Analytics

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Analytics is the application of computer technology, operational research, and statistics to solve
problems in business and industry. Analytics is carried out within an information system: while, in the
past, statistics and mathematics could be studied without computers and software, analytics has
evolved from the application of computers to the analysis of data and this takes place within an
information system or software environment. Mathematics underpins the algorithms used in analytics -
the science of analytics is concerned with extracting useful properties of data using computable
functions (see Church-Turing thesis), and typically will involve extracting properties from large data
bases (see data mining). Analytics therefore bridges the disciplines of computer science, statistics,
and mathematics.

A simple definition of analytics is "the science of analysis". A practical definition, however, would be
that analytics is the process of obtaining an optimal or realistic decision based on existing data.
Business managers may choose to make decisions based on past experiences or rules of thumb, or
there might be other qualitative aspects to decision making; but unless there are data involved in the
process, it would not be considered analytics.

Common applications of analytics include the study of business data using statistical analysis in order
to discover and understand historical patterns with an eye to predicting and improving business
performance in the future. Also, some people use the term to denote the use of mathematics in
business. Others hold that field of analytics includes the use of Operations Research, Statistics and
Probability. However, it would be erroneous to limit the field of analytics to only statistics and
mathematics.

Analytics closely resembles statistical analysis and data mining, but tends to be based on modeling
involving extensive computation. Some fields within the area of analytics are enterprise decision
management, marketing analytics, predictive science, strategy science, credit risk analysis and fraud
analytics.

Contents
[hide]

• 1 Example: Portfolio
analysis

• 2 See also

• 3 References
 • 4 External links

[edit]Example: Portfolio analysis

A common application of business analytics is portfolio analysis. In this, a bank or lending agency has
a collection of accounts of varying value and risk. The accounts may differ by the social status
(wealthy, middle-class, poor, etc.) of the holder, the geographical location, its net value, and many
other factors. The lender must balance the return on the loan with the risk of default for each loan.
The question is then how to evaluate the portfolio as a whole.

For instance, the least risk loan may be to the very wealthy, but there are a very limited number of
wealthy people. On the other hand there are many poor that can be lent to, but at greater risk. Some
balance must be struck that maximizes return and minimizes risk. The analytics solution may
combine time series analysis, with many other issues in order to make decisions on when to lend
money to these different borrower segments, or decisions on the interest rate charged to members of
a portfolio segment to cover any losses among members in that segment.

[edit]See also

 Analysis  Learning

 Business analytics  Mobile a

 Business intelligence  OLAP

 Data Presentation Architecture  Operatio

 Online video analytics  Predictiv

 Data mining  Statistics

 List of software engineering topics  Web ana

 Machine learning
[edit]References

Davenport, T. H. (2006). Competing on Analytics. Harvard Business Review.

Kohavi, R., Rothleder, N. J., & Simoudis, E. (2002). Emerging Trends in Business Analytics.
Communications of the ACM , 45 (8), pp. 45-48.

http://www.merriam-webster.com/dictionary/analytics

[edit]External links
 INFORMS' bi-monthly, digital magazine on the analytics profession
 Look
up analytics in Wiktionary, the
free dictionary.

Categories: Analytics | Financial data analysis | Mathematical finance | Formal sciences | Business
terms
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•
Data analytics (DA) is the science of examining raw data with the
purpose of drawing conclusions about that information. Data
analytics is used in many industries to allow companies and
organization to make better business decisions and in the
sciences to verify or disprove existing models or theories. Data
analytics is distinguished from data mining by the scope, purpose
and focus of the analysis. Data miners sort through huge data
sets using sophisticated software to identify undiscovered
patterns and establish hidden relationships. Data analytics
focuses on inference, the process of deriving a conclusion based
solely on what is already known by the researcher.
LEARN MORE
• Data profiling
The science is generally divided into exploratory data analysis
(EDA), where new features in the data are discovered, and
confirmatory data analysis (CDA), where existing hypotheses are
proven true or false. Qualitative data analysis (QDA) is used in the
social sciences to draw conclusions from non-numerical data like
words, photographs or video. In information technology, the term
has a special meaning in the context of IT audits, when the
controls for an organization's information systems, operations and
processes are examined. Data analysis is used to determine
whether the systems in place effectively protect data, operate
efficiently and succeed in accomplishing an organization's overall
goals.

The term "analytics" has been used by many business

intelligence (BI) software vendors as a buzzword to describe quite
different functions. Data analytics is used to describe everything
from online analytical processing (OLAP) to CRM analytics in call
centers. Banks and credit cards companies, for instance, analyze
withdrawal and spending patterns to prevent fraud or identity
theft. Ecommerce companies examine Web site traffic or
navigation patterns to determine which customers are more or
less likely to buy a product or service based upon prior purchases
or viewing trends. Modern data analytics often use
information dashboards supported by real-time data streams. So-
called real-time analyticsinvolves dynamic analysis and reporting,
based on data entered into a system less than one minute before
the actual time of use.