Importance of Data Analytics for business

January 27, 2021 / by Nikhil Mandape in Data Science

Hello folks! If you are interested in understanding the significance of data analytics for your business then
there are multiple aspects to it. But before that, we need to understand what data analytics is. So let’s get
started!

Data Analytics

Data analytics techniques take raw data and uncover patterns, trends, and relationships to extract valuable
insights from it. The concept behind this is to make sense of your data, analyze it and share better
business prospects shortly. To take competitive advantage of it and do wonders with your data, data
analytics plays a vital role. Hence, let’s take a closer look at why data and analytics are important for your
business.

Importance of Data Analytics

1. Increase in data volume

 

As shown in the figure, The data volume created, copied, captured, and consumed in the world is
forecasted to 74 zettabytes in 2021. Most of the data is not analyzed which is going to get wasted,
whereas if it is analyzed appropriately this can help us in discovering information that is powerful enough
to bring in a significant change in your business.

Statistics on data growth

-Google: 40,000 search queries per second. 1.2 trillion searches yearly!
-YouTube: 300 hours of video each minute. 1 billion GB (1 exabyte) of data on its servers!
-Facebook: 100 terabytes of data shared daily. 31 million messages sent and 2.7 million videos viewed
every minute.
-Smart devices produce 5 quintillion bytes/day. In 5 years, it will be more than 50 billion!
-Moving to a cloud can improve a business’s agility (by 29%) and shorten payback times by 30%.
-Surprisingly, 99.5% of collected data never gets used or analyzed. So much potential wasted!
-83% of companies invest in big data analytics.
-Healthcare could also vastly benefit from data analytics adoption. Every year we can save $300 billion.
-Operational margins of big data companies could be increased up to 60%!

2. Better Targeting

Using data analytics, you can determine what forms of advertising reach your customers effectively and
make an impact that will make them buy your products. What we can learn from data is a. Which of the
advertising methods impact more on the target audience and b. how much you can embrace such
advertising.

3. Knowing your Target Customers

Once you find appropriate products for the right customers, you can focus on the respective areas for
respective customers. The market trends are crucial to consumer expenditure. Once you understand these
vital informative things, you can show the direction to your business to produce or distribute certain
products to achieve the exact requirements of your potential customers.

4. New Innovations

Data analytics also gives you a rough idea of the future trends in consumer behavior that will enable you
to make futuristic inventions on your products. These innovations will take you to the top of the industry
and you can take a positive advantage over your competitors. One more important thing about these
innovations is that you can patent them and reap the best from them while doing your profitable business
at the same time.

5. Cut Cost of Operation

You can determine the sectors of your business that are using unnecessary finances and the areas that
need more financing with the help of good data analytics techniques. To reduce operational and
production costs, you will have the entire idea of where you should cut costs in the process as well as the
technology you will use. Data analysis avoids filler activities and makes you think of direct, precise, and
straight actions to the point in your business.

 

Now we will see how data analytics affects different domains.

1. Healthcare

-In healthcare, there are different Data Analytics services that help in modern treatment.
-In last year’s survey, McKinsey estimated that Data analytics initiatives within the US healthcare system
“could account for $300 billion to $450 billion in reduced healthcare spending or 12 to 17 percent of the
$2.6 trillion baselines in US healthcare costs”. Roughly the cost of $3.1 trillion a year is estimated for bad
data.
-By using data analytics it will reduce the cost of treatment, also beneficial for predicting disease
outbreaks, circumvent preventable illnesses and generally improve the quality of care and life of patients.
-Below are examples of how healthcare analytics can be used to foresee problems and prevent them
before it’s too late, as well as speed up and improve treatment.

Medical image analysis
Electronic health records (EHRs) and Enhancing patient engagement
Preventing Opioid Abuse
Predictive Analytics

2. Ecommerce

-The importance of eCommerce analytics technology evolves shopping trends, seasonality on a daily basis,
monitoring daily analysis it will help organizations to improve management and give the best service to
each customer.

-Data science/Analytics has an important role in the eCommerce industry. It will help the customer and
merchant in their purchasing decisions and it will minimize the losses and maximize the profit.
-Benefits of Ecommerce analytics
Helps to build a robust supply chain and Analyze information to detect fraud
Personalize recommendations for your customers
Forecast inventory for the next season
With adding new customers, customer retention and holding customer is important
Price optimization and dynamic pricing
Sentiment analysis on customers review

3. Supply chain industry

-Benefits of supply chain management
The supply chain industry has descriptive analytics which provides visibility for both internal and external
data
For solving the organization’s problems, supply chain management can refer to predictive analytics,
demand/supply forecasting, and prescriptive analytics that will help to maximize business value.
Also, cognitive analytics helps organizations to answer complex questions by using natural language
processing.

4. Media

-From the media and entertainment industry’s data, data scientist find out the insights and use that for
predictive modeling, pricing, advertising, and sales forecasting
-These insights are beneficial to understand customer behavior and target customers to improve services
and user experience.
-Another important analysis on media and entertainment is sentiment analysis, it is used to assess the
sentiments of your customers towards a specific product and service.
-For example, Amazon Prime, from the music and video streaming service, uses big data analytics to
collect and analyze data from its millions of users to provide better music and movie recommendations to
users.

5. Government

-There are different ways to apply data science and analytics to decision-making in the public sector. By
giving well-informed decisions can save lives, which will help government agencies to make more efficient
and impactful investment decisions, and work towards improving the lives of citizens.
-Government agencies collect the data and have comprehensive privacy guidelines, legal safeguards, and
monitoring procedures that regulate how that data can be used.
-One other example is the Social Security Administration (SSA) who analyzes large numbers of social
disabilities under unstructured data. Also, data analytics is used to process medical information and detect
fraudulent or suspicious claims.

6. Gaming

-The gaming industry is now the biggest entertainment industry now. There are nearly 2.6 billion gamers
across the world.
-Data science is used to improve gaming models and optimization. It is also used to predict or identify patterns.
-Data scientists also work in the production process and monetization, where they identify the most
valuable customers and analyze general consumer behavior to increase the profitability and performance
of the company.

Here we can see the importance of Data Science by different industries;
-There are different industries in the above graph, i.e. Financial Services, Telecommunication, Technology,
Healthcare, Retail and Wholesale, Education, Manufacturing.
-As you can see Telecommunications, Finance, and Healthcare domains are highly impactful domains as
per a survey by Dresner Advisory Services in 2019

Conclusion
-Since about 99.5% of data never gets analyzed, if we analyze this data using proper analytics techniques,
we can boost our business to a new level.
-We have seen how data analytics affects different domains like telecommunications, finance, healthcare,
gaming, etc.
-Data-driven businesses are now more confident that they can bring success since there is analyzed data
to support them in their actions and decisions.
-Nowadays, Data Science and Machine Learning are used by many industries for their smart business
decision making.

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