Analytics is hot! It’s the latest buzzword. And as with all new trends, there is a great deal of confusion on what exactly ‘analytics’ is. How is it different from Business Intelligence? Where does market research come in? This is an attempt at throwing some light in that direction..

Definitions and the like…The Wikipedia definition for analytics is – “… how an entity (i.e., business) arrives at an optimal or realistic decision based on existing data”.  The definition for Business Intelligence – “…. refers to computer-based techniques used in spotting, digging-out, and analyzing business data ….” indicates degrees of overlap but also differences.  Both aim to analyze existing enterprise data and are widely used for decision-making.  The difference is that analytics aims to take up where BI leaves it.

Focus: BI has traditionally been a top management view of the health of the company – not a mere bird’s eye view but again, not exactly a nuts and bolts analysis. The focus has been on automating and consuming aggregated data for monitoring performance and for early warnings. This has been through various interface applications like scoreboards and dashboards on Key Performance Metrics. 

Analytics, on the other hand, aims to dig deeper; to help the line manager take relevant action based on the data. Automation figures in the scheme of things but the need for flexibility and human insight is critical as business dynamics change. This is a much more ‘end-to-end’ solutions game – the tool (BI or other) is relevant for its credibility and reliability but the critical factor is the insight and consulting edge.

Who are the players? The platform vendors(Oracle, SAS, IBM SPSS, SAP, MS ) of course – new products and platforms developed to perform complex statistical models; Software/ Software as a service  (SaaS) vendors providing end-to-end solutions; consultancies and market research agencies providing cutting edge insights are all competing in this space. 

Applications: In view of its broad ranging need for operational excellence, analytics finds a use across functions.

Marketing Analytics aims to help optimize marketing ROI – through better segmentation and targeting, through up-selling and cross-selling opportunity analysis, through campaign tracking, pricing & channel analytics.  In partnership with the Customer Service function, they also deploy customer analytics to lower acquisition cost for customer retention and to minimize churn.

 Financial analytics focus on credit risk management, fraud and risk management, equity research, claims analyses and the like. HR analytics can help gain better insights into identifying and nurturing talent, identifying potential attrition and root-cause analysis for this and so on.. Similarly supply chain analytics.

Web Analytics is, of course, an area of far-reaching importance today. Understanding how consumers navigate the web, your web-site, what facilitates conversion and what impedes, are now critical elements of any corporate’s web strategy.

In subsequent posts, we will try and take a deeper look into each of the above application areas as well as analytics principles and techniques.