UNIT - 1

Descriptive statistics, Introduction to Analytics, Business

Understanding, Introduction to R- Basics, The R Environment,
Inductive and Deductive Logic, Installation of R

R. K. Sharma, CSED, TIET Patiala

Introduction to Analytics and
Business Understanding
Why Data Analytics
Data analytics helps in:

 Scientific decision making and effective business

operations.

 Analyzing data, gaining profits, making better use of

resources, and improving managerial operations.
What is Data Analytics

 Data analytics is the science of extracting trends, patterns,

and relevant information from raw data to draw conclusions.

 It has multiple approaches, multiple dimensions, and diverse

techniques.

In addition to making business decisions, data analytics is also

used by data scientists and researchers to verify scientific
models and theories.
What is Data Analytics?...
Analytics is the use of:

data,
information technology,
statistical analysis,
quantitative methods, and
mathematical or computer-based models

to help managers gain improved insight about their business operations and
make better, fact-based decisions.
Business Analytics (BI) is a subset of Data Analytics
Data Analytics: benefits

 Improved Efficiency

 Good Resource Utilization

 Good Market Insights

 Effective Decision Making

 Cost Reduction
Data Analytics: Domains

E-Commerce Industry
Healthcare Industry
Media and Entertainment Industry
Education Industry
Government Organizations
Retail Industry
Accounting Methods: Traditional approach and
associated problems
 Accounting was done in the form of notebooks. This was cumbersome and tedious.
 Use of excel sheets simplified accounting but did not solve all problems.
 SMBs (Small and Medium Businesses) and start-ups face issues in managing and
tracking cash flow.
 A highly accurate and dependable solution is required for financial management in
business.
 Difficulty in tracking small expenses such as one-time government tax and regular
taxes.
 Requirement of a dedicated financial expert by SMBs and start-ups.
 Small business owners managing the role of an HR and payroll expert due to lack of
resources or money.
 Interpreting and analyzing financial reports with traditional accounting methods was
difficult.
 The available excel-based macros and pivot tables did not provide sufficient insight
into the data.
Traditional Accounting Methods: Challenges

 How much inventory must be held?

 How many invoices are overdue?

 How much cash is tied up at work?

 How long does it take to get cash from the customers?

Impact of Analytics on Accounting

 Uncovers valuable insights

 Identifies process improvements

 Help in managing risks

 Adds value to the decision making process

Data Analytics in Accounting

Auditors Tax Accountants Investment Advisors

• Deploy continuous • Use data • Use big data to
monitoring science to find behavioral
• Analyze and verify analyze patterns
large datasets complex • Identify investment
• Few errors and taxations opportunities
precise • Helps in faster • Generate higher
recommendations investment profit margins
decisions
Data Analytics: Process Flow

1. Define
goals

Infer data for 2. Identify

decision measurable
making metrics

Process Flow

3. List,
Interpret and
collect, and
visualize
extract data
data
from sources

Explore and
analyze data
Data Analytics: Life Cycle
Learn about business domain and
assess available resources
1.
Discovery

Deliver final reports, 2.

briefs, codes, and 6.
Operation Data Execute ELT (Extract,
technical documents alize Preparatio
n
load, and transfer

Data
Analytics
Identify key findings, 5. 3.
business variables, and Communi
Model
cate
develop narratives for Results Planning
Identify techniques and
stakeholders
4. data to understand
Develop datasets for Model
Building
variables relationship
testing, training, and
production
Types of Data Analytics
We have 4 types of Data Analytics based on work flow and requirements

 Descriptive Analytics
 To explore what happened

 Diagnostic Analytics
 Why did this happen

 Predictive Analytics
 What will happen

 Prescriptive Analytics
 How can we make this happen
Descriptive Analytics
 It is the conventional form of Analytics

 Its purpose is to summarize the findings

 It focuses on the summarized view of facts

 Descriptive Analytics is designed to access information about the past

Descriptive Analytics
Techniques
Data of
Data Mining
Aggregation Descriptive
Analytics

 Data aggregation is the process of gathering and expressing

information in a summarized form

 Tools for data aggregation: R, Python, MS Excel, MATLAB, SPSS, …

 Various company reports is an example of descriptive analytics

Diagnostic Analytics

 This helps us why something happened in the past

 It helps us in understanding the root cause of events

 It has a limited ability to provide actionable insights

 It provides an understanding of casual relationships and sequences

Diagnostic Analytics: Techniques
 Drill-down
 Data Discovery
 Correlation
 Data Mining

 This can be used to discover casual relationships

between 2 or more datasets.
 This is helpful for those concerned with day-to-day
operations.
 It can helps us in identifying why a sales
representative sold fewer items than usual in a
specific time unit.
Predictive Analytics
This analytics is used:

 For predicting future outcomes in terms of probability of an event to occur

 For analyzing sentiments where all opinions posted on social media are
collected to predict a person’s sentiment, for example

 For identifying target audience for a promotional campaign

 For fforecasting weather, plan-failure prediction, and travel products

recommender system
Predictive Analytics: Tools

ML algorithms: RF, SVM, Statistical

Algorithms

Tools

These tools are used by Data Other tools: R,

Scientists and ML experts to
build models Python, …
Prescriptive Analytics
 Prescriptive analytics provides the solution for a prediction in the
future.
 It creates and updates the relationship between action and
outcome using a feedback system.
 It helps in making optimal recommendations during the decision-
making process.
 It helps in mitigating the possible risks based on the available
predictive analytics.
 It has the power to suggest favorable solutions and ease the
decision-making process.
 It is the final frontier of advanced analytics.
 It is used by recommendation engines in companies.

Advancements in predictive analytics is paving the way for its development.

Case Study on Analytics
Amazon uses data analytics to improve efficiency
and reduce cost.

• Descriptive Analytics  Spent $20M in different sales training the

previous year

• Diagnostic Analytics  Amazon’s revenue increased in the West Coast

during the past one year
 Increased spending on sales training

• Predictive Analytics  Purchase factors: price, time, weather, and

festive seasons
 Predicted 10–12 percent increase in revenue

• Prescriptive Analytics  Sales trainings fetched good ROI

 Implemented a suitable optimization plan to
maximize revenue
Data Analytics Benefits: decision-making
Data Analytics helps us in defining our target audience base don :

 Customer age group

 Customer preference

 Location-based purchase

 Popular brands or products people seek

Data Analytics Benefits: decision-making
Data Analytics helps us:

 Manage inventory

 Forecast demands

 Identifying shopping seasons

 Analyze customer sentiments

 Decide optimum prices

Data Analytics Benefits: cost reduction
Data Analytics helps us:

 Understand shopper behavior by monitoring their browsing interest

 Seller identifies shopping pattern and customer demand

 Customer data helps companies minimize failed campaigns and

reduce cost associated with them.
Case Studies on Analytics

Amazon uses data analytics to improve

efficiency and reduce cost.

LinkedIn LinkedIn employs data analytics to revamp its

job listings, track user profiles, and posts.

Netflix gathers data from its subscribers to

decide on customer preferences.
Case Studies on Analytics

According to McKinsey, companies that use

customer analytics outsmart their competitors in
terms of profit.

According to a survey conducted by the

Business Application Research Center (BARC) on
the Analytics trends, Master Data and Data
Quality Management were the most important
trend in 2020.
Thank You !