytics takes the help of technology and advanced tools. It takes the help of internal as well as external data before giving solutions.
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Having discussed the different types of analytics that help in decision-making, we move forward to understanding which type of data analysis is ideal for which business.
It is recommended for your organization to hire a special team of data analysts who are seasoned in the industry that you cater to. You will be able to perform better decision-making for your organization if you are in possession of all the required data. Your organization should be able to study the different types of analytics and with the available data take decisions.
A survey conducted by PricewaterhouseCoopers (PwC) in the year 2016, handpicking 2000 recruits to choose a type of data analytics for decision making. The study finds out 58% preference was given to descriptive analytics categorized data-driven decision-making while diagnostic analytics and predictive analysis scored 34% and 36% in almost data-driven and highly data-driven categories respectively.
Another statistical research in 2019, advanced analytics was deemed to be of high importance for decision-making. It meant that advanced or predictive analysis was more preferred in the organizations.