Reporting and Analytics – what’s the difference?
It is very important that each side participating in a negotiation agree on the meaning of the used terms. Otherwise it might happen that the agreement is reached but in practice everybody expects something different to happen. That's why today our analyst Leons writes in detail about the buzzword that's hot both in the Baltics and elsewhere in the world.When participating in discussion about business analytics, I often note that while the answer to the question "Do you use analytics?" is affirmative, but, when digging for details, it turns out that by analytics the person meant just reports. I've come to a conclusion that by overusing it, we've degraded the term "analytics" to the level of simple report, so it's easy to get into all kinds of misunderstandings when talking about business analytics or business intelligence. Is report analytics? Today I'll try to answer this question, as well as show what actually hides under this broad term in 2017.
Why is the difference important?
There can be no doubt that we're currently experiencing another industrial revolution (Industry 4.0), where few of the main components and driving forces are data and analytics. Only by understanding the difference between report and analysis we can evaluate the actual level and status of analytics in our company. It also enables us to evaluate our readiness to the new challenges, where the results generated in analytical process if one of the important factors in maintaining the competitiveness.
So what's the difference between reporting and analytics?
Reporting - by turning data into summary indicators by monitor how our business was doing. It's a look in the past, answering the question "what happened?". Often, by using the drill up / drill down options provided by the best reporting tools, we come to a false impression that we are doing analysis. Yes, we are analyzing the result provided by report, but our options are still limited by the borders of report. We generate more an more questions and usually try to answer them with generating even more reports
Analytics and analysis - process and interaction with data, looking for insights, understanding and knowledge with the goal to improve various business processes and results. This is a creative process, during with an analyst puts forward hypotheses, looks for interconnections, similarities, causes and correlations, finding out - what really happened, why it happened and what else could have happened.
To better understand where reporting ends and analytics begins, take a look at this chart:
What can you use analytics for?Most common goals why companies invest in analytics projects are:
- To make better, data based business decisions;
- To better understand the customer and his actions;
- To improve products and services;
- To reduces costs;
- To identify new business opportunities and income sources;
- To monetize data;
- To increase competitiveness.
Which industries can benefit from analytics?
All of them. If until recently we saw that the mose case studies in analytics came from Banking, Insurance and Telco industries, then now, with the rapid growth of IoT, big data and advance analytics, there are interesting solutions that help with solving specific business issues in every industry. Take IBM Watson in Health Care (especially oncology), marketing or supply chain management, or peer-to-peer lending solutions in Fintech, and many more.
There are more and more of those companies, that completely disrupt the existing business models. Some might claim that it's not relevant in the Baltics, because of the small market size, low purchasing power and lagging behind in technology. But globalization and extremely fast development rates of new technology have all but dismantled any geographical borders and today it's accepted as a normal situation when a start-up that's barely a year old buys a 100 year old, well known business.
Few ideas for first analytics project in your company
First, it's important not to be afraid of scary sounding terms like "predictive", "data science", "machine learning" and similar. With the help of a good analyst they usually quickly become very familiar and can accompany you on the wonderful journey that leads to a significant boost to the competitiveness of your organization.
I'd like to list some examples that are usually tackled by analytics projects. Possibly you see one that could be a great starting point when beginning first analytics initiatives in your company..
- Customer behavior analysis;
- Buying habits analysis;
- Customer lifestyle exploration;
- Determination of customer value / lifetime value;
- Customer churn prediction;
- Optimization of communication (direct marketing next best offer, next best communication);
- Customer segmentation and profiling, insights gained from from analyzing customer habits.
- Text analytics, sentiment analytics
- Social network analytics or looking for networks in your customer database, for example, looking for households;
- Risk analysis (customer scoring).