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Wednesday, May 25, 2011

What really is Analytics?

I get this question so so often. I finally decided to dedicate a blog post to this oh so often asked question. I sometimes try and make an honest effort to make people understand and more often than not, give in and say yes to everything they describe analytics as just so that I don't need to give an hour long explanation and still not be able to make people understand. 

This reminds me about how when we first got into the IT industry, everyone assumed IT was all about Y2K and how we would all be jobless post 2000. I used to get tired of explaining that the industry wasn't going to close down so soon. It didn't help that the dot com bust happened exactly around that time making it even tougher for us to defend the IT industry and our reputations as IT professionals.

Coming back to the topic of this post, let's start off with what Analytics is not. 

  1. Analytics is not BI even though there's nothing less intelligent about Business Intelligence practitioners/experts. 
  2. Analytics is not Data Warehousing even though it was the most cutting edge technology/phrase a few years back and we all (including yours truly) aspired to be part of the DW brigade purely because of the demand in the job-market. 
  3. Analytics is not Reporting even though it has a very critical place in the data-driven decision making space. They provide some really important data to analytics practitioners that if used well can save tons of effort for us.
  4. Analytics is not about OLAP Cubes nor is it about Databases even though OLAP cubes are super-cool tools and can really help you do analytics. 

Now that we know what it is not, what is Analytics really? 

  1. Analytics is making sense of raw data, identifying trends and recommending actions to people who either don't have access to the data, don't have the time/ability to make sense of the data or need help thinking of clear actions that can be taken based on the trends. 
  2. Analytics is as close as one can get to Management Consulting without getting into BS land or Tell me what you want want to hear and I'll do so land (I know I'll have a few people ready to throw stones at me for this statement. But I'll still stand by it. For a long long time, Management Consulting has been about a few standard frameworks and making sure you use the frameworks to arrive at a solution that the customer wants to hear). Don't get me wrong the frameworks have its advantages and being in a nascent industry as analytics, we do have a fair share of opportunity to define some  useful frameworks.
  3. Analytics is about using all of the existing reports to get a story and also drilling down further when required to identify the Whys of the trends. 
  4. Analytics is about using every tool in the book (SAS, Omniture Sitecatalyst/Insights, Tableau, R, MS SSAS, Microstrategy and a million others) and every data source (Behavioral Data, Survey Data, Sec Research, Competitive Analysis among others), but with the intention to identify trends and make recommendations to leverage/overcome a trend. 
  5. Analytics is about recommendations/insights that Change the Business (CTB) and rarely about Run the Business (RTB). 
  6. Analytics is in short about enabling customer insights and data-driven decision making instead of gut based decision making.
These are my 2 cents on what I feel is the best way to define/describe Analytics. Have suggestions on a simpler/better way to explain what analytics is. Please feel free to share your thoughts below in the comments section or connect to me on Twitter @rhebbar or on Facebook.

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