What is Data Analysis? Research | Types | Methods | Techniques
What is Data Analysis?
Data analysis is defined as a process of cleaning, transforming, and modeling data to discover useful information for business decision-making. The purpose of Data Analysis is to extract useful information from data and taking the decision based upon the data analysis.
A simple example of Data analysis is whenever we take any decision in our day-to-day life is by thinking about what happened last time or what will happen by choosing that particular decision. This is nothing but analyzing our past or future and making decisions based on it. For that, we gather memories of our past or dreams of our future. So that is nothing but data analysis. Now same thing analyst does for business purposes, is called Data Analysis.
Why Data Analysis?
To grow your business even to grow in your life, sometimes all you need to do is Analysis!
If your business is not growing, then you have to look back and acknowledge your mistakes and make a plan again without repeating those mistakes. And even if your business is growing, then you have to look forward to making the business to grow more. All you need to do is analyze your business data and business processes.
Data Analysis Tools
Data analysis tools make it easier for users to process and manipulate data, analyze the relationships and correlations between data sets, and it also helps to identify patterns and trends for interpretation. Here is a complete list of tools used for data analysis in research.
Types of Data Analysis: Techniques and Methods
There are several types of Data Analysis techniques that exist based on business and technology. However, the major Data Analysis methods are:
- Text Analysis
- Statistical Analysis
- Diagnostic Analysis
- Predictive Analysis
- Prescriptive Analysis
Text Analysis is also referred to as Data Mining. It is one of the methods of data analysis to discover a pattern in large data sets using databases or data mining tools. It used to transform raw data into business information. Business Intelligence tools are present in the market which is used to take strategic business decisions. Overall it offers a way to extract and examine data and deriving patterns and finally interpretation of the data.
Statistical Analysis shows “What happen?” by using past data in the form of dashboards. Statistical Analysis includes collection, Analysis, interpretation, presentation, and modeling of data. It analyses a set of data or a sample of data. There are two categories of this type of Analysis – Descriptive Analysis and Inferential Analysis.
analyses complete data or a sample of summarized numerical data. It shows mean and deviation for continuous data whereas percentage and frequency for categorical data.
analyses sample from complete data. In this type of Analysis, you can find different conclusions from the same data by selecting different samples.
Diagnostic Analysis shows “Why did it happen?” by finding the cause from the insight found in Statistical Analysis. This Analysis is useful to identify behavior patterns of data. If a new problem arrives in your business process, then you can look into this Analysis to find similar patterns of that problem. And it may have chances to use similar prescriptions for the new problems.
Predictive Analysis shows “what is likely to happen” by using previous data. The simplest data analysis example is like if last year I bought two dresses based on my savings and if this year my salary is increasing double then I can buy four dresses. But of course it’s not easy like this because you have to think about other circumstances like chances of prices of clothes is increased this year or maybe instead of dresses you want to buy a new bike, or you need to buy a house!
So here, this Analysis makes predictions about future outcomes based on current or past data. Forecasting is just an estimate. Its accuracy is based on how much detailed information you have and how much you dig in it.
Prescriptive Analysis combines the insight from all previous Analysis to determine which action to take in a current problem or decision. Most data-driven companies are utilizing Prescriptive Analysis because predictive and descriptive Analysis are not enough to improve data performance. Based on current situations and problems, they analyze the data and make decisions.