Updated on: December 7, 2022
Data analysis is defined as the process that revolves around cleaning, transforming, and modeling the data to land at useful information that is further used in informed decision-making. The data analyst takes out valuable information from the large pool of data and generates decisions based on that analysis and its conclusions. Data analysis is an important part of one’s daily life. When people make important decisions based on their past life experiences, this is also referred to as “data analysis.” Thus, similar kinds of things when performed for making business decisions are also known as “data analysis.” Let’s know here types of data analysis
What is the Need for Data Analysis?
When a business is not doing well, it’s time to analyze what’s going wrong. Similarly, when a business needs growth, it’s time to analyze the factors that can fuel the growth meter. This is where data analytics enters the picture. It helps in analyzing business data and business processes in order to achieve business goals.
Are There Any Data Analysis Tools?
Yes, there are a few tools that aid in optimizing the data analysis procedure. R, SAS, Python, Java, SQL, Matlab, and many other data analysis tools are available. These tools play the role of making it easier for the users to process the data and manipulate it. Also, these tools support the related analysis and correlation between data sets and help in identifying the patterns and trends that are further used for interpretation.
Types of Data Analysis
There are different types of data analysis techniques and methods that are utilized by experts to make the best decisions. The techniques are based on business and technology, and they serve some of the major data analysis methods that can assist users in making simple and effective decisions.
The major types of data analysis are:
Text analysis is also referred to as “data mining.” In this method, a large data set is used to determine certain kinds of patterns using databases or data mining tools. Under this method, the raw data is transformed into business information. This method helps in extracting and examining the data and deriving the patterns that lead to the final interpretation of the data.
Statistical analysis: In this analysis, the result will be generated in the form of “What happened?” It will be processed using the past data in the form of dashboards. In this method, the steps involved are collection, analysis, interpretation, presentation, and data modeling. This method analyses data sets using a sample of data. Under this, two types of analysis are undertaken:
- Descriptive analysis: this analysis is related to analyzing the complete data or a sample of numerical data. It displays the result via mean and deviation for the data.
- Inferential analysis: It analyses a sample from the whole data set.
Diagnostic analysis: it shows the result “Why did it happen?” It works by finding the cause of the insight. This analysis is helpful in identifying the behavior patterns in the data. If somehow any new problem arrives in the business, this analysis is used against the problem to look for the behavior of the patterns. Many times, old behavior works well in order to solve new problems.
Predictive analysis: this analysis is related to “What will happen now?” This analysis is related to past data. Suppose you bought some furniture last year, and this year your salary increases; then you can buy more stuff this year. In this, additional conditions are relied upon in order to make genuine and related predictions. This analysis is also known as “making future predictions based on current or past data.”
Prescriptive analysis: This analysis combines all the above-mentioned analyses and chooses which kind of action would be best to solve the current issue. Sometimes, both descriptive and prescriptive analyses are not up to the mark to help in achieving the desired decision. Thus, most data-driven companies make use of prescriptive analysis to solve problems. Based on the running circumstances and the problems, the right method is taken, followed by an analysis of the data, after which decisions are made accordingly.
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What all is included in the data analysis process?
The data analysis process is the collection of information using a tool or application that allows easy exploration of the data. Under data analysis, the following steps are taken:
- Collecting data requirements
- Data Collection
- Data cleaning
- Data analysis
- Data interpretation
- Data visualization
The process begins with the idea of gathering data to solve any business problem, which is followed by data collection. Once the data is collected, it is thoroughly cleaned using the proper tools in order to remove unwanted elements from it. Then a detailed analysis is done using different methods and techniques. Once the analysis is complete, the results are interpreted and well-informed insights are generated in order to apply them to the problem. The results are then visualized in order to see their impact.
Data analysis is a deep process, and every step should be followed strictly to generate the best decision.