Discover the Benefits of Descriptive Analytics | iCert Global

Most businesses today utilize data to enable them to make more informed decisions. By examining figures and data, business executives can observe patterns and trends that inform them in which direction things are heading. This enables them to do things better and post improved results. When individuals are provided with more data, they are able to make more informed decisions.

What is descriptive analytics?

There are four primary categories of business analytics:

• Descriptive Analytics – What occurred?

• Diagnostic Analytics – Why did it happen?

• Predictive Analytics – What's next?

• Prescriptive Analytics – What do we do about it?

Descriptive analytics is the most prevalent and simplest form. It analyzes historical and existing data to demonstrate what has occurred in a firm. It assists companies in spotting tendencies and tracking their performance.

With descriptive analytics, companies create reports and scorecards (e.g., KPIs – Key Performance Indicators) to quantify such as customer behavior, spending, and sales. They use them to view how they are performing.

A prime example is social media. Companies utilize descriptive analytics to analyze how their posts are performing. They are tracking likes, shares, new followers, and how much money they are generating on social media. This allows them to determine which posts or campaigns are performing and which are not.

More Examples

Descriptive analytics also help us to:

• How much profit or loss the company is making

• Inventory and product movement

• What customers complain about in surveys

• How fast things get through the supply chain

• Which bills must be paid or collected

Descriptive analytics can seem daunting, but it is only a means of comprehending something that already exists. This assists businesses in making better decisions in the future.

What Can Descriptive Analytics Teach Us?

Descriptive analytics assists companies in looking where they are headed, where they currently are, and where they are relative to others. There is more to it than that, however. Then what else can they discover from it?

1. How well the company is currently doing.

It tracks significant numbers for departments, teams, and the business as a whole. For instance, it could be showing one salesperson's performance this quarter or what product is selling best.

2. Trends from the Past

It gathers data over time so that companies can compare things. For instance, they can compare sales this quarter with sales last quarter to check whether things are getting better. They tend to use graphs to facilitate such comparisons to be easily understandable.

3. Strengths and Weaknesses

It enables companies to know what is going right and what is going wrong. They can compare their performance with other companies or industry standards. This informs them where they are performing better and where they should improve.

How Does Descriptive Analytics Work

There are five crucial steps:

Step 1: Determine What to Monitor

Firms first decide what they would like to measure. If they want to expand, they may consider how much they earn every quarter. The unit that bills may observe how rapidly customers make payments.

Step 2: Search for the Appropriate Data

Secondly, they have to gather the correct data. This might be difficult since the data may be located in various places. Some businesses use specialized software such as ERP systems to assist in keeping everything in order. They may also require data from websites or social media.

Step 3: Prepare the Data

They have to clean and merge the data before it can be used. This involves correcting errors and having everything in the right format. Occasionally, they employ something known as data modeling to assist in getting everything in an easier-to-understand format.

Step 4: Analyze the Data

After the data is prepared, they feed it into a computer program using applications such as Excel or using special programs. They will make simple calculations such as totals, averages, or other simple math to figure out what is going on. A manager might need to know how much money they earned this month, for instance.

Step 5: Display the Results

Finally, they present the results so others can understand. Some people like charts or graphs, while others prefer tables and numbers. The goal is to make the data clear and useful for everyone.

What are the advantages of Descriptive Analytics

Below are some of the benefits of using descriptive analytics:

• It is easy to use and get the hang of. You don't need to be a genius at math to work it.
• There are several handy tools. Several tools do the hard work for you.
• It answers common questions. For example, "How are we doing?" or "What should we change?"
• But it is not flawless. There are two errors here:
• It is basic. It only looks at simple relationships between a few things.
• It does not inform us why. It informs us what, but not why or what may be coming next.

Descriptive, Predictive, and Prescriptive Analytics:

What's the Difference?

There are three primary types of analytics used in business and data analysis that assist one in comprehending data and making conclusions. They include Descriptive, Predictive, and Prescriptive analytics. Each serves a unique purpose and provides a different answer.

1. Descriptive Analytics – What happened?

Descriptive analytics examines historical and current facts with the purpose of describing what has occurred within a business. It makes individuals consider trends, patterns, and what is happening at the moment.

Example:

• A shop has looked at 6 months' worth of sales to see what was selling most.

Important points:

•Utilizes reports, charts, and dashboards.

• Indicates previous performance

• Supports monitoring progress and finding trends

2. Predictive Analytics – What could happen next?

Predictive analytics uses data and mathematics to predict what will happen in the future. It examines past trends and makes future occurrences or outcomes predictions from them.

Example:

An online retailer forecasts which shoppers are most likely to purchase something during a holiday sale based on their history.

Major sections:

• Uses statistics and machine learning

• Helps plan ahead

• Identifies risks and opportunities

3. Prescriptive Analytics – What do we do about it?

Prescriptive analytics takes it a step further. It not just tells you what will happen; it tells you what you should do next. It assists individuals in making the optimal decision based on several possible scenarios that can occur.

Example:

A delivery business applies data to determine the lowest cost and most efficient path for drivers, factoring in traffic and fuel costs.

Main points:

• Best options advised

• Supports decision-making

• Solves complicated problems with numerous options

In conclusion:

• Descriptive = Informs you of what occurred in the past.

• Predictive means it looks forward to tell us what will happen.

• Prescriptive because it informs a person what to do next.

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Conclusion

Descriptive, predictive, and prescriptive analytics help businesses observe the past, predict the future, and make smart choices. All of them have a unique role to play in data-driven success. iCert Global offers training to help you master these skills and excel in your professional life.

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