The Most Important Thing in Analytics is… No, It’s Not Data!

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The most important thing in analytics - DART hitting dartboard at the centre

The Most Important Thing in Analytics is… No, It’s Not Data!

Veravizion 2 comments

L  ast Friday, I was having a very productive give-and-take with a group of business people on the benefits of business analytics. During our conversation, I had an interesting observation about what those people considered the most important thing in analytics. They seemed to think that data is the most important element in any (business) analytics project. I am sharing here the gist of that conversation. Hope you too find it interesting.

I believe data is the second most important thing in analytics or data science.

The most important thing in analytics is ‘the question to be answered’.

Let me explain why.

Typically analytics initiatives are undertaken to achieve one of these four objectives:
1. To solve a problem
2. To accomplish a specific (business or non-business) goal
3. To prove or disprove a hypothesis
4. To answer a question

Unless you have a specific question that needs answered, any analytics initiative will at best be a random analytical study with no direction. The specific question or the problem statement gives it a definite goal. More importantly, the goal will determine what data to use to arrive at a fact-based conclusion.

I like to think of it as ‘a ship sailing in an ocean’ analogy. An analytics initiative making way through the huge organizational data is analogous to a ship sailing in an ocean. If the ship has a pre-determined destination, then it takes the intended route to reach that destination and achieves its objective. To a bystander, mere existence of a ship creates a perception that it is going somewhere. However, if the destination is not clearly defined, the ship might just have a fun time cruising the ocean and figuring out what the ocean has to show. Worse, it might just flounder in the huge ocean and may not reach any meaningful place.

A ship like that is like a holiday-cruise-liner – expensive to sail but not tasked with any objective to reach a place.

Likewise, many organizations launch their analytics initiatives without any specific target. They just start with a tentative goal of let’s figure out what the data shows along the way. In the absence of any pointed objective to pursue, the analysts running the initiative either have great fun cruising with unbounded data or they just lose their way in it. Such an initiative renders no meaningful results.

An analytics initiative like that ends up becoming an expensive proposition like a luxury cruise-liner.

That’s why the most important thing in analytics is the question to be answered. The question determines what data to use to reach a definitive answer.
For example, to determine an organization’s target customer profile and their buying habits, the customer data will need to be analysed. Similarly, the sales history data will be required to ascertain a company’s sales trends.

The data serves as the route to finding the answer to the question.

The data to be analysed will change with the question to be answered. In our analogy, it is the route taken by the ship to its destination. Different destinations will warrant different routes to be pursued.

The selection of the right data becomes important after determining the objective(s) of the analytics initiative. The right prioritization will not only help you reach your destination faster, but it will also be very cost-effective as you save yourself from expending time, money, and manpower in analysing needless data.

In a nutshell, make sure that you do not end up getting lost in the ocean of data with wrong prioritization. Data-cruising is an expensive way to have fun at the expense of an organization’s usually scarce resources.


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2 Comments

curt nardecchia

October 3, 2015 at 11:55 pm

This is one awesome blog post.Really thank you! Great.

    Praveen

    October 13, 2015 at 10:09 am

    Thanks Curt !

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